Published February 02, 2013
Wednesday’s announcement that the economy shrunk during the last quarter of 2012 is reason to ask two questions: First, what are the true priorities of this president? And second, is Jack Lew really the best choice to be Barack Obama’s Treasury Secretary?
The 44th president’s second inaugural address was, in part, a tribute to past struggles for social and political equality, from women’s suffrage to civil rights for blacks to equal rights for gays. But Obama’s speech also was a shout-out to the “Coalition of the Ascendent,” the demographic core of minorities, women and younger voters who propelled the president to reelection.
In other words, it was a riff on the “identity politics” that helped fuel his two presidential campaigns -- and an obvious signal as to where the president’s domestic policies for his second term will be focused. That is good news for liberal activists, even if that means closing-down power plants and perhaps even entire industries. Indeed, the White House Jobs Council shut down this week without as much as a whimper.
So yes, Obama’s speech was inspiring for his most ardent supporters.
By contrast, those GDP numbers -- the economy actually shrank by one-tenth of a percent, the worst performance since the second quarter of 2009 -- are neither aspirational nor uplifting. Rather, they are a reminder that the economy is a slog, at best. While upper income America has benefited from near-record stock market levels, the Dow flirting with 14,000, economic recovery is more an abstract than a reality for most Americans.
The labor force participation rate, for example is 63.6 percent today, a drop of more than 2 points since Obama took office and the lowest in twelve years. To put things in perspective, America’s participation rate lags those of Australia, Canada and New Zealand, the Netherlands and Germany.
Have Obamanomics succeeded? GDP contraction seems to say otherwise. In particular, GDP contraction is proof that Lew’s brainchild, the sequester, stands to harm the economy in ways that Lew may have never cared to contemplate.
Not surprisingly, the president has treated the pending sequester as someone else’s idea. Indeed, during the presidential debates, Obama incorrectly blamed Congress. But, the facts say otherwise.
As Bob Woodward painstakingly narrated, it was Lew who sold the sequester to Democratic Senate Majority Leader Harry Reid. As Woodward recounts: “After reviewing all the interviews and the extensive material I have on this issue, it looks like President Obama told a whopper...” Woodward laid out Lew’s pitch in graphic detail:
We have an idea for a trigger,” Lew said.
“What’s the idea,” Reid asked skeptically.
Reid bent down and put his head between his knees, almost as if he was going to throw up or was having a heart attack."
Yet now the economy could be tipping back toward recession, and tepid growth may be morphing into more joblessness. For this reason alone, Senate Republicans should rise up against the Lew nomination.
Still, there is a stronger reason to oppose Lew at Treasury. Before joining this administration, Lew did a stint at Citibank, pocketed profits and then watched the bank teeter as it fed off a Treasury Department bailout. Lew himself was paid $1.1 million annually.
Specifically, Lew took over the Alternative Assets program at Citigroup in late 2007, which lost most of its assets as it bet on the downfall of the housing market -- just before Citigroup needed a $45 billion TARP bailout.
Heck, Mitt Romney made money for his partners.
It was all perfectly legal, of course, for Lew to get paid seven figures in effect, with taxpayers’ dollars. It just wasn’t good, and it is nothing that the U.S. Senate ought to endorse.
In other words, Citi helped itself to public money, while the shops on Main Street shuttered their windows and closed their doors. And Lew watched.
During his reelection effort, the president’s mantra was the “middle class.” And yet his policy preferences lie elsewhere. He seems more motivated by redistribution than by growth; by social and legal activism, as opposed to sharing and driving the concerns of those who eat their midday meal out of a lunch bucket or at the workplace cafeteria.
Obama’s Second Inaugural masked the fact that the economy remains ailing. More precisely, it ignored that fact. His pick for Treasury Secretary signals a greater concern for the parochial interests of the financial industry than the needs of the entire nation. It is time for the Republican Senate to push back. A thorough grilling is in order, starting with Lews’s days at Citi.
The Senate should press Lew on his views on too big to fail. It should ask him if he was worth his pay at Citi and why he should be trusted with the economy and the taxpayers’ hard-earned dollars. Lew’s answers will be illuminating, if not enlightening.