We discussed the President’s pick for Treasury secretary on the Newshour last night. Covered lots of ground but I didn’t get a chance to weigh in on the unemployment question, so allow me to do so here.
As I stressed, my experience with Jack leads me to believe he’ll be vigilant regarding the implementation of Dodd-Frank financial reform. True, he’s not an Occupy-Wall-Streeter but neither is he someone with allegiance to financial institutions at the expense of the larger economy. Larry Kudlow, for example, was very critical of him for the Treasury job for this reason, which I take as a good sign. I read a quote from a markets’ guy yesterday to the effect of “he’s not one of us,” also a good sign. Yes, he worked at Citigroup for a few years, and as I said on the segment, he’s an unknown in this regard, but I believe that in this part of his job his client will be the economy, not the banks.
But on the unemployment question at the end of the segment, I’m a bit more concerned than my colleague on the segment (Bloomberg’s Julianna Goldman). Like Tim before him, Jack’s a deficit hawk. Not, in either case, to the point where they wouldn’t support stimulus measures when they’re needed. But they’re both guys who, in the “we need to accept larger, temporary budget deficits in order to bring down the unemployment rate” arguments that you have in the White House, would give more weight to the deficit side of that argument than I would.
Would Jack Lew err on the side of caution when it comes to supporting temporarily larger budget deficits in the near term to fight against our still-too-elevated unemployment rate? Some might argue the question is moot (or at least moo) because Congress wouldn’t go near anything Keynesian right now, i.e., deficit spend on jobs measures. But I don’t want my economic officials in the cabinet to accept that constraint without a fight.
Assuming he’s confirmed, and I think and very much hope he will be, let’s see if Jack Lew is up for that fight.