WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner plans to stay on into early next year to help the Obama administration forge a deal with lawmakers to avert a looming fiscal crisis, the White House said on Friday.
The Obama administration and Congress have less than two months to stave off the “fiscal cliff,” a $600 billion combination of tax hikes and spending cuts that could throw the economy back into recession if Washington does not take action.
“Geithner has indicated that he will stay on through inauguration and he will be, obviously, a key participant in the negotiations around the so-called fiscal cliff issues,” White House spokesman Jay Carney told reporters.
Geithner has long said he planned to step down if President Barack Obama won a second term, after a grueling several years dealing with the financial crisis, a deep recession and lackluster recovery, first as head of the New York Federal Reserve Bank and later as Obama’s Treasury chief.
In helping the White House negotiate last year’s budget deal to raise the debt limit and cut the deficit, Geithner won over many Republicans, who viewed him as reasonable and willing to listen to their concerns.
On Friday, Obama, who was re-elected on Tuesday, said he was prepared to compromise with Republicans, but was adamant that a tax increase for the wealthiest Americans be part of any debt reduction deal.
It is not clear who Obama will pick to replace Geithner, but his chief of staff and former budget director, Jack Lew, is seen as a favorite because of his expertise and the fact that budget and tax reform could dominate the administration’s domestic agenda.
The White House did not have a specific date for when Geithner would leave and would not comment on whether he would stay until the administration brokered a budget deal.
It was also unclear if the Senate would have time to confirm a successor before Obama is sworn in for his second term on January 21, given the urgency of the fiscal talks and the number of other important positions that have to be filled.
Obama will want to move quickly to replace Secretary of State Hillary Clinton, who is also planning to leave, and CIA Director David Petraeus, who resigned abruptly on Friday, citing an extramarital affair.
Another possible contender for the Treasury job is Erskine Bowles, who was President Bill Clinton’s chief of staff and who was appointed by Obama to help craft a deficit reduction plan.
Roger Altman, a Clinton-era deputy treasury secretary and co-founder of investment firm Evercore Partners; Sheryl Sandberg, the chief operating officer of Facebook; and Laurence Fink, the chief executive of asset manager BlackRock, are other names that have been floated.
Reporting By Rachelle Younglai; Editing by Bill Trott and Peter Cooney