The worst part of the Jack Lew nomination for treasury secretary is not simply that he has no qualifications, standing, or experience in the financial world or international sphere (think G20 and European debt crisis). Nor is it simply that he doesn’t have any seasoned currency opinions (under Obama, the greenback has dropped 10 percent while gold has doubled).
Yes, these are big disqualifiers. But the real problem is that Lew is a left-liberal Obama spear-carrier, whose very appointment signals a sharp confrontation with the Republican House over key issues such as the debt ceiling, the spending sequester, next year’s budgets, and taxes.
From all the way back when Lew was staff advisor to Tip O’Neill, he has been a man of the left. So as treasury secretary, I expect the former Obama budget director to push for trillions of dollars in new tax hikes, absolutely minimal spending restraint, and no serious entitlement reform.
Instead of being a fresh face who can generate a clean start for a new slate of fiscal compromises, Lew — who doesn’t play well with the other kids — is going to represent the same old Obama confrontation with the Republican House.
It didn’t have to be this way. As treasury secretary, Obama supporter Larry Fink of Blackrock would have tremendous support from the financial community in the effort to solve our fiscal imbalances. So would budget reformer Erskine Bowles. Or Amex CEO Kenneth Chenault. Or even the outspoken Democratic banker Jamie Dimon.
These are all men of experience, high standing, and respect within financial circles. Any one of them would have given Obama credibility and led us to serious talks about growing the economy and keeping us out of bankruptcy. Lew has none of their qualities.
And did I say Lew doesn’t play well with the other kids? He may have singlehandedly sabotaged the Boehner-Obama deficit talks in 2011. “Jack Lew said ‘no’ 999,000 times out of a million,” House Speaker John Boehner told author and reporter Bob Woodward. “At one point I told the president, ‘Keep him out of here.’” Many believe Lew was responsible for the last-minute, $400 billion tax hike that doomed the talks.
Because there are so many more Democrats than Republicans in the Senate, I have no doubt that Lew will be confirmed. But he’s going to take a lot of flak over his short experience on Wall Street, where he got a $1 million bonus for administering Citigroup’s proprietary trading operation. Oh, that came on top of his $1 million compensation. And there was the big money made by shorting the subprime mortgage market, all back in 2008, when Citigroup got a $47 billion taxpayer bailout.
Now, you know what? I have no problem with guys on Wall Street or anyplace else making good money. No problem at all. But here’s Lew’s problem: His boss, Barack Obama, keeps lashing out at fat-cat bankers who receive obscene bonuses. Which means, during the Senate hearings, Lew is going to be hoisted on Obama’s petard.
Lew is to the left of the departing Tim Geithner, just as Chuck Hagel is to the left of Leon Panetta, and John Kerry is to the left of Hillary Clinton. It gives you a sense of Obama’s second-term direction, which is likely to move toward high taxes at home and weak national security abroad.
Some highly placed senior Obama advisors are telling me that Jack Lew is really a fiscally conservative Democrat who will sell spending and entitlement reforms to all those liberals in the Senate. Look, I don’t even know the guy. None of my criticisms are personal. But I don’t see any evidence of this fiscal conservatism. And I sure don’t see an influential presence on the world stage to keep America front and center.
Jack Lew is no George Shultz, or William Simon, or Lloyd Bentsen, or Robert Rubin, or Hank Paulson. He is an insider, an Obama political operator, not an independent voice. This is degrading to one of the biggest jobs in the government.
For my Republican friends out there, here’s a piece of free advice: In the coming economic battles, stay away from debt-ceiling defaults and government shutdowns. Instead, keep a laser-like focus on implementing the $1.2 trillion sequester spending cuts, which would actually pay for last year’s debt-ceiling hike, and put together a tough-minded, cut, cap, and balance spending-cut package for the upcoming budget cycle.
As John Boehner told me a couple of years ago, his primary purpose is to “stop the bad stuff.” Please, Mr. Speaker, hold that thought.
Larry Kudlow is the host of CNBC’s “The Kudlow Report.”