If Geithner Leaves, And Why He Would Not

The media coverage of Tim Geithner’s future is split. Some news outlets say he will leave after the debt cap debate is resolved — hopefully by August 2. Others claim he has decided to remain at his job “indefinitely.”

Geithner is barely 50. He does not need to go to Wall St. to make the tens of millions of dollars a former Treasury Secretary would make — yet. His tenure as a Federal Reserve official, including his period as the nation’s top financial officer, has stretched since 1988 off and on. Geithner may just be tired despite his age.

The Treasury Secretary’s job is likely to become more difficult, if that could possibly be the case, in an economic slowdown that has caused a war over the economic future of the U.S. Geithner is likely to prevail in his attempt to raise the debt cap. The alternative of a U.S. default is too great to imagine. The Republicans in Congress will give in. The open issue is what concessions they will get in return.

Once the debt cap hurdle has been cleared, Geithner will become the center of the debate about whether the economy has been handled well by the Administration. That would certainly involved endless trips to Capitol Hill to defend the efficacy of programs such as the Obama stimulus package and individual efforts like the failed HAMP real estate program.

Geithner’s decision may have to do with his loyalty to the President. Obama would find it difficult to easily get a nominee to replace the Treasury Secretary approved by the Senate. The process would be a referendum on the Administration’s economic policies. The President’s position would be weakened if his first nominee withdrew under the pressure of scrutiny of past positions on financial matters. That would be a catastrophe as the national election approaches.

Among the most difficult situations Geithner has faced is the number of senior jobs at Treasury are open. That puts pressure on the balance of high level staff to do additional work. The White House may find the only way to make Geithner even modestly comfortable is to pledge those jobs will be filled by the end of the year

Geithner  has the most powerful national financial chief job in the world. He may decide that the position is too attractive to give up, particularly if he can be seen by history as an architect of a revival of the U.S. and global economies.

Of course, if the economy does not recover, he may not be remembered well. That risk should not matter if he is an optimist. And, it would have taken an optimist to make it through the horrible period that began with a credit crisis just before he was sworn in.

Douglas A. McIntyre