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Senate confirms President Barack Obama's nomination of Jacob Lew for Treasury secretary

By: Martin Crutsinger, The Associated Press

Thursday, Feb. 28, 2013 at 8:16 AM | Comments: 0

FILE - In this Feb. 13, 2013, file photo, Jack Lew testifies at his confirmation hearing to be the new Treasury Secretary in Washington. The Senate confirmed Lew on Wednesday, Feb. 27, 2013, to be Treasury secretary, affirming President Barack Obama's choice of a budget expert at a time when Congress and the White House are at odds over sharp government spending cuts. (AP Photo/J. Scott Applewhite, File)

WASHINGTON - The Senate confirmed Jacob Lew to be Treasury secretary, affirming President Barack Obama's choice of a budget expert at a time when Congress and the White House are at odds over sharp government spending cuts.

The Senate voted 71-26 to support the nomination.

Lew, 57, had most recently served as Obama's chief of staff. He succeeds Timothy Geithner, who completed a tumultuous four-year term in which he helped lead the administration's response to the financial crisis and recession.

He takes over just before automatic spending cuts are set to take effect. He's likely to take part in any negotiations to reverse the cuts, and also in key budget talks next month to continue funding the government.

Lew began his government service in the 1980s as an aide to House Speaker Tip O'Neill. He brings nearly three decades of government service to the job, including two stints as White House budget director.

"Mr. Lew is well-qualified to be the nation's next Treasury secretary," said Finance Committee Chairman Max Baucus, a Democrat. "He has demonstrated time and again that he has the knowledge and expertise" to deal with the country's budget problems.

But Republican Sen. Jeff Session, who opposed the nomination, said Lew is the architect of the Obama's administration's budget. Sessions said that budget doesn't reduce the deficit enough.

During his confirmation hearing, Lew signalled no major economic policy changes. He advocated a balanced approach to reducing the long-term budget deficit through spending cuts and additional tax revenue.

He said he would be open to reforms to Medicare, but he didn't spell out any details. Lew also said he would work with the committee on a rewrite of the tax code.

Beyond the budget, Lew is expected to hew closely to the positions Geithner struck on Europe's debt crisis, the U.S. relationship with China and the administration's defence of the Dodd-Frank financial overhaul law that the banking industry has fought to weaken.

Some Republicans voted against Lew because they were not satisfied with his answers about his previous employment with Citigroup, including a brief time when he was chief operating officer for an investment unit in 2008. The unit has been criticized for making risky investments that imploded during the financial crisis. And Lew received a bonus of nearly $1 million in early 2009, a time when Citi was being bailed out by taxpayers.

Lew told the panel that he didn't make decisions about the investments being offered to clients. He said his bonus reflected compensation for his work.

Sen. Charles Grassley, a Republican, opposed Lew's nomination. He cited questions about his time at Citi, as well as Lew's compensation while working as chief operating officer at New York University.

"Mr. Lew's eagerness and skill in obtaining bonuses, severance payments, housing allowances and other perks raises concerns about whether he appreciates who pays the bills," Grassley said.

One potential weakness for Lew: His relative inexperience with financial markets and international economic crises — areas that had played to Geithner's background. Analysts think Lew will keep pressuring Europe to deal aggressively with its budget and debt issues. But they think this will consume less of his time given that Europe's debt crisis now poses less of a threat to the global economy.

On trade, Lew is expected to keep prodding China. The U.S. trade gap with the world's second-largest economy hit another record high last year. No breakthrough is expected, though.

Lew will also need to calm investors who have grown concerned about possible currency wars after Japan's new government sought to lower the value of the yen as a way to boost exports and its weak economy. A weaker yen makes Japanese goods cheaper overseas and foreign goods costlier in Japan.

And Lew will need to defend the Dodd-Frank Act, which overhauled financial regulation after the 2008 crisis. Since the law was passed in 2010, Wall Street has fought to weaken many of its stricter regulations.

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