Thanks, but (probably) no thanks.
That’s the word coming from the White House to a suggestion made by Erskine Bowles that he serve as a “special negotiator” during the talks between the Obama Administration and Congressional Republicans over how to avoid the so-called fiscal cliff, the automatic spending cuts and tax increases set to go into effect at year’s end and that many economists believe will lead to a double-dip recession.
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Bowles, a former Wall Street banker, Democratic Senator and most recently co-author of the Simpson-Bowles deficit reduction plan, had been considered a possible choice to succeed Tim Geithner as Treasury Secretary. He also founded the Campaign to Fix the Debt, a private-sector initiative to force lawmakers to deal with the debt crisis.
But the White House sees Bowles as being too moderate on budget matters. Not only is the White House leery about involving him in the fiscal-cliff talks, but people close to the administration say President Obama has all but ruled out appointing Bowles Treasury Secretary, and is leaning toward naming his chief of staff, Jack Lew, to the post.
Lew, a former budget director during the Clinton Administration and executive at Citigroup (NYSE:C), is considered a partisan liberal and his likely appointment suggests that President Obama will not compromise much from stated positions as part of any deal, including tax increases on families that earn more than $250,000 a year.
A spokesman for Bowles would neither confirm nor deny the matter, and the White House couldn’t immediately be reached for comment.
Geithner is expected to remain at Treasury until sometime in January, though Lew is expected to play a key role in the fiscal-cliff deliberations, these people say.
“It’s Lew’s job to lose,” said one person with knowledge of the matter. “If he does well during these discussions he will be Treasury Secretary.”
As an indication just how committed President Obama is to naming Lew as Geithner’s replacement, other potential candidates haven’t even been called by the White House as of this morning, these people add.
Lew’s task, these people say, will be to help ensure that the president’s priorities get advanced as part of the talks with Congress. They include tax increases, though the president has suggested he is willing to compromise on various matters.
Still, the hard-line approach by the White House raises the stakes that the fiscal cliff scenario is a possibility. The stock market has been rattled since the president won re-election last week, and bond prices have jumped—an indication that investors are looking for super-safe places to park their money as the fiscal-cliff worries escalate.
Having Bowles play a role in the talks would help calm the markets, many traders say, because he is considered someone who can deal with Republicans. He has made favorable remarks about the deficit cutting plan made by Rep. Paul Ryan, the Wisconsin Republican who served as Mitt Romney's vice presidential nominee.
But those comments also hurt his chances at being named Treasury Secretary during a second Obama term, according to people with knowledge of the matter.
On another front, several people with close ties to Wall Street are seeking senior jobs in the Obama Administration as it gears up for a second term. Former Bank of America (NYSE:BAC) chief Sallie Krawcheck has expressed her desire for a senior position at the Securities and Exchange Commission, including replacing Mary Schapiro as chairwoman. Schapiro is expected to step down shortly.
Krawcheck had no comment.
Also, former Morgan Stanley (NYSE:MS) executive and current undersecretary of state Tom Nides is eyeing Lew’s job as chief of staff if Lew, as expected, gets tapped to run Treasury.
As many as 11 chief executives of the country’s largest companies are scheduled to meet with President Obama on Wednesday to discuss a budget compromise that would help avoid the fiscal cliff.