WASHINGTON -- President Obama announced his choice of Jacob J. Lew to be the secretary of the Treasury on Thursday, saying that he has "worked and succeeded in some of the toughest jobs in Washington." The selection of Mr. Lew, the White House chief of staff and a former budget director, is a change that would complete the transformation of Mr. Obama's economic team from the big-name economists and financial firefighters hired four years ago to budget negotiators ready for the next fiscal fights in Congress.
Mr. Obama called Mr. Lew "a master of policy who can work with membes of both parties and forge principled compromises."
If confirmed by the Senate, Mr. Lew, 57, would become just the second Treasury secretary for Mr. Obama, succeeding Timothy F. Geithner, who at the president's insistence stayed for the entire first term.
Mr. Geithner, formerly president of the New York Federal Reserve Bank and a top Treasury official in the Clinton administration, was the last remaining principal from the original Obama economic team that took office at the height of the global financial crisis in January 2009.
Mr. Lew, in brief remarks, did not address the looming challenges of the job, saying only that he looked forward to leading a Treasury staff that he called "legendary for their skill and knowledge."
Mr. Geithner, who received a warm send-off, said his successor was "committed to defending the safety net for the elderly and the poor," a reference to programs like Medicare, Social Security and Medicaid, which are under intense pressure in the long-running fiscal negotiations.
Mr. Lew also "understands what it takes to create the conditions for economic growth," he added.
Mr. Geithner will remain at Treasury through Jan. 25, a few days after Mr. Obama's second inaugural.
While the team is changing, so far it is made up entirely of men who have been part of the administration since its first months. Gene Sperling, like Mr. Lew a veteran of the Clinton administration and the partisan budget wars of that era, is expected to remain as director of the White House National Economic Council. Alan B. Krueger, a former Treasury economist, will continue as chairman of the Council of Economic Advisers and Jeffrey D. Zients, a former business executive, remains for now as acting director of the Office of Management and Budget, though Mr. Obama is said to want to promote him to another job.
That composition gives Mr. Obama a high degree of comfort with his economic advisers, who have experience in the budget struggles that have occupied the administration since Republicans took control of the House two years ago. Those struggles will resume later this month. Yet the continuity also plays into criticism that the president is too insular and insufficiently open to outside voices and fresh eyes in the White House.
If Mr. Lew is confirmed in time, his first test as Treasury secretary could come as soon as next month, when the administration and Congressional Republicans are expected to face off over increasing the nation's debt ceiling, which is the legal limit on the amount that the government can borrow. Mr. Obama has said he will not negotiate over raising that limit, which was often lifted routinely in the past, but Republican leaders have said they will refuse to support an increase unless he agrees to an equal amount of spending cuts, particularly to entitlement programs like Medicare and Social Security.
Mr. Lew was passed over for Mr. Obama's economic team four years ago, when Mr. Obama instead chose Lawrence H. Summers, a former Harvard University president and Treasury secretary in the Clinton administration, as director of the National Economic Council. Hillary Rodham Clinton then hired Mr. Lew at the State Department when she became secretary, and in late 2010 -- over the objections of Mrs. Clinton, who had come to rely on Mr. Lew -- Mr. Obama made him budget director, the same post Mr. Lew had held late in the Clinton administration.
Mr. Lew in the 1980s was a Democratic adviser to the House speaker at the time, Thomas P. O'Neill Jr., participating in fiscal talks with the Reagan administration. Mr. Lew is known for his low-key style and organizational skills.
While Mr. Lew has much less experience than Mr. Geithner in international economics and financial markets, he would come to the job with far more expertise in fiscal policy and dealing with Congress than Mr. Geithner did. That shift in skills reflects the changed times, when emphasis has shifted from a global financial crisis to the budget fights with Republicans in Congress.
Given the ongoing partisan tension, Mr. Lew is likely to be questioned closely by Senate Republicans in confirmation hearings. But Republicans have not signaled the kind of opposition they have put up to some of Mr. Obama's other potential nominations, although Senator Jeff Sessions, Republican of Alabama, indicated that he would try to block Mr. Lew for what Mr. Sessions considered his misleading testimony about the federal debt when Mr. Lew was budget director.
It is Republican leaders in the House like Speaker John A. Boehner, who do not have a role in confirmation votes, who have been most critical of Mr. Lew based on their experience with him in the mid-2011 negotiations to resolve a debt fight. An aide to the Republican leaders, who would not be identified, said Mr. Lew is viewed as "a classic big-government liberal" who all but lectures to the Republican leaders about the rightness of administration positions.
While Mr. Lew's personal politics are indeed progressive, for the White House he has supported reductions in future spending for entitlement programs like Medicare and Social Security, just not as deep and as transformative as Republicans would like. But like Mr. Obama, he is protective of Medicaid and other antipoverty programs in budget-cutting talks.
His departure as chief of staff would create a vacancy in a critical job at the White House, leaving Mr. Obama to find what would be his fifth -- a turnover rate that is in contrast with the stability atop Treasury the last four years with Mr. Geithner. The leading candidates are said to be Denis McDonough, currently the deputy national security adviser in the White House, and Ronald A. Klain, a former chief of staff to two vice presidents, Joseph R. Biden Jr. and Al Gore.
Before joining the Obama administration, Mr. Lew spent a brief period in the financial sector, at Citigroup, first as managing director of Citi Global Wealth Management and then as chief operating officer of Citigroup Alternative Investments. For the financial industry, Mr. Lew is a largely a blank slate.
"While he can undoubtedly learn the material on the job, we question whether he has sufficient relationships with the banking industry in the U.S. and abroad, which can be critical during a financial crisis," Brian Gardner, head of Washington research for the investment banking firm Keefe, Bruyette & Woods, wrote to clients on Wednesday.
But Rob Nichols, the president Financial Services Forum, a group that includes the chief executives of the largest financial institutions in the country, said in a statement that Mr. Lew was "well-suited for the job especially at a time when Washington must come together to address our debt situation and put our nation on a long-term fiscally sustainable path. Mr. Lew understands the important role the financial sector plays in our economy, as well as our continued economic recovery."
And Michael Schlein, who worked with Mr. Lew at Citigroup and is now head of a nonprofit financial services organization, Accion, said, referring to Mr. Lew as Jack, as he is commonly known: "People in the business community like to deal with people in Washington who they can trust. I think Jack already does, and will do, very well with Wall Street and with business leaders because he is a very, very straight shooter."
The question is relevant because major regulations under the 2010 Dodd-Frank law remain to be put into effect in Mr. Obama's second term. Like financial institutions, advocates of tighter regulation of Wall Street have concerns about Mr. Lew, but from the opposite perspective -- that he has too much experience in the industry, not too little.
"He appears to share a Wall Street mentality, particularly when it comes to financial reform," said Dennis M. Kelleher, the president of Better Markets, a Washington-based nonprofit. "Financial reform is all about making the banking system safer and preventing more taxpayer bailouts."
John H. Cushman Jr. contributed reporting.
This article originally appeared in The New York Times.