by Xinhua writer Jiang Xufeng
WASHINGTON, Jan. 10 (Xinhua) -- U.S. President Barack Obama on Thursday tapped White House Chief of Staff Jacob Lew, a government budget veteran, as the next Treasury Secretary in a big step of shaping the presidential economic team for his second term.
If confirmed by the Senate, Lew will replace the incumbent Treasury Secretary Timothy Geithner, the last remaining major economic aide from Obama's original economic team four years ago.
Lew, a 57-year-old budget expert, served as the director of the Office of Management and Budget (OMB) in President Bill Clinton's cabinet from 1998 to 2001. During his tenure at the OMB, he helped the federal government achieve budget surpluses for three consecutive years.
Lew served in the Obama administration first as deputy Secretary of State from 2009 to 2010 and then as the OMB director from November 2010 to January 2012. He served as White House Chief of Staff from January 2012 to present, playing a key role in striking various bipartisan fiscal deals.
As a congressional Democratic adviser in the 1980s, Lew helped negotiate the deal between President Reagan and U.S. House Speaker Tip O' Neill to save the government-run Social Security program. Under President Clinton, Lew presided over three budget surpluses in a row, for which, Obama heaped praises over him during a White House nomination event.
Entitlement programs including the Social Security have become the primary driver of U.S. government deficit, while a budget surplus has eluded the United States for more than a decade.
Analysts believed that Lew brought with him a different set of skills to the post compared with Geithner, who used to serve as president of the Federal Reserve of New York and a senior official at the International Monetary Fund (IMF). Lew has less experience in international economics and financial markets but more expertise in fiscal policy than Geithner.
Obama's selection of Lew has sent a clear message of his second- term agenda and symbolically hit the start button on a new showdown between Democrats and Republicans over how to rein in the government deficit.
Over the years, Lew has built a reputation as a master of policy who can work with members of both parties and forge principled compromises, Obama stressed.
If Lew is confirmed by the Senate in time, his first test will be negotiations with Republicans to raise the nation's debt ceiling and avert another fiscal showdown that could lead to the shutdown of U.S. federal government.
The United States federal government has reached its debt limit of 16.4 trillion U.S. dollars on Dec. 31, 2012, which is the legal amount the federal government allowed to borrow. The Treasury Department is taking some extraordinary measures to temporarily postpone a disastrous default on its legal obligations.
The nomination of Lew to head the Treasury was symbolic of the shift of economic priorities of the Obama administration from tackling the financial crisis to resolving the mounting fiscal challenge, said William Cline, a senior fellow at Washington-based Peterson Institute for International Economics, in an interview.
If confirmed by the upper chamber of U.S. Congress as the 76th U.S. Treasury Secretary, Lew should push forward the rule-making process set out in the 2010 Dodd-Frank financial regulation reform, since U.S. Treasury Secretary chairs the Financial Stability Oversight Council (FSOC), an intra-government policy-setting group created by the Dodd-Frank overhaul.
Moreover, the nation's obsolete tax system badly needs a reform to make it fairer and more efficient. The tax code reform is critical to attract manufacturing jobs and investment back to the United States, but is also a flash point between Democrats and Republicans.
He is the "right person" for adopting the long-term fiscal reform for the United States, commented Cline, also a former senior official at U.S. Treasury Department.
Due to the ballooning entitlement spending, waning government revenue and massive spending on wars in Iraq and Afghanistan, U.S. federal government's deficit has surpassed 1 trillion U.S. dollars for four consecutive years under Obama's watch.
Obamacare and Dodd-Frank are the flagship reforms in Obama's first term, while resolving the nation's long-term fiscal challenges may be the principal policy heritage in Obama's second term, experts predicted.
If confirmed as Treasury Secretary, Lew's role as Obama's strategist may continue in the efforts of curbing entitlement spending increase and putting the nation's fiscal house in order, a tough mission even for a budget old hand like Lew, given the divisive state of Beltway politics today.