Lew Nominated to Become Next Treasury Secretary
Jacob “Jack” Lew, the current White House Chief of Staff, was nominated last week by President Obama to replace Tim Geithner as Secretary of the Treasury. Lew, who was deeply involved in the negotiations with Congressional Republicans over the debt limit increase in the summer of 2011, has extensive experience on budget matters, having served as Director of the Office of Management and Budget under both President Bill Clinton and under Barack Obama. Unlike Geithner, however, he does not have experience in Wall Street banking and finance, raising concerns among some in the financial sector that he lacks the background need to implement many of the financial reforms promulgated by Congress since 2008. Despite this lack of Wall Street experience, Lew is expected to be confirmed by the Senate Budget Committee.
The appointment of Lew, who has had a strained relationship with congressional Republicans as a result of the contentious debt negotiations, could complicate Senate and House attempts to pursue comprehensive tax reform legislation in 2013. Tax reform is perceived as a goal that will be difficult to accomplish and achievable only with strong leadership from the White House, particularly in the wake of the recently-passed fiscal cliff legislation which raised tax rates on upper-income taxpayers and made permanent the Bush tax cuts. Both Senate Finance Committee Chairman Max Baucus, a Democrat, and House Ways and Means Chairman Dave Camp, a Republican, have both vowed to work together to simplify the tax code by closing loopholes, eliminating many deductions, and lowering rates, including corporate tax rates. However, an important goal of the Obama Administration is to reform the tax code so as to raise additional revenue in order to improve the nation’s long-term fiscal condition.