The man who made Republicans blink

The visage suggests Asian roots. So does the name. The negotiating style is that of a dogged Hakka haggling on a Hong Kong street.

In March, when US Treasury Secretary Jack Lew went on a trip to Beijing to meet new Chinese President Xi Jinping, he reportedly had a US$6 (S$7.40) lunch with staff members at Bao Yuan Dumpling House close to the American embassy.

Though he can eat like a Beijing local and is often mistaken for having Asian heritage, Mr Lew has Jewish parents. Democratic Senator Joe Lieberman once joked that he had always been envious that Mr Lew managed to "be Jewish and convince people by your name that you're actually Asian-American".

Yet, it's not his looks but his poker-faced gambit that got a recalcitrant Republican Party to blink in the stand-off over the government debt ceiling that's drawing attention to this Washington insider. The Republicans had refused to pass the federal budget unless concessions were given on President Barack Obama's healthcare law, leading to a partial government shutdown from Oct 1, and refused to agree on increasing the debt ceiling as well, risking a government default on its debts.

The eleventh-hour deal by Congress to avert a potential default and reopen government has been hailed as something of a victory for Mr Obama. In equal measure, it is Mr Lew's victory as well.

The 58-year-old took a gamble by presenting Oct 17 as the day the US economy would fall off a precipice if no deal was reached.

That he was able to focus minds squarely on that single date is a testament to how shrewd a negotiator Mr Lew is as well as almost three decades' worth of experience fighting budget battles.

His strategic triumph in the latest round has once again thrust the spotlight on an otherwise low-key White House operative.

Though he never actually said the US would descend into its first-ever credit default on Thursday, he made the deadline sound urgent enough - writing a letter to Congress to say that would be the day there would be only US$30 billion left in government coffers to pay daily bills that can occasionally be twice that amount.

Many economists say Mr Lew's D-Day was never going to be that scary. Money would still come in after that day and most say the default would not have taken place at least for another week.

To make his case about the urgency of a deal, Mr Lew adopted an approach quite apart from any deployed by his predecessor Timothy Geithner. Where many have come to see the office of the Treasury Secretary as one that endeavours to calm markets, there were times in the past month when Mr Lew seemed to want to alarm it.

"The calm out there is a bit greater than it should be," he said in an interview with Bloomberg, about a month before Oct 17.

The Chicken Little gambit brought rebukes from Republican congressmen and pundits alike. For some, Mr Lew's tactics are nothing new. The man has been involved in such deals since the 1980s when he was an aide to the Democratic House Speaker Tip O'Neill and President Ronald Reagan was in the White House.

Since then he has held various roles under presidents Bill Clinton and Obama, including as Director of the administration's Office of Management and Budget. He was also Mr Obama's chief of staff for a year before he was elevated to the current job.

And it was under Mr Obama that the serious, understated man - ironically known for a loopy signature - really began to develop a reputation as a negotiator.

The son of middle-class parents from Queens has certainly established himself as a key player within the President's tight inner circle and is expected to be a key weapon in negotiations to come.

Despite his reputation and status, the Harvard-educated Mr Lew is known to have an even temper and to shy away from publicity. But, as the Wall Street Journal wrote in a critical leader at news of his appointment as Treasury Secretary in January, Mr Lew is the "President's most partisan and implacable negotiator".

"He's the man you pick if you expect months of political trench warfare over taxes and spending."

Ask Mr John Boehner. The House Speaker tangled with him earlier over the fiscal cliff negotiations and is on the ropes for a second time this week. As he said on Thursday, vanquished by the Lew move: "We fought a good fight. We just did not win."

jeremyau@sph.com.sg

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