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Obama’s Pick for Treasury Is Said to Be His Chief of Staff Obama’s Pick for Treasury Is Said to Be His Chief of Staff
(about 5 hours later)
WASHINGTON – President Obama will announce on Thursday that he intends to elevate his chief of staff and former budget director, Jacob J. Lew, to be his next secretary of Treasury, according to officials familiar with the decision. WASHINGTON — With his choice of Jacob J. Lew to be the secretary of Treasury, President Obama on Thursday will complete the transformation of his economic team from the big-name economists and financial firefighters hired four years ago to budget negotiators ready for the next fiscal fights in Congress.
If confirmed by the Senate, Mr. Lew, 57, would be Mr. Obama’s second Treasury secretary, replacing Timothy F. Geithner, the last remaining principal on Mr. Obama’s original economic team, at the head of that team. If confirmed by the Senate, the 57-year-old Mr. Lew — Mr. Obama’s current chief of staff and former budget director — would become the president’s second Treasury secretary, succeeding Timothy F. Geithner, who was the last remaining principal from the original economic team that took office at the height of the global crisis in January 2009.
While Mr. Lew has much less experience than Mr. Geithner in international economics and financial markets, he would come to the job with far more expertise in fiscal policy and in dealing with Congress than Mr. Geithner did when he became secretary at the start of Mr. Obama’s term. That shift in skills reflects the changed demands of the times, as emphasis has shifted from the global recession and financial crisis of the president’s first years to the continuing budget fights with Republicans in Congress to stabilize the growth of federal debt. While the team is changing, so far it is made up entirely of men who have been part of the administration since its first months. Gene B. Sperling, like Mr. Lew a veteran of the Clinton administration, is expected to remain as director of the White House National Economic Council. Alan B. Krueger, a former Treasury economist, continues as chairman of the Council of Economic Advisers and Jeffrey D. Zients, a former business executive, as acting director of the Office of Management and Budget.
The partisan tension over the budget between Mr. Obama and Republicans suggests that Mr. Lew will face a grilling by Senate Republicans in confirmation hearings. But despite weeks of speculation that Mr. Lew would be named Treasury secretary, Republicans have not signaled that they plan to mount the kind of opposition they raised to Mr. Obama’s potential nomination of Susan E. Rice, the ambassador to the United Nations, for secretary of state, and Chuck Hagel as secretary of defense; the president named Mr. Hagel on Monday, and eventually settled on Senator John F. Kerry, Democrat of Massachusetts, for secretary of state. That composition gives Mr. Obama a high degree of comfort with his economic advisers, who have experience in the budget struggles that have occupied the administration since Republicans took control of the House two years ago. Those struggles will resume later this month. Yet the continuity also plays into criticism that the president is too insular and insufficiently open to outside voices and fresh eyes in the White House.
Mr. Lew’s departure would create an important vacancy for what would be Mr. Obama’s fifth White House chief of staff, a turnover rate that is in contrast with the stability at Mr. Geithner’s Treasury. Leading candidates are said to include Denis McDonough, currently the deputy national security adviser in the White House; and Ron Klain, a former chief of staff to Vice President Joseph R. Biden Jr. Adding to a scarcity of female advisers among Mr. Obama’s top aides, Hilda L. Solis, the secretary of labor for four years, announced on Wednesday that she would be resigning, following the most prominent female Cabinet member, Secretary of State Hillary Rodham Clinton, out of the administration.
Mr. Lew had a brief turn in the financial industry before joining the Obama administration four years ago, working at the financial giant Citicorp, first as managing director of Citi Global Wealth Management and then as chief operating officer of Citigroup Alternative Investments. Separately, administration officials let it be known on Wednesday that several Cabinet members will remain in their jobs: Kathleen Sebelius, the secretary of health and human services, who is expected to stay through the full adoption of the 2010 health care law in 2014; Eric H. Holder Jr., the attorney general; and Eric K. Shinseki, the secretary of veterans affairs.
His first job with Mr. Obama was at the State Department, where Mr. Lew was the deputy secretary responsible for managing day-to-day operations of the department and its international economic policy. Secretary of State Hillary Rodham Clinton protested to Mr. Obama when the president in 2010 tapped Mr. Lew to replace Peter R. Orszag as budget director. If Mr. Lew is confirmed in time, his first test as Treasury secretary could come as soon as next month, when the administration and Congressional Republicans are expected to face off over increasing the nation’s debt ceiling, which is the legal limit on the amount that the government can borrow. Mr. Obama has said he will not negotiate over raising that limit, which was often lifted routinely in the past, but Republican leaders have said they will refuse to support an increase unless he agrees to an equal amount of spending cuts, particularly to entitlement programs like Medicare and Social Security.
It was Mr. Lew’s second stint heading the Office of Management and Budget. He previously served in President Bill Clinton’s second term, helping to negotiate a bipartisan budget deal with Congressional Republicans that led to four years of budget surpluses. In the 1980s, Mr. Lew was a senior aide to House Speaker Thomas P. O’Neill, a Democrat, also advising in budget negotiations with President Ronald Reagan. Mr. Lew was passed over for Mr. Obama’s economic team four years ago, when Mr. Obama instead chose Lawrence H. Summers, a former Harvard University president and Treasury secretary, as director of the National Economic Council. Mrs. Clinton then hired Mr. Lew at the State Department, and in late 2010 — over the objections of Mrs. Clinton, who had come to rely on Mr. Lew — Mr. Obama made him budget director, the same post Mr. Lew had held late in the Clinton administration.
He has been deeply involved in the deficit negotiations over the last two years. And, if he were quickly confirmed, as Treasury secretary his first test could come as soon as next month, when analysts expect a fight over raising the debt ceiling, which is the legal limit on the amount that the government can borrow. Mr. Lew in the 1980s was a Democratic adviser to the House speaker then, Thomas P. O’Neill, participating in fiscal talks with the Reagan administration. Mr. Lew is known for his low-key style and organizational skills.
Republican leaders have said they would refuse to raise the ceiling unless Mr. Obama agrees to equal spending cuts, particularly in entitlement programs like Medicare and Social Security. Mr. Obama has said that he will not negotiate over the ceiling, with the country’s full faith and credit at stake. While Mr. Lew has much less experience than Mr. Geithner in international economics and financial markets, he would come to the job with far more expertise in fiscal policy than Mr. Geithner did. That shift in skills reflects the changed times, when emphasis has shifted from a global financial crisis to the budget fights with Republicans in Congress.
With battle lines already drawn, the country is expected to run out of room under the ceiling sometime between mid-February and March. At that point, Congress would need to raise the borrowing limit, or the country would start defaulting on obligated payments, like those promised to seniors, doctors, contractors and bondholders. The partisan tension suggests that Mr. Lew will be questioned closely by Senate Republicans in confirmation hearings.
Mr. Lew’s role as an Obama negotiator in 2011 did not endear him to Republicans, in particular House Speaker John A. Boehner, and he took a lower-profile role in the most recent negotiations at year-end. The White House was eager to avoid controversy given the likelihood of Mr. Lew’s nomination to Treasury. Instead Mr. Geithner and Rob Nabors, the director of legislative affairs, were lead negotiators. But, Republicans have not signaled the kind of opposition they put up to some of Mr. Obama’s other potential nominations.
Mr. Lew, a native of New York, is known for his low-key, professorial style and organizational skills. While he was a favorite of Mr. Obama and other staff members as chief of staff, Mr. Lew made it known that he did not want to continue in that post for a second term. Mr. Lew’s departure as chief of staff would create a vacancy for what would be Mr. Obama’s fifth White House chief of staff, a turnover rate that is in contrast with the stability atop Treasury the last four years with Mr. Geithner. The leading candidates are said to be Denis McDonough, currently the deputy national security adviser in the White House, and Ronald A. Klain, a former chief of staff to two vice presidents, Joseph R. Biden Jr. and Al Gore.
Before joining the Obama administration, Mr. Lew spent a brief period in the financial sector, at Citigroup, first as managing director of Citi Global Wealth Management and then as chief operating officer of Citigroup Alternative Investments.
By contrast, Mr. Geithner had been president of the New York Federal Reserve Bank, which includes overseeing Wall Street. For the financial industry, Mr. Lew is a largely a blank slate.
“While he can undoubtedly learn the material on the job, we question whether he has sufficient relationships with the banking industry in the U.S. and abroad, which can be critical during a financial crisis,” Brian Gardner, head of Washington research for the investment banking firm Keefe, Bruyette & Woods, wrote to clients on Wednesday.
But Michael Schein, who worked with Mr. Lew at Citigroup and is now head of a nonprofit financial services organization, Accion, countered: “People in the business community like to deal with people in Washington who they can trust. I think Jack already does, and will do, very well with Wall Street and with business leaders because he is a very, very straight shooter.”
Mr. Lew has a reputation as a fiscal progressive who, like Mr. Obama, is eager to protect Medicaid and other antipoverty programs from deep cuts. But advocates for tighter financial regulation of Wall Street question whether he is too conservative.
The question is relevant because major regulations under the 2010 Dodd-Frank law remain to be put into effect in Mr. Obama’s second term.
“He appears to share a Wall Street mentality, particularly when it comes to financial reform,” said Dennis M. Kelleher, the president of Better Markets, a Washington-based nonprofit. “Financial reform is all about making the banking system safer and preventing more taxpayer bailouts.”  

Annie Lowrey contributed reporting.