Published January 10, 2013
President Obama on Thursday nominated White House Chief of Staff Jack Lew to be his next Treasury secretary, as the top Republican on the Senate Budget Committee vowed to oppose the pick over a questionable statement Lew once made about the national debt.
Lew, if confirmed, would replace outgoing Secretary Tim Geithner.
The president said Thursday that he "cannot think of a better person" to continue Geithner's work. The announcement marked the president's fourth major nomination to date of officials for his second-term administration.
"I trust his judgment, I value his friendship. I know very few people with greater integrity," Obama said. The president stressed Lew's experience in both Washington and the private sector, and particularly his role presiding over "three budget surpluses in a row" while in the Clinton-era budget office.
But as with the prior nominations, Lew was drawing early criticism from the Republican side of the aisle.
"Jack Lew must never be secretary of Treasury," Sen. Jeff Sessions, R-Ala., ranking Republican on the Senate Budget Committee said, calling Lew's comments nearly two years ago "so outrageous and false" as to disqualify him.
Sessions was referring to a bitter Senate hearing from February 2011, when Lew attempted to defend statements he and Obama had made claiming their budget blueprint would get the country to a point where "we're not adding to the debt anymore."
Those statements, at best, stretched the truth. The White House budget plan at the time showed the public debt (which isn't the entire debt) soaring from $11 trillion that year to nearly $19 trillion by 2021, driven by year-after-year deficits.
Yet Lew, appearing at a Senate hearing, tried to justify the claim that the government was not adding to the debt. He said the administration was merely referring to "primary balance" -- or federal spending that does not count interest payments.
He repeated the claim before the Senate. "Our spending will not add to the debt," Lew said. "It's an accurate statement."
But since interest payments are in fact a gigantic part of federal spending every year, Republican senators slammed Lew as "dishonest" for the claim. The website PolitiFact also rated the statement "false" at the time.
The White House later clarified that the debt would not increase as a share of the economy.
Sessions, though, said Lew's comments stand as "the most direct and important false assertion during my entire time in Washington."
He said the next Treasury secretary must be able to "look the American people in the eye and lay out an economic plan for America that will end our debt." Sessions continued: "Jack Lew is not that man."
Other Republican senators said they would reserve judgment on Lew.
"It's imperative that Mr. Lew outline the administration's plans on tackling our unsustainable debt, what areas of federal spending should be cut, and what kind of reforms -- from our tax code to our entitlement programs -- are needed to get our fiscal house in order," Sen. Orrin Hatch, R-Utah, top Republican on the finance committee, said. He said he wants to hear more before deciding whether to support Lew.
Lew would not come into the job with the same type of financial experience as Geithner, who previously headed the New York branch of the Federal Reserve and in that role played a major role in addressing the 2008 financial crisis.
Before becoming Obama's chief of staff, Lew was director of the Office of Management and Budget, a post he also held in the Clinton administration, serving from 1998 to early 2001. While running OMB during the Clinton administration, Lew helped negotiate a balanced budget agreement with Congress, something that has eluded Washington ever since.
On Wall Street, Lew also was managing director and chief operating officer of Citi Global Wealth Management and then Citi Alternative Investments. At the start of the Obama administration, he oversaw international economic issues at the State Department.
A White House official said Lew would bring an "impressive record of service in both the public and private sectors for over three decades and economic expertise" to the job.
"His deep knowledge of domestic and international economic issues will enable him to take on the challenges facing our economy at home and abroad on day one," the official said.
Lew could be seen by some Republicans as a political figure. He clashed repeatedly with the other side of the aisle during the debt-ceiling fight of 2011.
Lew has often been described as a "pragmatic liberal" who understands what it takes to make a deal even as he stands by his ideological views.
"He's a political guy. He didn't get where he is today by being a shrinking violet," said Paul Light, a public policy professor at New York University and an acquaintance. "But he's really a doer. He's the kind of guy you want at the table if you want to get something done."
If confirmed, Lew would assume the post in time for the administration to battle anew with Republicans over three looming fiscal deadlines -- raising the $16.4 trillion federal borrowing limit, averting automatic spending cuts to defense and domestic programs and the expiration of a congressional resolution that has been keeping the government operating. Those events, if unresolved, would have a far greater negative effect on the economy than the "fiscal cliff" that Obama and Congress avoided a week ago.
Internationally, the 57-year-old Lew also will be the administration's point man on issues related to China's integration into the global economy and Europe's sovereign debt and financial struggles. The issues aren't foreign to Lew. While a deputy secretary of state early in the Obama administration, Lew managed the State Department's international economic policy portfolio.
On Thursday, Obama also gave Geithner a send-off at the White House. "When the history books are written, Tim Geithner's going to go down as one of our finest secretaries of Treasury," he said.
The Associated Press contributed to this report.