In January, Timothy Geithner, the treasury secretary, received an invitation to testify before the House government oversight committee. It was a moment the administration had been dreading for months. Now that the GOP controls the House of Representatives, it has enormous investigative power, which flows through the oversight committee and its ambitious chairman, Darrell Issa. And, in the run-up to the November election, Issa hadn’t been shy about his intention to use it. Such was the anxiety on Pennsylvania Avenue that the White House had quietly assembled a team of lawyers and communications staffers to deal with Issa’s requests.
Geithner was inclined to reject the invitation, a move fraught with risk. Had he simply shown up and testified, the moment would likely have passed with little fanfare. By declining, he would give Issa a chance to compel his appearance through a subpoena, an escalation sure to attract half the TV crews in greater Washington. Oh, and the date for the hearing would be January 26, the morning after the State of the Union address. Nevertheless, when Geithner ran his decision by the White House, the president’s political aides offered their blessing: Fine, they said, let’s escalate.
Back in 2009, courting a Geithner-Issa faceoff would have been the surest way to knot David Axelrod’s stomach, with the possible exception of a Joe Biden reality show. With his sleek build and trademark spread collar, the fresh-faced Geithner looks like nothing so much as Main Street’s idea of a Goldman Sachs partner.
Even before he officially started work, Geithner had acquired a reputation as the administration’s most controversy-prone member. In his former job as president of the New York Fed, he’d stirred populist angst with the bailouts he helped engineer. Then, not long after President Obama tapped him for Treasury, news leaked that he’d failed to pay payroll taxes on income from the two-plus years he worked at the International Monetary Fund (IMF)—a common oversight for American employees of international organizations. Republicans pilloried him as a tax cheat and overwhelmingly opposed his nomination in the Senate.
Geithner’s fortunes only worsened after he was confirmed. On February 9, 2009, the president announced that his treasury secretary would present a detailed plan for solving the financial crisis the following day. The problem was that there was no detailed plan. When Geithner delivered a vague and unimpressive speech, the stock market shed nearly 400 points, sending investors and West Wing denizens into a panic. White House Chief of Staff Rahm Emanuel accepted part of the blame for setting the treasury secretary up to fail, but, privately, he was alarmed. “Rahm’s thing is, can he put [a Cabinet secretary] on a Sunday show and not have to clean it up on Monday? That was his test,” recalls a former White House aide. “Early on, Tim was not doing well.”
And yet, at the midway point of Barack Obama’s first term, Geithner is the lone remaining member of the president’s original economic team and arguably the administration’s second-most valued official. Indeed, that the White House was willing to let him face down Issa is only the latest sign of a rather remarkable transformation. (Issa ultimately blinked.) Geithner owns the economic portfolio with China and has been tasked with confronting Republicans over the nation’s debt limit. He has taken the lead on corporate tax reform and overhauling Fannie Mae and Freddie Mac. With his former lieutenant, Gene Sperling, now running the National Economic Council, Geithner will no longer form part of the multiheaded “war cabinet” that included Sperling’s predecessor, Larry Summers. He is set to play the first-among-equals role of a traditional treasury secretary.
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