Geithner’s absence from looming fiscal fight robs Obama of valued ally

President Obama is walking into crucial battles over the debt ceiling and government spending for the first time without Timothy Geithner at his side, leaving him without a partner lauded for his ability to highlight the economic dangers posed by Washington gridlock.   

{mosads}The former Treasury secretary was Obama’s right-hand man for past fiscal battles, and the president relied on the former head of the New York Federal Reserve to speak with authority about financial markets and the economy.

Replacing him at the fiscal forefront is current Treasury Secretary Jack Lew, another Obama confidante, but one that comes with a different set of skills.

Geithner spent years as a financial regulator and economist before joining Obama’s team, and his experience gave him the ability to explain — to the public and lawmakers — precisely how failures in Washington could end up a disaster, both for financial markets and the broader economy.

“Tim had the ability to talk about market reaction … with more texture and specificity,” said one senior financial industry executive. “He would probably be able to put a finer point on how markets would react and the sort of economic turmoil associated with debt default.”

“There’s no question he’s a stronger voice on the market impact than Jack Lew,” said Tony Fratto, a former Treasury official and spokesman under President George W. Bush. “I don’t think there’s any question they leaned on Geithner and valued him greatly.”

One need look no further than Geithner’s efforts to extract himself from the Obama administration to see how much the president valued him.

Rumblings about Geithner wanting to leave first began in the summer of 2011, as he wanted to rejoin his family in New York. The president asked him to stay on, and Geithner didn’t actually leave until shortly after the president was sworn in for his second term in January, a year and a half later.

“I think if the president could have had his way, he would have preferred Tim Geithner as Treasury secretary all eight years of his administration,” Fratto said.

Lew put in a stint at Citigroup in an administrative role between the Clinton and Obama administrations, but lacks Geithner’s experience on Wall Street.

Much of the fall’s fight will remain within Congress, with the White House already staking out a position of refusing to negotiate over raising the debt limit. 

Speaker John Boehner (R-Ohio) is demanding an equal amount of spending cuts to a borrowing boost.

But if the White House does come to the table to talk, they will bring a Treasury secretary more familiar with such haggling. 

Lew has negotiated in service of Presidents Clinton and Obama, but he also carries more baggage with GOP negotiators.

As Obama’s budget director during 2011 budget talks, Lew exasperated Boehner’s staff enough that he asked Obama to send Geithner and then White House chief of staff William Daley to meetings instead of Lew.

According to Republicans, things didn’t improve during 2012 talks on the “fiscal cliff,” when Lew served as Obama’s chief of staff.

“In our experience, Secretary Geithner was focused on finding ways to bridge the divide between two positions,” said one House GOP leadership aide. “Mr. Lew tends only to find more words to tell you why his position is the right one.”

There have been signs that Lew’s frosty relationship with the GOP is thawing.

Lew met with Republican senators after his nomination to Treasury, an effort that helped ease his confirmation in a 71-26 vote. He was buoyed by support from several Republicans, including Sen. Orrin Hatch (R-Utah), the ranking member of the Senate Finance Committee.

But it is clear the relationship remains prickly. A spokesperson for Hatch said Lew’s effort to win over Republicans dried up after his February confirmation, calling it a “tremendous disappointment.”

Of course, Lew brings his own skill set to the Treasury’s top spot.

He showed in past budget talks that he can be a bulldog negotiator who will fight for Democratic principles. In fact, that’s what rubbed Boehner and other Republicans the wrong way in 2011.

While liberal Democrats were always somewhat suspicious of Geithner, they don’t feel the same way about Lew.

Jim Manley, a former spokesman for Senate Majority Leader Harry Reid (D-Nev.), said Republicans are going to have to get used to Lew.

“If they’re all bent out of shape because Jack was a strong defender of domestic spending programs, well, too damn bad,” Manley said.

Lew is also more of a politician than Geithner. He worked with the GOP on budget deals in the 1990s for the Clinton administration and understands the art of cutting a deal.

“I think his views will be sought aggressively, and I think they will be listened to carefully by the president,” said Steve Bell, a longtime Republican staffer on the Senate Budget Committee who now works at the Bipartisan Policy Center. “That level of political nuance was not one of the reasons the president listened to Geithner.”

Bill Hoagland, a former GOP budget staffer now at the Bipartisan Policy Center who has previously haggled with Lew under President Clinton, said he is the “perfect person” to negotiate on behalf of the president.

“Yes, he is extremely knowledgeable and that may come across to some Republicans as, ‘It’s either my way or the highway,’” he said. “I always found Jack to be tough, but one that we could always find middle ground.”