A debt limit brawl could end Jack Lew's 'quiet period'

Jack Lew (right) and Fed Chairman Ben Bernanke
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Jack Lew (right) and Fed Chairman Ben Bernanke

Jack Lew's first few months as Treasury secretary have been relatively quiet. The biggest news so far has been the transformation of his signature from a series of loops to something that actually bore a resemblance to letters.

On Monday morning, I spoke to a derivatives trader to gauge his perception of Lew's tenure.

"When does he take office?" the trader asked.

This is almost certainly intentional. Tim Geithner, Lew's predecessor, became a lightning rod for controversy, garnering criticism from the left and right. Lew and the White House appear to have decided on a policy of letting the Treasury secretary fade a bit into the background.

Or maybe it's not so much a policy as a reflection of Lew's personality. People who have worked with him describe him as a "policy wonk" and "low key."

"He didn't come into this with a grand vision of, say, how the financial system should work. He's not Tim Geithner," one person in the administration said.

Lew's relative obscurity probably won't last through the end of the year. The clock is ticking on the debt ceiling and Republicans are once again gearing up to take on the Obama administration in a public fight over government debt. In fact, the fight may have already begun.

Republican Sen. Marco Rubio of Florida announced that he and his colleagues were drawing "line in the sand" over the debt ceiling.

"The bottom line is that the debt limit and the fact that we don't have a solution for the debt is also the reason for the crisis. We need to begin dealing with this seriously and stop playing games. Someone has to draw a line in the sand, and I know many of my colleagues and I intend to do so every chance we get," Rubio said.

Rubio appeared to demand cuts in entitlement spending, particularly in Medicare and in Obamacare, in exchange for an increase in the debt ceiling. (I say "appeared" because it's quite hard to tell exactly what the "line in the sand" is in Rubio's speech. He doesn't like debt, though, that's for sure.)

On Sunday, Lew went on CNN and said the Obama administration wasn't going to get drawn into another round of negotiations over trading spending cuts for a debt ceiling hike.

"The president has made very clear that we will not negotiate over whether or not the government should default and we will not get into a negotiation like 2011, over the debt ceiling. And I'm trying to separate the issues of the debt ceiling and the larger fiscal questions," Lew said.

(Read More: Don't Panic—The Debt Ceiling Explained)

Of course, this is a bit of bluster on the part of Lew. The debate has never really been about "whether or not the government should default." Almost no one takes the position that the United States should default. It's really about whether the debt ceiling—the legal limit on how much debt the United States government may have outstanding at any time—should be raised and under what conditions.

But the appearance of bluster from Lew is remarkable.

"His quiet period is about to end," said one person in the administration.

The debt ceiling debate will likely come to a head this fall. That's when the Treasury Department's extraordinary measures to avoid reaching the ceiling will more or less run out of room to maneuver. And at that point, Lew may no longer have the choice to remain behind the scenes.

It's obvious Lew knows this. He may already be preparing to take a bigger public role. On Wednesday, he'll be speaking at the Delivering Alpha conference, co-sponsored by CNBC and Institutional Investor. So watch to see whether the Treasury secretary takes a quiet approach or comes out swinging against Republican's like Rubio.

"This is going to be his coming out party to Wall Street," the administration source said.

—By CNBC's John Carney. Follow him on Twitter at @carney.