Economy Dominates White House Focus
STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.
LINDA WERTHEIMER, host:
And I'm Linda Wertheimer. The new week begins with anxious eyes on financial markets and fresh anger at the bonus system for financial executives. President Obama will also make his first official trip to California this week to speak to some of those hit hardest by the recession. Joining us now to talk about the political side of the economic downturn is NPR's national political correspondent Mara Liasson.
Good morning, Mara.
MARA LIASSON: Good morning, Linda.
WERTHEIMER: Mara, there is considerable resentment with AIG. The insurance firm has received billions of dollars from the government and is still paying large bonuses to its executives. What happens if the company has to come back to Congress for more help?
LIASSON: It's going to be much harder to get that help. Look, there's a real wave of outrage. I mean, administration officials are excoriating the company all over television yesterday. And it's very likely that AIG will be forced to pay the taxpayers back for those bonuses. Still, it's going to make it a lot harder for AIG to get more bailout money from Congress.
And it's not just AIG. What happens when the administration comes back after the stress tests that it's performing on the banks and asks for more bank bailout money overall? There are estimates they could need as much as $2 trillion. There's a real populous backlash brewing. And in Congress, there's real bailout fatigue.
I think that's one of the reasons that the administration is waiting as long as possible to kind of bite the bullet and do what looks politically incendiary. You know, the president did put $750 billion as a placeholder in the budget for more bank bailout. Might be even higher than that.
WERTHEIMER: The Fed chairman, Ben Bernanke, was on "60 Minutes" last night in what I understand is a rear appearance. And he spoke cautiously, but relatively optimistically, about stabilizing the financial system.
(Soundbite of TV show, "60 Minutes")
Mr. BEN BERNANKE (Chairman, Federal Reserve): We do have a plan. We're working on it. And I do think that we will get it stabilized and we'll see the recession coming to an end probably this year. We'll see recovery beginning next year. And it'll pick up steam over time.
WERTHEIMER: Bernanke doesn't usually talk on the TV does he?
LIASSON: No, he does not. And this shows you how seriously the administration is taking the effort to really explain to people that they've got a plan. I would say they're - that they are very cautiously optimistically, with emphasis on the very.
What Bernanke said yesterday is, look, he thinks there can be a recovery if we can get banks to lend more freely, get the financial markets to work more normally. And until we do that, we're not going to see recovery. It's kind of like saying if we succeed, we will be successful.
(Soundbite of laughter)
WERTHEIMER: So that is the tone the administration is trying to take - sound as positive as they possibly can given the circumstances.
LIASSON: Yes. Now, they also had Larry Summers on television yesterday, who's the National Economic Council head at the White House, Christina Romer, the head of the president's Council of Economic Advisors. Larry Summers on Friday said it was a good time to buy stocks. The vice president, Joe Biden, gave an interview to AP where he took credit for last week's stock market rally, saying that there was an Obama factor at work.
I think there is a risk here. The White House, with reason, doesn't think it's fair to be blamed for any market dips on a given day or even a downward trend since the president was elected. But if they take credit for an uptick, they're going to have to take blame for a drop. But they are struggling to strike that right balance between convincing the country that the situation is dire and that it's going to take a long time to fix and scaring people into putting their money in their mattresses. So they know part of the crisis is a crisis of optimism and confidence. People have to feel comfortable enough, businesses have to feel comfortable enough to spend and hire. This is a very tricky rhetorical challenge.
WERTHEIMER: Now today, the president is unveiling a plan to help small businesses, which I guess sounds like he is turning his attention back to the economic crisis. He's been talking about health care, education initiatives.
LIASSON: Yes, he's back to the credit crunch. And very soon, we're told, he's going to have more details about how they plan to get those toxic assets off the balance sheets of banks.
He has been criticized for doing too much, for taking his eye off the ball of the economic crisis, and the White House responds that all this other stuff, health care and energy, is fundamental to getting the economy back to a more stable growth pattern, one that's not based on speculation and asset bubbles. But the truth is that if he can't get the economy fixed, every one of his other priorities - like health care, like energy, like education - are going to be in peril.
WERTHEIMER: NPR's national political correspondent, Mara Liasson. Thanks very much, Mara.
LIASSON: Thank you, Linda.
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