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Obama To Name Jack Lew For Treasury; Republican Critics Blast Lew; Hurdles Ahead If Lew Is Confirmed; Obama Treasury Pick Draws Critics; Pastor Withdraws From Inauguration: Obama Nominates Lew
Aired January 10, 2013 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Can you tell me what his last nomination was for?
MICHAEL HOLMES, CNN ANCHOR: I could not. "Taxi Driver?" I --
MICHELLE: "Cape Fear."
HOLMES: "Cape Fear." He's awesome. Love him.
MICHELLE: "Cape Fear."
HOLMES: Yes, I hope he wins.
HOLMES: Michelle, thanks so much. You'll be keeping an eye on it all the way through the season. Michelle Turner there. That will do it for me. And winding us up, CNN continues with Wolf Blitzer's special coverage of the president's nomination for secretary of the treasury. Here he is.
WOLF BLITZER, CNN SENIOR WHITE HOUSE CORRESPONDENT: Thanks very much.
President Obama about to make a major cabinet nomination. I'm Wolf Blitzer in Washington, and this is a CNN special NEWSROOM coverage of the president's announcement. It happens about 30 minutes from now.
President Obama will nominate his chief of staff over at the White House, Jack Lew, to be the next treasury secretary to replace Timothy Geithner. The surprise is certainly no -- the choice, I should say, certainly no surprise. Lew is a trusted member of the president's tight inner circle. Prior to his job as chief of staff, the 57-year- old served as director of the Office of Management and Budget.
During that time, he worked closely with Congress and federal agencies to oversee the budget of the entire federal government. We have a full house to bring you all the details on the nominee. The challenges ahead for him, for the country. Our Chief Political Analyst, Gloria Borger is here. Our Congressional Correspondent Kate Baldwin, as well. Brianna Keilar is over at the White House. Our Chief Business Correspondent, Ali Velshi, is joining us from New York. Let's start with Gloria first. Tell us a little bit about Jack Lew.
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Jack Lew is someone who has spent most of his life, Wolf, in government service. He did work at Citi Group for a while in the wealth management division. But he's a numbers nerd. He's a guy who understands the federal budget. You just noted that he had been head of the Office of Management and Budget twice in his career. I first met him when he worked for House Speaker Tip O'Neill when he was his chief domestic policy adviser. He -- it gives you an indication, Wolf, of where this administration thinks the arguments are going to be, the fights are going to be.
He is not a business and markets guy, gives Wall Street a little bit of concern. But he is somebody with an incredible understanding of the federal budget, where to cut, how to cut, and also politically what not to cut. That's what gets him in trouble with some Republicans who believe that he has defended a lot of social programs way too vociferously in their budget arguments. He's made some enemies among Republicans on the Hill, but that's not going to stop him from getting confirmed.
WOLF: Senator Jeff Sessions of Alabama already says he's --
WOLF: -- not going to vote to confirm him. And there are a lot of other Republicans, as you point out, who don't like him as well. So, the question is, you think he'll get confirmed --
BORGER: I do think --
BLITZER: -- but there will be a battle?
BORGER: I think there's going to be a grueling nominations' process. The testimony that he's going to have to give, they're going to call him on the griddle and say, OK, you promised to reduce the deficit, doesn't look like you reduced the deficit. And there are some Republicans who believe that in the grand bargain negotiations that failed between John Boehner, the Speaker of the House, and the president that it was Jack Lew who kept moving the goal posts on them. So, there's not a lot of warmth there. They also believe that he lectured them an awful lot on the federal budget. But in the end, Wolf, there's no organized opposition to Jack Lew like there is to, say, Chuck Hagel for the defense secretary's job. So, I think you'd have to say he'll be -- he'll be confirmed.
BLITZER: All right. Gloria, stand by. So, what does the treasury department actually do? It certainly collects taxes, duties, money that's paid to the United States as well as paying U.S. bills. It manufactures U.S. coins and currency. It manages -- it manages government accounts and the public debt. It supervises national banks and thrift institutions. It advises on domestic and international financial trade and tax policy and it investigates and prosecutes tax evaders, counterfeiters, and forgers. If he's confirmed as treasury secretary, Jack Lew faces several challenges right off the bat.
I want to bring in our Chief Business Correspondent, Ali Velshi. Ali, let's start with one of the most pressing issues, raising the nation's debt ceiling. That's going to be a huge --
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes.
BLITZER: -- debate, and Lew, if confirmed, will have a major role in that.
VELSHI: Yes. And I agree with Gloria. I don't think there's going to be a big confirmation battle. You kind of have to really not like the treasury secretary to not confirm him. Here's the thing, compare it to four years ago, Wolf, when Tim Geithner came in. Tim Geithner had been in the room prior to becoming treasury secretary when he was head of the New York Federal Reserve, and they made the decision to let Lehman Brothers fail. He walked into a banking and a central bank global financial crisis, and he was a guy who had no learning curve.
Same thing here. We don't have a banking crisis. We don't have a central banking and financial crisis. We've got a budget crisis in Washington, and Jack Lew is steeped in the budget. So, he takes over from Tim Geithner right in the middle of this debt ceiling debate which will be followed immediately by the sequestration, the broad spending cuts debate. And then, the fact that the U.S. has not had a federal budget since 2009. They have these so-called continuing resolutions which means nothing changes from the year before. That is central to the whole budget debate. If we actually had a budget in this country, we wouldn't have a debt ceiling debate and we wouldn't have a sequestration debate.
So, Jack Lew takes over, he's got three things that are going to face him immediately which is why the question, Wolf, is not whether Jack Lew is the right treasury secretary for the next four years. It's whether he's the right treasury secretary for the next eight months. And I think he is because this is a man who is steeped in the budget in the way Tim Geithner was steeped in banking and finance.
BLITZER: Yes, he spent the past several decades on that -- those budget-related issues. I know, Ali, you spoke to someone who worked with Jack Lew over at the Office of Management --
BLITZER: -- and Budget. What does he saw about Lew's qualifications to be treasury secretary?
VELSHI: Well, listen, there's been some detractors to Lew's nomination including some on Wall Street who say he doesn't have enough Wall Street experience. There's some who say yet another guy who's connected to Wall Street, because he was the chief operating officer of a particular branch at Citi Group which dealt with alternative investments, you know, these mortgage-backed securities. He'll get questions about that at his confirmation hearing. But ultimately, I talked about him with Ken Baer, who worked with him at the Office of Management and Budget which is very central to government budgeting. Here is what he told me.
(BEGIN VIDEO CLIP)
KEN BAER, MANAGING DIRECTOR, THE HAROUR GROUP: There has not been a major fiscal agreement in the United States in the past 25 years that Jack Lew has not been sitting at the table for. Going all the way back to 1983 to the deal which saved Social Security, the pension system here in the United States. So, he's really a part of that. And he actually has huge support on both sides of the aisle. Five times his name has gone before the full United States Senate for a vote for confirmation. Do you know how many no votes were lodged against him those five times? Zero. So, he actually has really wide respect across the aisle here.
(END VIDEO CLIP)
VELSHI: So, two points here. He's been nominated and he's been confirmed by the Senate, not the same Senate but a lot of the same people, five times before. He has worked on the Social Security -- the reform of that. He worked on the balance budget act and he was there in August of 2011 which is when we got into this budget debacle. So, the bottom line is this is a guy who, when it comes to budgets, has a great deal of experience. What else -- what other qualifications he has for treasury and whether he's too political are questions that are going to come up. But bottom line is, you need a guy who knows budgets? Jack Lew's your guy.
BLITZER: You know, he's a really, really smart guy. I've known him for a long time as well. I went to Harvard and then went to Georgetown Law School here in Washington, D.C. And he's got a lot of Washington experience. Ali, don't go too far away.
There is, though, a loopy, yes, a loopy side to Jack Lew. Take a look. It's his signature. It looks like random -- there it is right there, random squiggles. Some have compared it to a slinky gone awry. And it could appear on newly printed U.S. bills, because the treasury secretary's signature is on every backed note printed while in office. Some say Jack Lew may have to change his signature for the dollar bills. Timothy Geithner did when he became the treasury secretary of the United States. Loopy.
Well, Republicans have complained about Lew's relentless negotiation tactics. Some are promising a fight during his confirmation hearings. Our Congressional Correspondent, Kate Bolduan, is here watching what's going on. What's the main argument some of these Republicans, Kate, are making?
KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: By and large, the main argument is not only against Jack Lew. It's because he has become this -- he is one of the faces of the Obama budget and Obama's economic policies. I mean, it's no surprise Republicans were going to hear some very tough criticism from Republicans about Jack Lew, and he will face some very tough questions as this nomination goes forward. I mean, this really gives Republicans an opportunity to jump at this, to criticize not Jack Lew but President Obama and the last four years and his economic policies. They all feel burned after this most recent fiscal cliff negotiation. They didn't get the right end of the deal, they don't believe. And you can be sure this is an opportunity when the spotlight is on this issue to really vent. And we're already starting to hear this even before the nomination is official.
We've been talking about it earlier, Jeff Sessions, he's one person, Republican who's came out and this is what he said even before this all really came out. He said, Jack Lew must never be secretary of treasury. His testimony before the Senate Budget Committee less than two years ago was so outrageous and false that it alone disqualifies him. Here, Sessions is referring to testimony that Lew gave before his committee saying that the president's budget would not add to the deficit. One thing he's going to be taking on right away, Wolf, if he is confirmed. And he was a central player last time around in the debt ceiling fight.
And Republican aides have been very critical, as you mentioned, of his negotiating tactics. And Bob Woodward's book about the price of politics, about the debt debacle, they said many a thing about Jack Lew including calling him disrespectful and dismissive, even being quoted that Lew was doing 75 percent of the talking, lecturing everyone, not only about what Obama's policies -- policy was but also why it was superior to the Republicans. And even Speaker Boehner is quoted as telling Bob Woodward this in the book, "At one point I told the president, keep him, Lew, out of here. I don't need somebody who just knows how to say no." So, you can clearly hear where the line of criticism has started.
But bottom line, as you guys have been saying, I don't get any sense from anybody, Republican or Democrat, on the Hill right now, that his confirmation is at all really in jeopardy. This is just an opportunity to do some political posturing ahead of this debt ceiling fight that he's going to take on right away when he moves in. You might wonder, what do Democrats say about him Well, they love him. No question about that. One Democrat that I spoke with who has worked closely with Lew during the debt ceiling negotiations back in 2011 said this, he's the best. A total pro. He doesn't try to make policy, rather, he simply tries to protect the president's priorities. No wonder the Republicans hate him. They hate him for doing his job.
BLITZER: Stand by. We're going to have a lot more. We're waiting for the president of the United States to make the official announcement with Jack Lew, the next treasury secretary if confirmed by the United States Senate. By the way, we're going to hear later from the Alabama senator Jeff Sessions. He'll be joining me to talk about the president's decision to ask Jack Lew to be the next treasury secretary. Senator Sessions hates that idea.
We're waiting, as I said, for the president. Stand by, much more of our special coverage right after this.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: He is that rare person in Washington who has been here for years who has done some very hard things and brokered some serious bipartisan agreements and done it in a way that has earned the admiration of almost everybody he's worked with.
(END VIDEO CLIP)
BLITZER: President Obama getting ready to announce a key choice for his economic team this hour. We're only minutes away now from the announcement. The president will formally nominate his White House Chief of Staff, Jack Lew, to replace Treasury Secretary Timothy Geithner. One critic, though, says Lew is the president's yes man. That critic being Stephen Moore, the editorial board member, the writer for the "Wall Street Journal." Steve is joining us now. Yes man for the president, what's wrong with that?
STEPHEN MOORE, SR. ECONOMICS WRITER, "WSJ": Well, there's nothing really wrong with that in terms of -- look, the Treasury secretary probably should reflect the ideas and philosophy of the president. And I agree with the others on your panel that it's very likely that he's going to be confirmed.
We were very critical of him in our editorial this morning, Wolf, for a couple of reasons. One is, look, we kind of were hoping that there -- this would be kind of a new start for the president. That this second term might be a departure from some of the policies of the first term. And this suggests that it's going to be kind of more of the same. And when you heard the discussion about how many Republicans really just don't get along with this guy, they don't agree with his philosophy, they think he's really hard to deal with in negotiation, I think that could presage some real big fights to come.
But I wanted to mention one other point, if I could, Wolf. One of the things that bothers me about the president's cabinet in his first term and the one that's coming forward in the second term is, you just don't have the business experience. And you've heard that complaint by business men and women around the country that, you know, where are the people who understand how business works, who know how to, you know, meet a payroll? And Jack Lew does have private sector experience at Citi, but he's never really run a company. And I think that's a shortcoming not just of Jack Lew but the entire cabinet.
BLITZER: He did run two divisions at Citigroup during the years when the president --
BLITZER: President Bush was in office. So he did spend a few years up on Wall Street.
Let me bring Ali Velshi in --
MOORE: OK, but -- hold on, Wolf. Let me just say one --
BLITZER: Go ahead.
MOORE: Can I just say one thing about that?
MOORE: Yes, but, you know, look at his performance at Citi. I mean, Citi actually needed a huge government bailout when he was there. And, by the way, by many reports, the division that he ran lost billions of dollars. So I'm not so sure that's a real star for him.
BLITZER: But -- yes, you're right. Ali, hold on a second.
But in the story I read today on the front page of "The Wall Street Journal," Steve, it did point out, it did make the argument that even, as you point out, he did run those two divisions. One of which got into real serious trouble in 2007, 2008.
BLITZER: He wasn't the guy who was making those investment decisions that really caused such severe heartburn. I read that in "The Wall Street Journal" today.
MOORE: OK. Well that may be -- look, I don't know all the facts about it, Wolf, but I will say this, he was in charge of the operation and it lost money. Whether he was making the specific calls on investments, I don't know. But it certainly, you know, you don't look at that record and say, gee, this really makes him, you know, qualified to be the Treasury secretary for the United States.
BLITZER: All right, let's let Ali weigh in. You got a question, Ali?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Hey, Stephen, good to see you.
MOORE: You too.
VELSHI: Listen, I'm not sure there's anybody who Obama would ever nominate for Treasury secretary that the editorial pages of "The Wall Street Journal" would be in favor of. But maybe there is. Who knows.
But I would have thought you would have liked this. And I'll tell you why. Because your history is one of a tax fighter, right? You're been a tax fighter forever. You were a founder of the Club for Growth.
VELSHI: You're the -- you've got the same DNA as Grover Norquist and Pat Toomey and guys like this.
VELSHI: And this guy knows budgets, right? Jack Lew understands every detail about budgets. He's run the OMB twice. So whether or not you agree with where he comes from, the fact is this is a guy who can speak the right language when the biggest crisis -- you and I agree -- the biggest crisis in Washington right now is the fact that there's an absence of a budget.
MOORE: Yes. OK. So, Ali, that's a great point. Let me address that. Because when I heard you talking about this before, it was the one thing you said I kind of disagreed with. What I'm saying is, look, we have a fiscal crisis on our hand. We have a debt cries. And if you look at his performance in the last few years in terms of running the budget office and being the chief of staff for the president, the debt crisis has gotten much worse. So, again, I don't look -- I don't look at that record and say, gee, this is a guy who's going to really fix the problem.
And I do think what we need in Washington is some new thinking. And I'm kind of tired of these retreads. He's been in Washington for -- in and out of government for 25 years. And I guess my philosophy is, why not bring in some new faces. Granted they're going to have the president's philosophy, but maybe looking at new approaches to bringing this enormous debt down.
BLITZER: Steve, if you remember his record --
VELSHI: You have to --
BLITZER: At OMB during the four years -- the last four years of the second term of the Bill Clinton administration, how that budget thing worked out?
MOORE: I knew you were going to -- I knew you were going to bring that up, Wolf.
And, look, I'll give him high marks for his record as Clinton's budget director. But I'm going to give him an "F" for his budget -- his performance as budget director under Barack Obama because we took the deficit up to a trillion dollars. Levels that, Wolf, you and I and Ali, I don't think we ever would have seen in our lifetime.
So, look, the president's going to get his choice. He's going to be confirmed. I just don't think this is a guy who's going to really build bridges with the Republican Party, which I think all three of us think is desperately needed right now if we're going to get out of this crisis.
BLITZER: I agree with the need for building bridges, working together, compromise. That is critically important. I know Ali does, as well.
Steve Moore, as usual, thanks very much for joining us.
Ali, don't leave.
MOORE: Thank you, Wolf.
BLITZER: President Obama getting ready moments from now to announce his pick for the Treasury secretary of the United States. He will nominate -- let's not say expected -- he will nominate his White House Chief of Staff Jack Lew to replace Timothy Geithner. Geithner leaving. We're going to bring you the announcement momentarily.
BLITZER: We're following some news, disturbing news just coming in to CNN. A shooting at a high school in Taft, California. Taft High School. That's north of Los Angeles. About 30 miles outside of Bakersfield. According to our affiliate KERO, the shooting happened this morning around 9:00 a.m. local time, according to reports. At least two people have been shot. The shooter has been taken into custody. We're told parents are picking up their kids at the school's football field right now. We're getting more information, but that according to our CNN affiliate KERO. A shooting at a California high school.
There's other news we're following as well, including the pastor who had been selected to give the inaugural benediction. He is now backing out of that. Louie Giglio was receiving harsh criticism over a sermon on homosexuality that he preached back in the 1990's. CNN's belief blog editor Eric Marripodi is joining us on the phone right now.
Eric, give us a little of the background and what we're learning.
ERIC MARRIPODI, CNN BELIEF BLOG EDITOR (via telephone): Sure, Wolf.
Louie Giglio was selected to deliver this benediction in large part because of his work over the last decade or so on the issue of global slavery. He had been organizing college students to raise awareness and to raise funds to help end the global slave trade. Just last week in Atlanta, he wrapped up a conference with 60,000 college kids.
Once he was announced as President Obama's selection to give the benediction, this sermon surfaced just a few days ago where he called homosexuality a malfunction and said it was a sin, which is common and mainstream within evangelical theology for that time in the 1990s. Since, there's been a lot of shifting on that.
But nonetheless, that sermon had a lot of critics fiercely upset. The website Think Progress, which posted this sermon called it vehemently anti-gay. And as a result of that withering criticism, Wolf, he has rescinded his acceptance of the president's invitation to deliver that benediction.
BLITZER: Has he changed his views on homosexuality publicly?
MARRIPODI: In a statement he gave about why he has pulled out of the inauguration, he didn't get into that. He acknowledged that he had delivered the sermon, but didn't elaborate on where he is today on his views on homosexuality.
Folks I spoke to today who know him and have followed his work closely said they don't think his position has changed dramatically on this issue, but that it's likely where it was then or maybe a little bit closer to that issue of whether or not orientation is a choice or not. And that's really what got people upset in those comments that he seemed to be suggesting in that sermon that homosexuality was a choice as opposed to an in-born orientation. And that's really what got LGBT critics upset about this pick by the president who, Wolf, as you know, is a strong supporter of same-sex marriage. And he came out and changed his position on that just last year.
BLITZER: Yes, he believes in equal rights for gays and lesbians. And so Louie Giglio will no longer be giving the inaugural benediction.
Eric Marripodi is our CNN belief blog editor. Thanks for that update.
We're going to get back to the news this hour. The president of the United States getting ready to announce his pick for Treasury secretary in just a few minutes. You're looking at live pictures. Those pictures coming in from the East Room at the White House. He'll be nominating his White House chief of staff, Jack Lew, to replace Timothy Geithner. We'll bring you the announcement live in a few moments.
BLITZER: We're waiting for the president of the United States to make it official. He's about to announce that Jack Lew will be the next secretary of the Treasury, assuming he's confirmed by the Senate. The assumption is he will be confirmed by the Senate, succeeding Timothy Geithner.
Our White House correspondent, Brianna Keilar, is on the scene for us.
Brianna, looks like a very nice crowd in the East Room where you are.
BRIANNA KEILAR, CNN WHITE HOUSE CORRESPONDENT: That's right, Wolf. Starting to become a usual situation for us.
Here in the East Room, as we await President Obama, as well as Secretary Geithner and Jack Lew for this ceremony, you can see behind me there are a number of people in the audience. Among them, a number of top aides, including Gene Sperling, including Valerie Jarrett. And also Jay Carney, the White House press secretary, in the audience here.
But this is an announcement where we're expecting President Obama to tout his experience having Jack Lew by his side for the last couple of years for some very key negotiations on deficit reduction. Obviously very challenging ones that ultimately didn't succeed. The fiscal cliff --or, pardon me, I should say the debt ceiling negotiation of 2011 and most recently the fiscal cliff negotiation.