President Barack Obama on Thursday nominated his chief of staff, Jack Lew, as the next Treasury secretary, praising him as a expert on the pressing national issues of spending cuts and deficit reduction.
Lew will succeed Timothy Geithner and take the lead on difficult negotiations with Congress on how to cut the nation's massive debt and rein in spending - a central challenge for Obama's second term.
Lew, a 57-year-old New Yorker who has previously served as White House budget chief, is likely to face tough questioning from Republicans in his Senate Finance Committee confirmation hearing after a bruising year-end battle over tax increases on the wealthy. He appears likely to win Senate confirmation.
Obama described Lew as "a low-key guy who prefers to surround himself with policy experts rather than television cameras, and said the son of a Polish immigrant had a deep belief in public service.
"Over the years, he's built a reputation as a master of policy who can work with members of both parties and forge principled compromises," Obama said.
Since the Treasury secretary signs U.S. currency, Obama ribbed Lew for his unusually loopy signature and said the nominee had promised "to make at least one letter legible in order not to debase our currency."
Denis McDonough, Obama's deputy national security adviser, is the leading candidate to replace Lew as chief of staff.
Lew has experience in tough financial negotiations, having led talks with Congress in 2011 that brought a deal to avert a U.S. debt default. As budget director for former President Bill Clinton, he presided over a string of budget surpluses between 1998 and 2000.
A similar battle looms now.
"For all the talk out there about deficit reduction, making sure our books are balanced, this is the guy who did it, three times," Obama said.
NEXT STEP: THE SENATE
Lew's nomination now will be vetted by the Senate, where Senate Finance Chairman Max Baucus promised a "speedy but thorough" hearing. No date has yet been set.
"We must ensure Treasury has the leadership it needs as we tackle our country's pressing economic issues and work together to continue our recovery and create jobs," Baucus, a Montana Democrat, said in a statement.
Senator Orrin Hatch, the top Republican on the panel, said he plans to ask Lew about the administration's strategy for spending cuts, something Republicans have insisted needs to be made clear before they will agree to raise the debt ceiling.
Obama has vowed not to negotiate over the debt ceiling, which could be reached as early as mid-February.
"It's imperative that Mr. Lew outline the Administration's plans on tackling our unsustainable debt, what areas of federal spending should be cut, and what kind of reforms - from our tax code to our entitlement programs - are needed to get our fiscal house in order," Hatch said in a statement.
'TIM PUT IT BACK TOGETHER'
At the White House announcement, Geithner earned sustained applause from the crowd of friends and family for his work helping the administration navigate the financial crisis that put banks at risk and cratered the housing and stock market early in Obama's first term.
"With the wreckage of our economy still smoldering and unstable, I asked Tim to help put it back together," Obama said.
There were at least two former White House budget directors in the audience for the Lew announcement, including Alice Rivlin, who headed the budget office in the early 1990s, later became a vice chair of the Federal Reserve, and who remains a fixture in fiscal policy debate.
Also attending was Franklin Raines, who led the budget office from 1996 to 1998. Raines was ousted as chief executive of mortgage finance giant Fannie Mae after an accounting scandal.
Geithner praised Lew as "a man of exceptional judgment, calm under pressure, with an extraordinary record of accomplishment and experience" on U.S. economic policy.
Some analysts have questioned whether Lew has enough experience working on international financial issues and on banking regulations.
But the White House has highlighted international experience Lew gained during his time at the State Department, and his "strong relationships in the business community," having worked as a managing director at Citigroup.
Thomas Donohue, the president of the U.S. Chamber of Commerce said that all Treasury secretaries have to "compensate for the areas where they don't have experience" with strong deputies.
Donohue, whose business lobby has often butted heads with the Obama administration, told reporters he thought Lew was a "skilled operative" and a "tough dude."
"I think Jack Lew will do fine," Donohue said.