Jack Lew, Economic Dictator
NEW YORK (TheStreet) -- Jack Lew has spent his working life seeking orders, not giving them. He spent most of two decades on Capitol Hill, and has spent most of the last five in the Obama White House, seeking consensus or carrying out others' orders.
That will change Oct. 17, unless Congress acts before then. On Oct. 17, Treasury Secretary Jack Lew becomes America's "economic czar."
TheStreet hasn't really written about Lew as Treasury secretary. Our last story on him is dated from December, when Joe Deaux went over his resume upon his nomination.
For most investors, Lew is a blank slate. But he's about to become a blank slate with enormous power.That's because, despite the dire warnings coming from the White House about our inability to pay or even prioritize our debts after the 17th, the United States remains a cash-flow machine. We take in about $225 billion in taxes each month, and owe $36 billion in interest each month. The Treasury secretary is in charge of paying the nation's bills. Once the debt ceiling is reached, the Treasury secretary must decide which bills will be paid and which won't, or whether something else will happen. There are ways out of the bind, but they all involve breaking some fundamental law. Any refusal to pay interest violates the 14th Amendment. Borrowing from the Federal Reserve violates the Federal Reserve Act. Ignoring the debt ceiling violates the Second Liberty Bond Act of 1917, which established the ceiling. Lew refuses to say which he'll do. He accuses the Congress of "playing with fire," but that's been obvious for weeks now. He has said that failure to pay all bills "hurts everyone," but that's also stating the obvious. It's an economic Sophie's Choice. But on Oct. 17, the choice has to be made. The administration's political enemies stand ready to cry foul no matter what Lew does. Any action could be construed as an impeachable offense. That is not what Lew was trained for. Jack Lew has spent most of his life as a political operative. His biography lists him as an aide to the late Rep. Joe Moakley in 1974, when he would have been a newly minted high school graduate.
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