Fixing The Economy Is Job One For Obama
RENEE MONTAGNE, host:
The declines in U.S. and European stocks remind us that the global financial system remains weak and a recession in the U.S. still looms, if we're not in one already. One of the first things that President-elect Obama will have to tackle is the sinking economy. To talk about his immediate challenges, we're joined by David Wessel in the studio. Good morning, David. He's economics editor of The Wall Street Journal.
Mr. DAVID WESSEL (Economics Editor, The Wall Street Journal): Good morning.
MONTAGNE: Let's begin with the possibility of change. Look, inauguration day is not until January, but you're expecting, what, the president-elect to make some key decisions as early as this month?
Mr. WESSEL: Absolutely. President-elect Obama is very aware that at a time of uncertainty, the markets and the people can't be confused about whether there's going to be a competent administration. I expect that the president-elect will put together his economic team very soon and announce it, and that they will start working with the Treasury to sort of give people some confidence that we're not in a rudderless economy now, because it's pretty important.
STEVE INSKEEP, host:
Well, now what are the odds that the president-elect will also be - well, he'll be involved with what we could call his day job for the moment. He's still a United States senator. He's still a member of a Congress that will come back and meet one more time. And there is talk, at least among Democrats, of some kind of big economic stimulus package.
Mr. WESSEL: Right. Well, I don't think he'd be spending much time on his day job as a senator. But I do think that the Democratic leadership, which very much wants this to be a successful presidency, will be coordinating with him as they try and decide how big and what kind of fiscal stimulus to implement. The argument is if you're going to do fiscal stimulus, the sooner the better, so it takes - has some effect on the economy. But he also will want to make sure of two things, I think. One is that they're not wasting the money with a lot of pork barrel stuff that won't help out. And the second is that they can work something out with President Bush so that they don't have a confrontation.
INSKEEP: Quick question, David Wessel, since we're talking about more federal spending. Does anybody have a handle on what the federal budget deficit is going to be at this point?
Mr. WESSEL: Bigger.
(Soundbite of laughter)
Mr. WESSEL: Much bigger. I think the issue is that no one is going to worry about the deficit in the short term. At a time of economic crisis like this, all those concerns will go out the window.
INSKEEP: Even if the deficit is a trillion dollars?
Mr. WESSEL: As long as we can keep borrowing money from overseas, and interest rates aren't going up, they will continue to put that as a second-order issue. Now, the question is for President-elect Obama is whether to do things as part of this package that might help assure people that down the road the deficit will be smaller, but we'll have to see.
MONTAGNE: Well, at the moment the Bush administration is controlling that 700 billion dollars of bailout funds. How much influence would President-elect Barack Obama have on that?
Mr. WESSEL: Well, ordinarily I don't think the president-elect would have any impact. We know when there was a transition from Hoover to Roosevelt that Roosevelt did absolutely nothing, and it was the worst four months of the Depression between November and then the inauguration in March.
MONTAGNE: Although, he did that for a reason too?
Mr. WESSEL: Yes, but nobody wants that to happen again. My suspicion is that Treasury Secretary Paulson will consult very closely with President-elect Obama. The two men have been talking quite a bit during the campaign, and the Obama team will have some influence. The Bush administration will continue to have responsibility and do things. But I doubt they will do things that Obama strongly objects to.
MONTAGNE: And President-elect Obama's campaign promises: health care, energy, tax cuts. What do you see happening there?
Mr. WESSEL: I think all that's going to go on the backburner for now. The financial crisis is so severe, the recession so deep, and the need to repair the banking system so crucial. I do think that he'll have to pick one of those campaign promises to push, not only to keep faith with people who voted for him, but also to satisfy the newly enlarged Democratic majority which wants to do something more than bail out Wall Street and help the recession. They want to have some accomplishment. So my suspicion is he'll pick something, perhaps health care, to push as his agenda.
INSKEEP: Well, that's the most complicated one you could probably pick. Is it realistic to be pushing that at the same time you're trying all these emergency measures?
Mr. WESSEL: I don't think it's terribly realistic, but my suspicion is that this president will not start out being constrained by what people tell him is realistic. If he did, he wouldn't be president now.
INSKEEP: David, thanks very much.
Mr. WESSEL: You're welcome.
INSKEEP: David Wessel is economics editor of The Wall Street Journal, and a regular guest on this program, giving us an update on the economic implications of yesterday's election.