To Face Economic Crisis, Obama Moves Quickly
ROBERT SIEGEL, host:
From NPR News, this is All Things Considered. I'm Robert Siegel.
MICHELE NORRIS, host:
And I'm Michele Norris. It was another rough day in the stock market. The Dow was down 443 points after a similar drop yesterday. The market is now back near the lows of a couple of weeks ago. Investors are weighing what a serious recession might do to corporate earnings, and that looming recession is already a key concern for the new President-elect Barack Obama. He's scheduled to meet with his economic advisers tomorrow in Chicago. Here's NPR's John Ydstie.
JOHN YDSTIE: Mark Zandi of moodyseconomy.com gave advice to the McCain campaign during the election. Now, he says, the economic challenges the country faces are so great that Barack Obama should take a lead role in getting a new stimulus package through the lame duck Congress.
Mr. MARK ZANDI (Chief Economist, Co-founder, moodyseconomy.com): Effectively leading the nation, but still being President-elect, because the crisis is so severe, the pressure is so intense and time of essence, that waiting till an inauguration day may be waiting too long.
YDSTIE: Even President Bush, who will meet with his successor on Monday, said, today that the country faces economic challenges that will not pause to let a new president settle in. Obama is being urged to name his economic team quickly, especially his choice for Treasury secretary. Among those on the short list are former Clinton Treasury secretary, Larry Summers and former Federal Reserve chairman Paul Volcker. Both have advised Obama and will be at the meeting in Chicago tomorrow. Also on the list is the president of the New York Federal Reserve Bank, Tim Geithner, who's been deeply involved in the governments financial rescue efforts. Mark Zandi says there's plenty for Obama's economic team to do right now.
Mr. ZANDI: We do have an important meeting of global leaders on the economy, even next week, and it would be helpful if, you know, he had at least part of his team together so that they could participate in that very important meeting.
YDSTIE: Others say Obama's team could get involved in working with the Bush administration on focusing the $700 billion financial rescue plan, as well as working with Congress on the stimulus package. Today, House Speaker Nancy Pelosi said she envisioned a two-staged stimulus, one bill from the lame duck Congress and another early next year after Obama is in the White House. That one will likely include a permanent tax cut, says Pelosi. And a tax cut for the middle class was, of course, at the heart of Obama's economic proposal says Mickey Levy, chief economist at Bank of America, New York.
Dr. MICKEY LEVY (Chief Economist, Bank of America New York): So, the fiscal stimulus, now that it moves to the top of the priority list, that stimulus package will include some of the components of Obama's economic platform, including tax cuts for the middle and lower income households.
YDSTIE: And ironically, there are some other elements of Obama's plan that might move more easily through the Congress because of the recession. Obama's proposals for spending on infrastructure and alternative energy could also be moved forward to provide stimulus and job creation for a faltering economy, says Levy. One Obama idea that could be shelved for a while, says Princeton economics professor Alan Blinder, is his proposal to raise taxes on the rich. That's supposed to take effect in January of 2010, but if the economy is still weak, a tax hike could be counterproductive, says Blinder.
Dr. ALAN BLINDER (Economics, Princeton University): My guess is it will still be rather weak. If that's the case, then I think putting off the tax increases makes a lot of sense.
YDSTIE: Although the need for stimulus could give a boost to some of Obama's agenda, there's no doubt other elements of his program will face an uphill battle. That's because the financial downturn and expensive stimulus programs could drive the federal deficit over a trillion dollars, making additional federal programs a hard sell. John Ydstie, NPR News, Washington.