With a second term assured, President Obama can now get down to the serious work of the economy. But he's expected to craft a new team at the White House to do so.
It's widely anticipated that current Secretary Timothy Geithner may stay briefly to help broker a deal on the fiscal cliff, but will exit for the private sector soon thereafter. The new hire's portfolio will include some of the most challenging tasks facing the administration.
"It is clear that the central agenda for the second term, at least initially, is long-term deficit reduction," says Robert Shapiro, a former U.S. undersecretary of commerce for economic affairs and adviser to the presidential campaigns of Bill Clinton, Al Gore, and John Kerry.
Of course, the deficit discussion is not a new one. Worries about the nation's towering deficits and debt grew louder during George W. Bush's two wars and President Obama's emergency economic measures, particularly the stimulus package. In 2010, Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to study how to improve the nation's fiscal health. But with the automatic budget cuts and tax-cut expirations pending, it appears that the day of reckoning will come in the next term.
"I don't think they need to find the solutions," says Stephen Adams, president of the American Institute for Economic Research, of the next Treasury appointee. "The technical work has been done."
The grunt work, rather, will be more interpersonal than mathematical.
"It has to be someone who's really artful at bringing lots of people to the table, [who has] credibility around budgets and tax issues but has the ability to be a facilitator of the dialogue," Adams says.
One of the most-buzzed-about possibilities appears to have both the knowledge and the bipartisan bona fides. Erskine Bowles was, along with former Republican Senator Alan Simpson, cochair of the president's fiscal responsibility commission. Though Bowles was a chief of staff in the Clinton White House, he earned the respect of Republicans while on the debt commission. Politicians of both parties, including Republican presidential contender Mitt Romney, have spoken approvingly of the proposal, which called for both spending cuts and increased revenues.
Current White House Chief of Staff Jacob Lew is also considered a front runner. He served as the OMB chief under both Obama and Clinton, giving him plenty of number-crunching experience. However, Lew may have made enemies among GOP lawmakers during 2011 budget negotiations, according to Reuters, which reports that Hill GOP staffers said he wasn't always helpful in those talks.
One alternative is a high-ranking business executive. Names that have surfaced publicly include Laurence Fink, CEO of investment-management firm BlackRock, and long-time Democratic adviser Roger Altman, chairman of Evercore Partners, also a former deputy Treasury secretary. A private-sector choice could have the benefit of bringing the business community into the tax-reform conversation, but Shapiro thinks that now may not be the right time for an executive at Treasury.
"I think a CEO or a business person is not always a win-win situation because the reality of policymaking in Washington at a time of gridlock makes for a very different skill set than the one you would require from a successful CEO," he says.
Filling the Treasury seat is far from the president's only concern. In addition, Obama will have to round out his fiscal team, including appointing a director of the OMB. Currently, the office has an acting director in Jeffrey Zients, whom the National Journal lists among its top possibilities for the directorship. Also on the list is Doug Elmendorf, current director of the Congressional Budget Office.
But budgets are only one part of Washington's economic machinery. One year down the road, Obama could have another big decision to make: who to appoint as chairman of the Federal Reserve Board. The New York Times reported in October that Ben Bernanke, chairman since 2006, has told close friends that he does not expect to stand for a third term. However, he has not publicly commented on his plans.
Whoever holds the seat will have a heavy workload: presumably, the new head would work to continue current stimulative monetary policies, but would also eventually have to wind them down. Undoing unprecedented moves like the three recent rounds of quantitative easing will take a very skilled, very careful monetary policy expert "with the skills of a bomb defuser," says Adams.
"To me it seems like somebody who understands in great detail how the monetary system works and how the banking system works and how the money flows in and out of the system," he continues. "It's a technician's job, rather than a bully pulpit."
One person with that expertise is already on the Fed's Board of Governors: Vice Chair Janet Yellen. The former UC-Berkeley economics professor is often mentioned as a potential pick. She has plenty of experience: she served on the board in the 1990s and then returned in 2010.
However, there are plenty of other monetary policy wonks to pick from, including former Federal Reserve heavy hitters. The Wall Street Journal has named Princeton economics professor Alan Blinder and Brookings scholar Donald Kohn among the contenders. Both are former Vice Chairmen of the Fed's Board of Governors. Former Treasury Secretary Lawrence Summers has also been mentioned as a contender, but he may prove too controversial a pick. As president of Harvard University, Summers famously remarked upon women's under-representation in science and engineering, remarks that many considered sexist. As Treasury Secretary under Bill Clinton, he was also a proponent of the Gramm-Leach-Bliley Act, which repealed financial regulations in the 1933 Glass-Steagall Act. Many economic experts have claimed that these repeals contributed to the recent financial crisis.
The parlor game of picking the president's advisors before they're picked will continue for two more months. But while these predictions are mere cocktail chatter in Washington, the people on the shortlist should steel themselves for up to four tough years of nurturing a fragile economy (without breaking the bank).
Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter @titonka or via E-mail at firstname.lastname@example.org.