Scene: the Oval Office

PRESIDENT BARACK OBAMA and CHIEF OF STAFF JACK LEW are seated on the sofas facing one another, with a single sheet of paper in front of LEW on the coffee table between them. Neither looks happy.

The White House absolutely wants the Treasury Secretary to be deeply involved with budget issues. But we know this because they’ve already designated current Treasury Secretary Timothy Geithner in the lead negotiating role on the fiscal slope. So while Lew may have the resume, Geithner already has the job, and he has indicated he will not step down until the negotiation gets resolved somehow.

Erskine Bowles told Maria Bartiromo last night that he would not serve as the nation’s next Treasury Secretary. This apparently happened off-air, but it has been confirmed in local papers in North Carolina, Bowles’ home state.

The next Administration, whoever it may be, will feature a new direction on policies around economic and finance issues. That’s because, even if Barack Obama wins re-election, Treasury Secretary Timothy Geithner has announced that he would leave his post. So you either get a Romney Presidency and an entirely new direction on these policies, or a second Obama term and a potential new direction. With fiscal issues sure to take prominence in 2013, this is a critical changeover.

So who’s on the Washington short list?

Fatster compiles headlines and links from the stories you might have missived over the weekend, including articles on rendition, drone strikes, Burma, Barclays Bank thieves, House GOP underfunding, dumb ALEC, Rick Scott’s voter purge, private prisons, flood insurance, Jack Lew, Eric Holder ConED strike, phony pregnancy centers, reproductive rights, and much more.

The FY 2013 budget that the Administration will release today is, in the long run, a meaningless document in substantive terms, so I don’t want to spend that much time on it. But I was a little surprised with the pushback I received about my assessment that it reflects a shift in tone rather than policy. It’s a simple fact that the Administration has wanted a deficit deal for some time, and that this budget will build in a deficit deal. They’re going about it in a smarter way with a higher bid in the negotiations.

When Bill Daley was relieved of the Chief of Staff part of the Chief of Staff job, I thought he’d just end up as an appendage, a corporate bagman. But over the past several weeks, the White House has stepped away from the corporate-friendly pose they cultivated with the Daley appointment, and Daley became far less relevant. Today he resigned to join the reelection campaign.

The White House estimates that Hurricane Irene caused $1.5 billion in damages, virtually assuring that they will have to ask for a disaster relief supplemental sometime in the next couple months.

The CBO report on John Boehner’s debt limit plan has really set back the effort and probably poisoned the entire enterprise among the more conservative members of his caucus.

The market may be pricing in the fact that Treasury has more cash on hand than it claims, enough to hold things together past August 2nd, past the Social Security payments on August 3rd and even past the large debt rollover on August 4th.

There’s a great deal of credibility tied up in the imprecise rendering of August 2nd as the drop-dead date. If the Administration actually has the cash to go a bit further, it will confirm the basest suspicions of the conservatives.

That’s why OMB Director Jack Lew was out there today denying that Treasury had the additional headroom.