The U.S. Congress has reached a deal to temporarily avoid default. That gives Treasury Secretary Tim Geithner an opportunity should he wish to step down, as has long been rumored. What’s more, the debt deal’s contours suggest an ideal successor in the job: Erskine Bowles.
That’s not a name to warm the hearts of the liberal establishment. After all, Bowles was the co-chair, with former Republican Senator Alan Simpson, of the commission set up by President Barack Obama that last year called for painful cuts in discretionary spending and even reforms to entitlements like Social Security to help right America’s fiscal position.
But if the politics could be overcome, Bowles is a near-perfect candidate to take Geithner’s job. The borrowing and cost-cutting deal signed into law by the president on Tuesday forces legislators to return to the drawing board in just a few months to consider ways to reduce America’s debt and close its fiscal deficit. They needn’t look much further than the recommendations Bowles put his name to last December.
True, many of these are going to be political hot potatoes, such as the idea of scrapping the tax deduction for home mortgage interest. But Democrats will need a credible interlocutor with House Republicans to push through any changes that might resemble tax increases. Bowles’ work on the fiscal commission, which recommended some revenue-raising measures alongside expense cuts, gives him some standing.
Bowles can point to his hands-on role as President Bill Clinton’s chief of staff during the American economy’s most recent golden years. From 1996 to 1998, when he served as the White House’s enforcer, U.S. GDP grew at a healthy above-trend clip, including a few quarters where the economy expanded at an annualized rate in excess of 7 percent.
As a result, Uncle Sam’s finances swung from a now quaint-sounding $107 billion deficit to a surplus. And all this happened, as Bowles would be sure to remind Republicans at the bargaining table, with higher marginal income tax rates than today. Obama snubbed Bowles when the commission he co-chaired unveiled its ideas last December. Offering him the Treasury job, however tricky politically, would be one way to make it up to him.