The Jack Lew You Don’t Know

A budget warrior with a brief tenure on Wall Street | “Once the business community gets to know him, they will like him”

Peter Coy, with Julianna Goldman and Joshua Green

Lew, expected to succeed Geithner, worked for House Speaker Tip O’Neill and later was budget director for Presidents Clinton and Obama | Geithner worked on international financial crises in an earlier Treasury stint and then was president of the Federal Reserve Bank of New York


Jack Lew, who’s tipped to be the next treasury secretary, is every bit the budget wonk that conventional wisdom says he is. What’s less known about the 57-year-old Mister Inside is that he’s played Mister Outside as well. He spent the first two years of the Obama administration at the State Department in a desk job that nonetheless took him as far afield as Afghanistan’s remote Khyber Pass. He’s passingly familiar with the canyons of Wall Street, too. In 2008, the year before joining State, he earned about $2 million as the chief operating officer for Citigroup’s alternative investments unit.

Timothy Geithner had far more experience in foreign affairs and finance when he took office than Lew does now, but that didn’t prevent the occasional faux pas. In congressional testimony in early 2009, Geithner garbled the explanation of the administration’s financial-crisis response so badly that Representative Connie Mack (R-Fla.) urged him to resign “for the good of the country.” In Poland in 2011, Geithner annoyed a group of European finance ministers by offering unsolicited advice about the unfolding debt crisis. Jean-Claude Juncker, the group’s president, said, “we are not discussing” such matters “with a nonmember of the euro area.”

As a fresh face, Lew has the opportunity to improve relations with Europe, says Thomas Kleine-Brockhoff, a senior fellow at the German Marshall Fund. “We have a new day here. There’s a history that the new treasury secretary can leave behind.”

White House chief of staff since last January, he’s served as budget director for both Bill Clinton and Barack Obama. That gives him unrivaled expertise in budget battles with Congress. It also means he’s had time to develop enemies. House Republican aides say that during the debt limit talks, Lew was more interested in explaining to his opponents why they were wrong than in negotiating. House Speaker John Boehner and Majority Leader Eric Cantor even asked to negotiate instead with National Economic Council Director Gene Sperling or Geithner. “If they could get away with it, they’d make Jack Lew a persona non grata on Capitol Hill,” Jim Manley, a former aide to Senate Majority Leader Harry Reid, says of the Republicans. Lew’s friends see his relentlessness as a good thing. “There’s a quiet ferocity to him,” says White House Senior Adviser David Plouffe. “He knows this inside and out.”

Lew, a graduate of Harvard University and Georgetown University Law Center, spent his early Washington career as an aide to House Speaker Tip O’Neill. He bounced in and out of jobs in Washington, depending on which party was in the White House. In 2011, as budget director, he angrily rejected attempts by Senate Republicans to include Medicaid in the automatic spending cuts that would be triggered if lawmakers failed to reach a broader deficit reduction measure in the coming year. As an Orthodox Jew, Lew doesn’t work on the Sabbath, which stretches from sundown Friday to sundown Saturday. That would seem to complicate the life of a high-ranking public official, though Lew has managed it so far.

The biggest unknown is whether the qualities that served Lew well as a right-hand man will work for him on the world stage. “As chief of staff you are staff, and as treasury secretary, you are principal — Jack has to make that transition,” says Ken Duberstein, a chief of staff to former President Ronald Reagan who met Lew in the 1980s.

Loews Chief Executive Officer James Tisch thinks Lew can connect with business leaders. “The business community doesn’t know him too well. My guess also is that once the business community gets to know him, they will like him. He is very fair-minded, open, accessible, knowledgeable of how the government works and how it’s financed, which is really, really important.”

Lew’s mastery of budgetary matters may play well abroad, too, since other leaders would rather see the world’s largest economy get its own act together than have it lecture them on theirs. “A major fiscal contraction or accident would have economic repercussions for the rest of the world,” says Guntram Wolff, deputy director of Bruegel, a Brussels-based think tank. In an era of Beltway bitterness, the consummate insider may find life easier on the outside.

The bottom line The budgetary smarts of Jack Lew, the likely next treasury secretary, may serve him well in global financial negotiations.


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