The Treasury Department may be getting a new look … or two… or three.
Just weeks after (now) former Internal Revenue Service (IRS) Commissioner Doug Shulman announced his plans to step down, Secretary of the Treasury Timothy Geithner will also be departing. Since the IRS is a bureau under the Treasury, the Commissioner generally reports to the Secretary of the Treasury.
Geithner, who is neither Republican nor Democrat but a registered Independent, won the nomination after President Obama was elected in 2008, despite a controversy over his tax returns. Geithner failed to pay SE taxes (self-employment taxes) during his stint at the International Monetary Fund (IFM). Geither blamed it on his tax software, the so-called “Turbo Tax Defense.” He eventually repaid the tax but the controversy spurred decisions about the complexity of the Tax Code, with Sen. Tom Harkin (D-IA) wondering publicly, “How can Mr. Geithner speak with any credibility or authority?”
Geithner was nonetheless confirmed by Congress in 2009 with a bipartisan vote of support; the final count was 60-34.
President Obama hopes to repeat that success with his latest pick, Jacob Lew. Lew is the former budget director for President Obama and former President Bill Clinton.
Lew’s nomination will face a bit of an uphill battle since among his most vocal opposition is House Speaker John A. Boehner (R-OH). However, Lew is not otherwise publicly disliked on the Hill except by Rep. Jeff Sessions (R-AL) who has stated emphatically, “Jack Lew must never be Secretary of Treasury.”
Lew received his undergraduate degree from Harvard University and his law school from Georgetown University. As an attorney, Lew didn’t focus on finance, instead working at Van Ness, Feldman and Curtis in utilities. However, Lew became increasingly numbers focused, serving as the Associate Director for Legislative Affairs and Deputy Director of the Office of Management and Budget and later, the managing director of Citi Global Wealth Management and chief operating officer Citigroup Alternative Investments. For his work at Citi, Lew was reportedly paid $1 million and was eligible for a bonus though his division – a high-risk group that made money betting against the housing market – took heavy losses. His stint at Citi, one of the banks which did accept Troubled Asset Relief Program (TARP) money, is sure to be a hot topic at Lew’s confirmation hearing.
Also slated to leave the Treasury this year? Deputy Treasury Secretary Neal Wolin. Wolin, an attorney, previously served as Deputy General Counsel at Treasury under Secretary Robert Rubin and as General Counsel at Treasury under Secretary Lawrence Summers. Under Secretary Summers, Wolin received the Alexander Hamilton Award in 2001; the award is the highest honor given to a Treasury official. Wolin was reportedly Geithner’s pick for the Treasury Secretary position; his departure may signify his displeasure at being overlooked for the position. But – in a wild session of musical chairs – it is interesting to note that the highly regarded Wolin is available at the same time as the IRS Commissioner job remains vacant (Steven T. Miller is the Acting Commissioner and historically, Acting Commissioners don’t tend to be made permanent). Just saying.
The shake-up at the Treasury – while not completely unexpected since changes often surface following an election year – may signal that President Obama is changing his strategy with respect to the budget. The President has indicated all along that he supports efforts for a reformation of the Tax Code. Considering that, under his watch, Congress managed to shepherd through permanent income and estate tax rates (a move that surprised nearly everyone), we may be on our way to something bigger. Stay tuned.
