by Linda Beale
Lew almost official as nominee for Treasury Secretary
Media headlines continue to tout Obama’s white male choices for rounding out his ‘new’ cabinet. Latest to the list is that he has offered his Jacob Lew, his current White House Chief of Staff, the post of Treasury Secretary. See, e.g., Obama to tap Jack Lew for top Treasury post, Washington Post.com (Jan. 9, 2013).
Jack Lew has been a slew of things–hedge fund manager at Citigroup (bailed out big bank), university administrator (administrative stuff, not academic stuff) at NYU, Clinton and Obama administration OMB administrator, State Department official, and of course White House Chief of Staff. That means he is well embedded in the Wall-Street-respecting culture of Geithner, Summers, Paulson and the rest of the DC crowd that pays too much credence to what bankers say and not enough to what ordinary Americans think. So that is one strike against him.
On the other side, as the news story in the Post notes, the GOP generally views him as a tough negotiator who stands his ground on issues that Democrats have tended to consider important. That is one big strike in his favor, especially since it is not something that his current boss is especially known for (or good at, as evidenced by the way he caved on not letting the Bush tax cuts just die of their own accord so that less stupid provisions could be put in place, especially on the corporate and estate tax side).
But what about the fact that Treasury is where most tax policy thinking goes on, and thinking about the ins and outs of statutory provisions and exceptions, and thinking about “administrative” lawmaking through regulations. Under the Bush administration, the Treasury Department put through a series of regulations that greatly facilitated concentration of corporate giants into even larger corporate giants, and did so in ways that appear to have allowed, for the first time ever, a taxpayer who engaged in a reorg transaction and received boot and stock to recognize a LOSS in the reorg transaction by allocating consideration.
In other words, the internal goings on at Treasury are just another place that corporate lobbyists (including continuing contact between former Treasury and IRS officials with the bar as they move back and forth) can influence the law in favor of lower taxes for business. Shouldn’t we care how much Lew knows about tax law and what his views on that are? I think we should.
Lew is a Harvard graduate with a JD from Georgetown (so yes, we continue to see the elite nominating their comrades in elitedom to offices in this country). He was a congressional aide and then policy adviser to Speaker Tip O’Neill in the late ’70s, when he worked on Social Security, Medicare, budget, tax and similar issues. So at least he’s got some depth of experience on those issues. He practiced law for several years, but not as a tax lawyer–he worked on electricity generation. Wikipedia says he has also dealt with Middle East issues and various other things in other short-term posts he has held. So a peripatetic acquirer of bits of experience and knowledge across a range of things, but not an economist and not a tax lawyer.
Does that make him qualified to head Treasury and to advise on what has become one of the most important areas of the law, in which we subsidize whole industries, give huge tax breaks to huge multinational corporations without even understanding how much of a break we are giving them (the bonus depreciation/accelerated depreciation/expensing regime and the active financing exception), and continue to consider that some of the richest people in the country are just “middle class”? I have my doubts.
Remember that in both of the big “economic” commissions of the last couple of years (Alice Rivlin’s, Erskine Bowles’) there were no actual tax lawyers–not even tax academics–involved. Maybe that’s one reason the ideas miss out so much on what is reasonable. Maybe it’s time that a range of tax academics were listened to about what shape the tax code needs to take, and why.
cross posted with ataxingmatter