President Barack Obama may be forced to accept the imminent departure of his Treasury Secretary, Tim Geithner, despite the looming political fight over raising the national debt ceiling.
Mr Geithner has been by Mr Obama’s side from the start of his White House stint and has had a voice in every major budgetary debate – including attending the latest emergency Oval Office meeting on the “fiscal cliff” with Congressional leaders last Friday.
But he has made no secret of his desire to step back from politics. Speculation in the wake of the 2011 debt ceiling deal suggested he might step down before the 2012 election, but he was said to have changed his mind at Mr Obama’s request.
Though it is possible he could be persuaded again, preparations for his departure continue, despite the coming debate over raising the debt ceiling, the congressionally mandated limit on the federal government’s ability to borrow. Mr Geitner reportedly intends to depart by the end of January regardless of whether there is agreement on the ceiling between the Congress and the White House. “Secretary Geithner has previously stated that he plans to be at Treasury until around the inauguration,” a Treasury spokesperson said in response to the reports.
His departure is likely to complicate matters for Mr Obama, who is faced with replacing an experienced advisor who has played a role in every major fiscal debate during his presidency and who also played a critical part in the financial crisis of 2008. As Lehman Brothers teetered on the edge, Mr Geithner was in charge at the New York Federal Reserve and had a key voice in the debate leading up to and immediately following Lehman’s collapse in September 2008.
Jack Lew, the President’s chief of staff, who served as the head of Mr Obama’s Office of Management and Budget and also held the post under Bill Clinton, is being touted as the most likely replacement.
But questions have been raised about his experience with financial markets. Although he spent more than two years at Citigroup, his Wall Street CV is weaker than Mr Geithner’s. The White House might get around this by picking someone with stronger Wall Street credentials as Mr Lew’s deputy.
Another possible alternative is Laura Tyson, the former chair of Mr Clinton’s council of economic advisors. Currently a professor at the University of California, Berkley, she would be the country’s first female Treasury Secretary.
Could a trillion dollar coin be the solution?
Armchair economists have hit upon an unorthodox way to fix the US debt problem.
Thanks to a legal quirk, one of Tim Geithner’s last acts in office could be to mint a single platinum coin with a face value of $1 trillion (£620bn) and deposit it in the Federal Reserve, putting an abrupt end to Congressional bickering by wiping out most of the deficit at a stroke.
The notion was dismissed by the New York Times columnist Paul Krugman as a “gimmick”, but the #MintTheCoin Twitter hashtag translated into a White House petition, urging the Obama administration to mint and deposit the coin. At the time of writing the petition had just 1,626 signatures.