HONG KONG – Washington and Wall Street’s chattering classes are excited about a squiggle or doodle that consists of a series of nine linked loops. Some experts have compared it to scribbling by a not very bright bored child, others to a practice session by the machine that decorates Hostess cupcakes, and yet others have said it looks like curly fries that took a curl too far.
The nine loops, medium-sized at the start, diminishing for five loops, then increasing again for the last three, ending with a final throw like a discarded rope comprise a signature that could soon become one of the most sought-after pieces of art in the world. The loopy loops are the signature of Jacob Joseph Lew, former chief of staff to President Barack Obama, whom Obama nominated to take over as his Treasury secretary from Timothy Geithner. The Senate confirmed Lew for the position on Feb. 27.
The Treasury secretary’s signature is on every U.S. dollar bill. It is perhaps unfortunate, but typical of the preoccupations of the modern media, that the signature is distracting attention from the really important question — what will he bring to the job?
It is easy to see why Obama picked Jack (as he is normally called) Lew. In looks and manner, said one commentator, it is “as if Harry Potter grew up and replaced his magic wand with Excel spreadsheets.”
This fails to give Lew sufficient credit for his fierce intellect, his sharply honed political infighting skills and his mastery of the dark details of budgets. Lew’s educational and intellectual pedigree are excellent. He graduated from Harvard, and obtained a law degree from Georgetown University Law Center. He cut his political teeth working as senior adviser to Thomas P. “Tip” O’Neill, the legendary speaker of the House of Representatives.
He immersed himself in the details of social security, Medicare, the budget, appropriations, trade issues, which was to stand him in good stead for later jobs in the Clinton administration in the Office of Management and Budget and under Barack Obama where he was successively director of the OMB, then deputy secretary of state for management and resources before he took over as Obama’s chief of staff from the more public William Daley.
He has won a reputation as unflappable, although it is harder to judge him than his more flamboyant predecessors Daley and the tough talking, tough cursing Rahm Emanuel (now mayor of Chicago) simply because Lew is a more private person.
The job of chief of staff has been variously described as “the power behind the throne”, “the gatekeeper” and “the co-president.” Obama evidently trusts him. The president said when announcing Lew as his choice to succeed Geithner, “Over the past year, I’ve sought Jack’s advice on virtually every decision that I’ve made, from economic policy to foreign policy.” Indeed, one political commentator described Lew as “Obama’s most skillful consigliere in matters of political trench warfare.”
Lew has been heavily involved in the discussions on budget and fiscal matters, where his mastery of the nitty-gritty details makes him a tough negotiator and a difficult opponent.
John Boehner, the Republican speaker of the House, complained bitterly that, “Jack Lew said no 999,000 times out of a million.” Then he corrected himself, “999,999. At one point, I told the president. Keep him out of here. I don’t need somebody who just knows how to say ‘No.'”
For his part, Lew complains witheringly that Boehner is “impatient with details.”
These stories, reported by Bob Woodward, do raise crucial questions about the still immense potential for damage to the United States because of political dog fighting in Congress between Obama and Republicans. They also encourage skeptics to ask whether Lew’s ability to discern the leaves, twigs and branches of intricate policy details may lead him to miss the trees, let alone the forest. A vital job of the Treasury secretary is to preside over and promote the U.S. economy, which by any measure has been underperforming.
Unemployment is still at 7.8 percent, and the best guesses of economists are that it may fall to 7.5 percent by yearend with growth of about 1.7 percent, even if Obama and his opponents manage to reach agreement on the fiscal cliff and the debt ceiling. In these circumstances there are pertinent questions as to whether Lew can bolster confidence with a coordinated economic and fiscal plan to get the economy moving. In previous recoveries, the U.S. has grown at 4.6 percent a year on average; this time it is an anemic 2 percent.
The Treasury secretary is also responsible for the financial system, and critics, mainly but not all on the left, complain that Lew is a Rubinite who will pander to Wall Street and the so-called too-big-to-fail banks. “Rubinite” refers to Robert Rubin, Treasury secretary under Bill Clinton and principal author of the demise of the Glass-Steagall act, which allowed creation of the megabanks and prepared for the 2008 (and current) financial crisis.
Rubin’s acolytes included his successors Larry Summers and Geithner. Recent release of Geithner’s telephone records showed that Larry Fink of BlackRock was the person whom he called most frequently, followed by Rubin.
Evidence that Lew is a fully paid Rubinite is thin, though he did do an 18-month stint at Citigroup to which Rubin went after the Treasury. But critics are on firmer ground when they say that Lew is unlikely to do much radically to reform Wall Street.
That is because Obama himself seems to have ruled out radical financial reform. He has too much on his plate and thinks that Geithner has done a good job. Critics contend that this is dangerous complacency. Banks today are bigger and more opaque than in 2008 and the world may again be heading for a new round of financial crisis. It is not merely that the banks are too big to fail. But they have become too complex to manage. But Obama does not want to know and Lew is unlikely to challenge his master.
There is still the outstanding question as to whether the loopy signature will grace all U.S. banknotes. Obama himself says that the signature may change: “Jack assures me that he will work hard to make at least one letter legible so as not to debase our currency.”
Kevin Rafferty is the editor in chief of Plainwords Media.