Trusted aide Lew picked to lead US Treasury

Updated: 2013-01-11 11:58

By Zhang Yuwei in New York (China Daily)

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President Barack Obama has nominated his chief of staff, Jacob Lew, to be the next US Treasury secretary, positioning the former White House budget director to help lead political battles over fiscal policies.

Lew, 57, appeared with Obama for Thursday's announcement of the latest change in the presidential cabinet before the administration officially begins its second term in 10 days.

If confirmed by the Senate, Lew will succeed Timothy Geithner, who plans to step down later this month. Geithner, a chief negotiator in 2011 talks over the US debt limit and other hot-button issues, is the longest-serving member of Obama's first-term economic team.

Although he was chief operating officer of two Citigroup Inc units from 2006 to 2009, Lew is known more for budget policy expertise than for the kind of close ties to the financial services industry that Geithner and other recent Treasury chiefs have cultivated.

Lew headed the White House Office of Management and Budget under Obama and, earlier, president Bill Clinton. He became Obama's chief of staff in January 2012.

On Thursday, the president praised Lew as "a master of policy who can work with members of both parties and forge principled compromises" and credited him for having "worked and succeeded in some of the toughest jobs in Washington".

Experts said that while the choice of a loyal Democratic aide shows that Obama has prioritized the Treasury Department's role in fiscal-policy negotiations with Congress, the incoming secretary will encounter myriad economic headaches.

"The main domestic challenge for the new Treasury secretary will be striking a balance between competing demands on the fiscal front," said Lawrence Goodman, president of the Center for Financial Stability, a New York think tank.

Edward Alden, an expert on US economic competiveness at the Council on Foreign Relations, called Lew's appointment "a signal that the highest priority for Treasury in the near future will be the negotiations with Congress over the deficit, taxes and entitlement spending".

"He has taken the leading role in these negotiations, and is deeply trusted by the president," Alden said, pointing to Lew's roles as White House budget director and then chief of staff.

Geithner is a former president of the New York branch of the Federal Reserve whose legacy includes helping guide the world's biggest economy out of the 2008 financial crisis.

He was also known to focus on issues associated with China, particularly its stance on the value of the yuan currency. Although sometimes critical of that and other policies, Geithner nonetheless resisted calls from some US lawmakers, and even Obama aides, to label China a currency manipulator.

Geithner, who speaks Mandarin, has served as co-chairman of the US-China Strategic and Economic Dialogue, a high-level forum for policy discussions between the world's two leading economic powers.

"The new Treasury secretary should strive to continuously deepen the relationship with China," Goodman said. "Post-crisis, the world is in need of leadership and vision. The US and China can provide both."

Lew doesn't have the same lever of international experience, including with China, as Geithner.

"I expect that the State Department under John Kerry, who has a strong interest in economics, will continue to play a larger role in managing the US relationship with China," said Alden, referring to Obama's recent choice to succeed Hillary Clinton.

The nomination drew groans from some Republicans in Congress over his negotiating style, including during 2011 talks to increase the US debt limit, but Lew is expected to be confirmed by the Senate, where Democrats have a slim majority over Republicans. He recently took part on a White House team that negotiated a deal to avoid immediate spending cuts and tax increases that could have damaged the US economy - the so-called fiscal cliff.

That agreement, however, didn't raise the "debt ceiling", address US unemployment nor set plans to combat the US budget deficit, all of which Lew is expected to encounter in coming weeks and months.