Four weeks before the deadline for America defaulting on its debt, Treasury Secretary Timothy Geithner got the sort of kick from behind that makes Washington’s rough-and-tumble politics famous.With Geithner about to go on stage with former President Bill Clinton at a prominent ideas festival Thursday, Blackberrys across Washington were ringing with news that the treasury secretary was thinking of stepping down.
Geithner had been the Obama administration’s senior bad cop in the effort to pressure congressional Republicans to negotiate a debt ceiling deal before a government default on Aug. 2. News of an impending departure not only would put talks back on ice; suggestions that there would be a shake-up at Treasury would rattle Wall Street, quashing consumer confidence and jeopardizing the U.S. recovery.
No one seemed more surprised than Geithner himself about the news. He gave the sort of non-denial denial mastered by politicians, “I live for this work,” he said, vowing that he was committed to staying in the job for “the foreseeable future.” That’s a pretty squishy timetable.
The fact that Geithner’s private conversations with the president had leaked out left an unmistakable message that some in the White House are ready for Geithner to leave.
The primary reason is that it allows Obama to remake his economic policy heading into 2012 with all fresh faces. Geithner is the last holdout from the president’s original team that had been unable to substantially lower unemployment, which hovers just above 9 percent.
The list of suspects for the leak was as wide as the media speculation about it. In the end, the who doesn’t matter as much as the fact that it happened.
Given chatter about Geithner’s eventual plans to leave, the leak effort may well have been orchestrated to speed the shake-up process so a replacement can be confirmed before Washington turns hyper-partisan in the runup to the 2012 election.
Administration officials, speaking on the condition of anonymity, mentioned some friction Geithner has had with some senior officials. With the economy in freefall when Obama took office in 2009, economic advisers were unanimous that some quick and massive action was vital. But several months later, when the turbulence began to ebb, lines developed that divided Obama’s team. Some thought more stimulus was needed to maintain stability and create more growth, but Peter Orzag, former head of the Office of Management and Budget, and Geithner urged the president to get serious on deficit issues.
Obama spent another year talking about industry incentives and debating the Bush tax cuts, before turning seriously to the debt and deficit in early 2011.
But as part of the original team that crafted the stimulus, Geithner has been the occasional lightning rod for the White House, facing harsh questioning whenever testifying on Capitol Hill. Eleven months after taking office, he was asked by Rep. Kevin Brady to resign, with Brady citing what he called a lack public confidence in the administration’s economic policies.The usually soft-spoken Treasury chief fought back. “Almost nothing with what you said gives a fair and accurate perception of where this economy is today,” he told the conservative lawmaker. The implication from Republicans seemed to be that regardless of his personal economic advice for the president, Geithner had become one of many symbols of Obama’s large and controversial stimulus.
As the last of Obama's original cadre of economic advisers still standing—Orzag, Austan Goolsbee, Christina Romer and Larry Summers have all gone back to industry or academia—Geithner is seen by some in the White House as perhaps having reached a point of exhaustion from overseeing the U.S. Treasury during a period of such upheaval.
Yet it’s hard to imagine Obama being on board with such thinking. At his East Room press conference last week, Obama ratcheted up the pressure on Congress to complete a deal for raising the debt limit before the 11th hour—a deal for which Geithner has laid the primary groundwork.
“What Tim Geithner has said is, technically speaking, we’re in a position now where we’re having to do a whole bunch of things to make sure that our bills are paid,” Obama said.
For Obama, one of those things, at least until a deal is secured, is to make sure Tim Geithner stays exactly where he is.