The next Administration, whoever it may be, will feature a new direction on policies around economic and finance issues. That’s because, even if Barack Obama wins re-election, Treasury Secretary Timothy Geithner has announced that he would leave his post. So you either get a Romney Presidency and an entirely new direction on these policies, or a second Obama term and a potential new direction. With fiscal issues sure to take prominence in 2013, this is a critical changeover.
So who’s on the Washington short list? The Wall Street Journal takes a look at it today. First let’s go down the Romney list.
Among the Republican’s possible candidates to lead the Treasury are Columbia University Graduate School of Business Dean Glenn Hubbard, former World Bank President Robert Zoellick and executives from the business world, such as CIT Group Inc. Chief Executive John Thain and former Wells Fargo & Co. CEO Richard Kovacevich, say people who have spoken to Romney advisers.
So George W. Bush’s former head of the Council of Economic Advisers, a World Bank President and two ex-bank CEOs. The inclusion of Thain on this list is almost incredible; he not only sought a $10 million bonus at the time of the financial crisis, he not only worried more about his compensation getting cut than anything else during the crisis, he also took that time to redecorate his office for $1.2 million.
But if I had to choose between Zoellick, at least, and some of the folks Obama has in mind, it’d be a toss-up:
The two people most frequently mentioned by current and former administration officials as likely successors to Treasury Secretary Timothy Geithner, who wants to leave the post, are White House Chief of Staff Jacob Lew and Clinton administration Chief of Staff Erskine Bowles.
Both are steeped in the minutia of the federal budget and have worked extensively on tax and spending negotiations with Republicans. Mr. Lew served as White House budget director in the Clinton and Obama administrations. Mr. Bowles was co-chief of the White House’s 2010 deficit-reduction commission, which won bipartisan support for a plan to reduce the budget gap by roughly $4 trillion over 10 years.
Gene Sperling, current head of the NEC, gets mentioned, along with current Treasury undersecretaries Neal Wolin and Lael Brainard and a couple financial types thrown in for good measure (Lawrence Fink of BlackRock and Roger Altman of Evercore). Obama is also looking at former DLC chief Bruce Reed to run the Office of Management and Budget. Reed was the executive director of the catfood commission run by Bowles and Alan Simpson.
I think there’s a pretty clear set of evidence in these names about the intended focus of the White House on these matters, should they remain in power. It won’t be about bank profits, at least not directly, or about how to implement financial regulation that properly assesses risk on Wall Street. Bowles and Lew have financial industry pedigrees but in more of a cashing-in-on-a-payday kind of way. No, they would be put in place for the grand bargain. Lew was the lead negotiator in 2011 on the debt limit package. Bowles, well, we know of Erskine Bowles. And the others mentioned with a legitimate chance would all have experience in this sort of dealmaking.
Not that any of this comes as a surprise: I noticed the trial balloon of Bowles-to-Treasury a couple months ago. The President’s ads, and his list of campaign promises, always make a point of mentioning “responsible and balanced $4 trillion in deficit reduction.”
Not that the guy who would redecorate his office for $1.2 million looks much better, but hey, at least he would stimulate the interior design economy.