Commentary Magazine


Topic: Treasury Department

Antonio Weiss, Elizabeth Warren, and the Spirit of the Constitution

When Elizabeth Warren led a campaign of misleading demagoguery against President Obama’s nominee for an under secretary of the treasury job, she was trying to make a point at the expense of someone else’s career. But since her success was temporary and Antonio Weiss has, as predicted, joined the administration anyway, Warren’s populist stunt has inadvertently raised questions about the entire premise of the Senate’s role in approving executive branch nominees.

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When Elizabeth Warren led a campaign of misleading demagoguery against President Obama’s nominee for an under secretary of the treasury job, she was trying to make a point at the expense of someone else’s career. But since her success was temporary and Antonio Weiss has, as predicted, joined the administration anyway, Warren’s populist stunt has inadvertently raised questions about the entire premise of the Senate’s role in approving executive branch nominees.

To recap: Obama chose Weiss, but his background in investment banking irked Warren, who loudly opposed the nomination in ways that proved her ignorance of the relevant issues but increased her celebrity and her rabid fan base. It was precisely the type of behavior that should not be rewarded, but unfortunately it’s also the type of behavior that works. So Weiss withdrew his nomination.

But that was not going to be the end of it. Here is what I wrote last month about how this would end: “Weiss will join the Treasury anyway, and give the same advice, not be much undercut by whoever eventually fills the under secretary seat. … Warren’s victory is, then, entirely symbolic. It will have no effect on policy. All it will do is act as an implicit threat to future nominees, pour encourager les autres.”

And that’s precisely what happened. As Bloomberg reports:

Eight days after joining the Treasury Department as an adviser, Antonio Weiss was the lead U.S. official listed at a meeting with Wall Street executives. It’s a role typically played by the undersecretary for domestic finance — the same post Weiss lost after Democratic senators stymied his nomination.

Weiss’s presence at that Feb. 3 meeting on quarterly debt sales shows him diving into many of the same tasks that would have come with the undersecretary’s job. The former Lazard Ltd. global head of investment banking is now working on issues ranging from debt management to housing finance and global market developments. One big difference: his job as counselor to Secretary Jacob J. Lew doesn’t require Senate confirmation.

The question–and it’s a fair one–is this: Does Antonio Weiss’s current job description violate the spirit of the separation of powers and the Senate’s advise-and-consent role in executive branch appointments?

Over at National Review, Charles Cooke says yes. Cooke writes that quality of candidate–and, by extension, the truthiness of the campaign against him–is beside the point: “Ultimately, I couldn’t care less whether Weiss is a better choice than Elizabeth Warren’s preferred candidate. If the Senate didn’t want him, he doesn’t get the job.”

He explains:

At first blush it must seem rather suspicious that the only functional difference between Weiss as undersecretary for domestic finance and Weiss as counselor to Secretary Lew is that the latter position “doesn’t require” the Senate confirmation that Weiss was so publicly denied. But first blushes are for schoolboys and bigots and haters, and for those wild-eyed radicals who would happily risk seeing into what sort of proto-Somalian hellhole the United States might fall if the Treasury secretary were to be denied an adviser for a few weeks. Here, as so often, we should presume that the president knows better than the other co-equal branches, and conclude that politics must not be permitted to intrude upon his getting his own way. Apologies to Elizabeth Warren and Dick Durbin, who made it their business to block Weiss’s nomination; but you know not what you do.

I support Cooke’s general defense of procedure here, but I don’t think it’s being violated in this case, for three reasons.

The first is that process matters. There is no way to prevent a government official from soliciting the advice he’s looking for. Having a Senate-confirmed spot in government is about more than hiring. It’s why it’s not inappropriate that Susan Rice landed at the exceptionally powerful National Security Council when opposition to her from the Senate chased the administration away from making her secretary of state. Yes, it’s a different job title, but so is Weiss’s. And since policy is made in the White House, Rice is arguably more influential toward the shape of American foreign policy as national security advisor than she would have been at State.

The second is that the purpose of the opposition matters. The truth is that Rice would likely have been confirmed. The problem for Obama was that Republicans wanted to use the confirmation hearings to press the administration (and especially Rice) on Benghazi. For Weiss, it wasn’t clear Warren had the votes to reject his nomination. What she wanted was to make a point about the administration’s supposedly too-cozy ties to Wall Street and demonstrate her growing clout in the Democratic Party. So yes, Weiss was hired this way to avoid the Senate’s “advice and consent” (mostly “advice”), but neither is it fully accurate to say that, in this case as in many others like it, “the Senate didn’t want him.”

The third reason is that you could say the same about recess appointments. But wait, you object, the recess power is in the Constitution! Indeed it is. And what is its purpose? If the purpose is to prevent debilitating vacancies while the Senate is out of session, then its popular use today unquestionably violates the spirit of that process.

Presidents use recess appointments for controversial nominees who would be otherwise “unconfirmable” by the Senate. Does this not trash the very concept of the Senate’s role in choosing nominees? If we follow this line of thinking, we should oppose any appointment that would otherwise go through the Senate. (Cooke may in fact agree; I’m not claiming to know, merely making a broader point.)

And if the spirit of the Constitution is not violated by recess appointments made for this purpose, then the case for Weiss is even stronger. We can then say that the framers allowed for the workaround in cases other than coincidental recess.

And we might glance at the way presidents choose their advisors for some perspective. If we must oppose Weiss’s hiring in this case for these reasons, then we might as well indict the executive branch’s general conduct in foreign policy. Was the diplomatic opening to Cuba arranged by the American secretary of state or even Foggy Bottom appointees? No it was not; it was arranged by presidential advisor (and Susan Rice deputy) Ben Rhodes, whose position is not subject to Senate confirmation. And we could say the same about the entire system of “special envoys” through which presidents approach foreign affairs.

There is a danger here, without question. And the growth of the administrative state and its army of unaccountable bureaucrats would surely horrify the framers, for a variety of reasons. But Weiss’s hiring is probably not one of them.

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An Administration That Won’t Face Reality

President Obama isn’t likely to have much trouble getting the Senate to confirm Jack Lew as his new treasury secretary. Though Senator Jeff Sessions has vowed to try and stop Lew, there is nothing in the nominee’s long record of service to Democratic presidents that would disqualify him for the office. Given the fight that is brewing over the nominations of Chuck Hagel and John Brennan for the Department of Defense and the CIA, there is little appetite on the Hill for any further effort to deny the president his choice to run an important department.

But even though Lew will probably be easily confirmed, his nomination is one more signal that there may be no way to avoid more bitter and counter-productive confrontations with Congress over the budget. Lew is well known to be a hard-core progressive who, during the negotiations with Republicans over the debt ceiling and the fiscal cliff, made it clear that he opposes any true reform of entitlement spending. Having run to the left and won re-election, President Obama is entitled to try and govern from the left. Lew’s selection illustrates that this is his intention. But though he may have a mandate to govern, that doesn’t give him the power to alter reality. If he isn’t prepared to start thinking about cutting spending, then no amount of rhetorical excess will prevent this country from going further down the road to insolvency.

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President Obama isn’t likely to have much trouble getting the Senate to confirm Jack Lew as his new treasury secretary. Though Senator Jeff Sessions has vowed to try and stop Lew, there is nothing in the nominee’s long record of service to Democratic presidents that would disqualify him for the office. Given the fight that is brewing over the nominations of Chuck Hagel and John Brennan for the Department of Defense and the CIA, there is little appetite on the Hill for any further effort to deny the president his choice to run an important department.

But even though Lew will probably be easily confirmed, his nomination is one more signal that there may be no way to avoid more bitter and counter-productive confrontations with Congress over the budget. Lew is well known to be a hard-core progressive who, during the negotiations with Republicans over the debt ceiling and the fiscal cliff, made it clear that he opposes any true reform of entitlement spending. Having run to the left and won re-election, President Obama is entitled to try and govern from the left. Lew’s selection illustrates that this is his intention. But though he may have a mandate to govern, that doesn’t give him the power to alter reality. If he isn’t prepared to start thinking about cutting spending, then no amount of rhetorical excess will prevent this country from going further down the road to insolvency.

Lew’s hard-line liberalism is exactly what qualifies him to sit in Obama’s new cabinet of yes-men. That he has the trust of the president after serving him faithfully as White House chief of staff is to his credit, but that doesn’t change the fact that an administration economic team that is dedicated to defending the status quo is exactly what the country doesn’t need as we sink further into a period of fiscal crisis.

Mr. Obama seems to think that he can avoid the usual second term blues that afflict most presidents by creating a team with a hard ideological edge that won’t lose focus or lack the energy to fight for the things he believes. That’s an interesting working theory for how to be the first president to avoid a miserable second term since Theodore Roosevelt. But he and Jack Lew seem to think that he can alter the basic laws of economics the way King Canute sought to alter the laws of nature at the seashore.

By replacing Tim Geithner—a man who for all of his flaws had a grasp of what was good or bad for the nation’s economy—with a left-wing ideologue, Obama is telling us that he thinks his second term will be one in which his political beliefs can contradict the basic fact that the United States cannot tax its way out of its spending problem. While the liberal press continues to portray the president’s conservative opponents as extremists, it is clearer than ever that the real radicals are in the White House and now at the Treasury.

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Banks Make a Joke Out of Iran Sanctions

Those wondering about Iran’s ability to confidently defy the sanctions that the Obama administration has belatedly imposed on the rogue regime have previously pointed to the lax enforcement of the regulations. The Treasury Department has granted over 10,000 exemptions to companies desirous of avoiding the sanctions. The U.S. has also given Iran’s largest oil customers a pass on having to give up purchasing Tehran’s supplies. But it turns out that even those sanctions that are enforced aren’t working and this time the fault can’t be pinned on President Obama’s lack of will.

The New York Times reports that federal prosecutors say Chinese banks and other international institutions have been playing the role of middleman in a con game allowing Iranian banks and corporations to conduct business in the West that ought to be curtailed by the law. Through their U.S. branches, the Chinese institutions have reportedly funneled billions of dollars to Iran’s coffers. When added to the president’s timorous diplomacy, this fraud helps explain why the Iranians are going full speed ahead with the nuclear program with few worries about the sanctions that Secretary of State Clinton claimed would be so tough it would bring them to their knees.

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Those wondering about Iran’s ability to confidently defy the sanctions that the Obama administration has belatedly imposed on the rogue regime have previously pointed to the lax enforcement of the regulations. The Treasury Department has granted over 10,000 exemptions to companies desirous of avoiding the sanctions. The U.S. has also given Iran’s largest oil customers a pass on having to give up purchasing Tehran’s supplies. But it turns out that even those sanctions that are enforced aren’t working and this time the fault can’t be pinned on President Obama’s lack of will.

The New York Times reports that federal prosecutors say Chinese banks and other international institutions have been playing the role of middleman in a con game allowing Iranian banks and corporations to conduct business in the West that ought to be curtailed by the law. Through their U.S. branches, the Chinese institutions have reportedly funneled billions of dollars to Iran’s coffers. When added to the president’s timorous diplomacy, this fraud helps explain why the Iranians are going full speed ahead with the nuclear program with few worries about the sanctions that Secretary of State Clinton claimed would be so tough it would bring them to their knees.

The Times named two London-based banks with extensive Asian operations, HSBC and Standard Chartered, as being under investigation for complicity in helping Iran evade sanctions. But the ability of Western law enforcement agencies to stop Chinese shenanigans may be limited. It may be that as banks come under scrutiny, the Justice Department will gain cooperation and stop more such schemes. But the impression given by the Times piece is that of an unending game of “Whack a Mole” in which one Iranian scam can pop up as quickly as another is put out of business.

While the Justice Department is to be commended for pursuing these banks and hopefully seeing that they are severely punished, the case also illustrates the futility of a U.S. Iran policy that is based on the hope that diplomacy and sanctions will stop Tehran. And as long as billions are flowing into Iran’s treasury, there is no chance that economic measures will suffice to halt their nuclear ambitions.

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