July 14, 2024

Geithner Staying (for Now)

Normally, that would not qualify as news. But Mr. Geithner’s comments came in a frenzied afternoon of speculation after news reports that he was considering leaving the Obama administration in the coming months, after a deal is reached with Congress to reduce the budget deficit.

Mr. Geithner’s comments, made at a conference in Chicago organized by former President Bill Clinton, were clearly intended to douse that speculation, underscoring how worried the White House is about the potentially destabilizing effect of his departure as it struggles with a fragile recovery and holds tough negotiations with Congress to avert a debt crisis.

“I live for this work, it’s the only work I’ve done, and I believe in it,” Mr. Geithner said in reply to a question from Mr. Clinton about his career plans. “I’m going to be doing it for the foreseeable future.”

Mr. Geithner, who turns 50 in August, said his son had decided to attend his final year of high school in New York, where Mr. Geithner previously lived, which meant that he would be commuting between Washington and New York for a while.

Earlier in the day, two administration officials familiar with Mr. Geithner’s thinking said family issues were weighing on him, as well as the recognition that there was a window of opportunity for him to leave after a debt deal was reached, but before the election year of 2012.

If Mr. Geithner does depart, he would be the last member of Mr. Obama’s economic brain trust to leave after two-and-a-half years of turmoil. In that time, the White House confronted a financial crisis, a historic recession, near double-digit unemployment and a recovery that has yet to gain traction.

Austan Goolsbee, one of Mr. Obama’s chief economic advisers, recently announced he would return to his teaching post at the University of Chicago. Lawrence H. Summers, a former Treasury secretary in the Clinton administration and a major Obama adviser, left late last year for Harvard, while Christina Romer, Mr. Obama’s first head of the Council of Economic Advisers, returned last summer to the University of California, Berkeley.

Of all these departures, Mr. Geithner’s would arguably have the greatest impact. He has become one of the president’s closest and most trusted counselors, attending his daily briefings and coordinating the White House’s strategy on crucial issues like financial reform and pressuring China on its currency.

Mr. Geithner’s influence within the administration has grown as other senior advisers have left, including some with whom he had clashed. He is perhaps now at the peak of his power, urging along the president’s gradual embrace of deficit reduction and heading the administration’s focus on foreign trade as an opportunity to accelerate growth at home.

Equally important is the credibility he enjoys on Wall Street, where he worked as president of the Federal Reserve Bank of New York before joining the Obama administration. Mr. Geithner is seen as deeply knowledgeable about the intricacies of modern finance and protective of the system’s health.

As Congress dallies over whether to raise the debt ceiling, Mr. Geithner’s repeated and forceful assurances that Washington understands the ceiling must be raised, and his unequivocal commitment that it will indeed be raised, have helped to preserve calm among investors.

Finding a replacement for him, and winning Senate confirmation would not be easy. Among potential candidates are Erskine Bowles, former chief of staff to Mr. Clinton and co-chairman of President Obama’s deficit commission; Roger Altman, an investment banker and former deputy Treasury secretary in the Clinton years; Janet Yellen, the vice chairwoman of the Federal Reserve; and Gene Sperling, director of the National Economic Council, who previously served as a lieutenant to Mr. Geithner.

But any of those candidates would most likely face a contentious confirmation hearing in the Senate as the country heads into a presidential election year and especially so if the economy remains sluggish. 

For all these reasons, reports that Mr. Geithner was leaving captured the attention of Washington and financial markets.

The drama began in midafternoon when Bloomberg News reported that Mr. Geithner was weighing his departure, citing three unidentified people familiar with his thinking. The White House and Treasury declined to comment on the report, but The New York Times, The Wall Street Journal, and other media organizations soon confirmed the gist of it and posted their own versions.

Officials cautioned that Mr. Geithner had made no decision, and directed reporters to listen to a discussion he was scheduled to have with Mr. Clinton in Chicago, where he would address his plans.

Seated on a dais across from Mr. Clinton, Mr. Geithner argued that a deal to reduce the deficit was crucial to demonstrate, at home and abroad, that the United States could put its fiscal house in order.

“If we can lock in some long-term reforms, then we’ll have a chance to turn our attention to the many other challenges facing our country,” Mr. Geithner said. He predicted that the American economy could return to the brisk growth it enjoyed during the 1990s.

“We’re just living with the scars, damage from the worst crisis since the Great Depression,” he said.

Their discussion wound to a close, and Mr. Clinton declared he would ask one “press question” — namely, was Mr. Geithner planning to leave? He smiled, offered his demurral, and the panel ended — and with it, it would seem, his hope of returning to New York any time soon.

Binyamin Appelbaum and Michael Shear contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=28845b4a7b78dbd40d3a2e8d6bf0d7d8

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