November 24, 2020

Calmly, Pick for Treasury Offers Replies to Senators

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Lew-articleLargeBy ANNIE LOWREY Published: February 13, 2013 New York Times
WASHINGTON — Jacob J. Lew, President Obama’s nominee for Treasury secretary, faced some fierce questioning on Wednesday from the Senate Finance Committee on his tenure at the bailed-out Citigroup and on an investment based in the Cayman Islands. But the even-tempered, bookish Mr. Lew parried the blows and appeared likely to win the committee’s approval and Senate confirmation.

“Frankly, I think you’ve done really well today,” said Senator Orrin G. Hatch of Utah, the ranking Republican on the committee. “My gosh, I have nothing but respect for people like you who give yourself to our government.”

Many questions from Senate Republicans seemed intended to rankle or ruffle Mr. Lew and score some political points. Senator Richard M. Burr of North Carolina asked about the Benghazi attack in Libya. Senator Charles E. Grassley of Iowa, referring to Mr. Lew’s lucrative but short time at Citigroup, commanded him to “explain why it might be morally acceptable to take close to a million dollars out of a company that was functionally insolvent and about to receive a billion dollars of taxpayer support.”

Mr. Lew calmly responded, “I was compensated for my work. I’ll leave for others to judge.”

He emphasized that he had worked in operations at Citigroup, albeit for a time at an investment unit that made proprietary trades on behalf of the bank.

“I was not in the business of making investment decisions,” he said. “I was certainly aware of things that were going on. I was working in a financial institution. I learned a great deal about the financial products. But I wasn’t designing them and I wasn’t opining on them.”

Aside from his time on Wall Street from 2006 to 2008, Mr. Lew has spent most of his career as a Democratic budget official — and the White House chose him in no small part for that experience. Much of his testimony focused on the trillion-dollar budget battle he would face immediately after becoming secretary. On March 1, automatic cuts to military and nonmilitary programs, known as the sequester, will start to take effect. Republicans and Democrats are both struggling to unwind or delay them, with hundreds of thousands of jobs at stake.

Mr. Lew said Congress needed to undo the sequester. He also said political dysfunction in Washington was threatening the real economy.

“The short-term-crisis, deadline-driven practices that we’ve seen over the last couple of years are undermining the economy,” Mr. Lew said. “It’s the first time in my nearly 30 years in public life that I felt that the actions of government were actually working against the goal of getting the economy moving.”

Mr. Lew also described tax reform as a top priority, with an eye to raising more money, lowering rates, reducing loopholes and generally rationalizing the code. He said cutting the tax rate on corporate income to 25 percent from its current 35 percent would be difficult. He also called for a minimum tax on foreign profits. And he said there was “room to work together” on creating a tax system in which income is taxed only in the country where it is earned, a change long sought by large American companies that operate around the world.

Over and over, Mr. Lew asserted his longtime budget bona fides and willingness to work with Republicans. “Working across the aisle while serving under President Clinton, I helped negotiate the groundbreaking agreement with Congress to balance the federal budget,” he said in his opening statement. He added that he had been involved in “almost every major bipartisan budget agreement over the last 30 years,” and that “the things that divide Washington right now are not as insurmountable as they might look.”

But as one of Mr. Obama’s main budget negotiators in the last few years, Mr. Lew has at times clashed with Republicans, particularly in the House. Former Treasury Secretary Timothy F. Geithner, not Mr. Lew, acted as a main negotiator during the talks over the automatic tax increases and spending cuts, the so-called fiscal cliff, that Congress cut a deal to avoid last month.

During the hearing, Republicans also targeted a money-losing investment Mr. Lew had made in a fund based in the Cayman Islands. Mr. Grassley noted that Mr. Obama had derided Ugland House, which provides an address for thousands of investment entities — including the fund Mr. Lew bought into — and said he saw some hypocrisy in Mr. Lew’s nomination, given the investment.

But the attacks seemed mostly tactical. “Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment,” said Eric Schultz, a White House spokesman. “There are no new facts that provide a basis for senators to reach a different conclusion about Mr. Lew’s nomination than they reached twice before in this administration.”

Some senators — including Jeff Sessions, Republican of Alabama, and Bernard Sanders, the left-leaning independent from Vermont — have said they do not support Mr. Lew. But it seemed unlikely that he would face a filibuster that might delay his confirmation or end his candidacy.

“Mr. Lew has been confirmed by the Senate three times already,” Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said in a statement released before the hearing, referring to Mr. Lew’s service in both the Obama and Clinton administrations. “I don’t expect there to be any reason why he should not be confirmed this time around as well.”

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Background story from

Obama’s Treasury Secretary Nominee Gets Free Pass on Cayman Islands Investments

Katie Pavlich News Editor, Townhall

Remember when Mitt Romney was repeatedly berated by President Obama and his campaign team for having perfectly legal investments in the Cayman Islands? As a reminder:

Romney has large investments in notorious overseas tax havens like the Cayman Islands and Bermuda. He had $3 million stashed away in a Swiss bank account that was closed in recent years for fear of political embarrassment.

It turns out, President Obama’s former Chief of Staff Jack Lew, who has been nominated to replace Turbo-Tax Timonthy Geithner as Treasury Secretary, also had large investments in “notorious overseas tax havens like the Cayman Islands.” Not to mention Lew took a huge bonus in 2009 just after the financial collapse from a bank that was bailed out by taxpayers. Even Dana Milbank at the Washington Post can see the irony:

It’s a bit, well, rich that Obama chose as his new Treasury secretary a man who received a big corporate payout for dubious work and who socked away money in the Cayman Islands.

This awkward fact pattern forced a role reversal Wednesday on Capitol Hill, as Obama’s nominee, Jack Lew, came before the Senate Finance Committee for his confirmation hearing. Republicans expressed outrage about his compensation and his investment — in other words, giving him the Mitt Romney treatment. And Chairman Max Baucus (D-Mont.), an outspoken foe of offshore tax havens, helped Lew defend himself.

In Washington, where you stand on an issue depends on where you sit.

Lew, who was White House chief of staff while Obama’s campaign was pummeling Romney over his pay and taxes, received a $945,000 bonus in January 2009 after a brief tenure at Citigroup — just as the bank announced huge losses and took a taxpayer bailout. Lew also invested $56,000 in a Citigroup venture-capital fund registered in the Cayman Islands — registered in the very building, in fact, that Obama labeled “the largest tax scam in the world.”

So, when President Obama talks about “closing loopholes” for the rich who can afford fancy accountants who “take advantage of” the tax code, is he talking about Democrats too? Or just rich and evil Republicans? Mitt Romney never took a bonus from a company bailed out by taxpayer dollars, but Obama backed Jack Lew did.

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