Obama Economic Team Rolls Up Its Sleeves

President-elect Barack Obama says bold action is needed to "jolt" the economy and save millions of jobs. He's urging Congress to pass a major job-creating stimulus bill. He also named key leaders of his economic team Monday.

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STEVE INSKEEP, host:

It's Morning Edition from NPR News. Renee Montagne is away. I'm Steve Inskeep, good morning. President-elect Obama says the country must act swiftly and boldly to deal with the economic crisis. And that may mean the President-elect himself faces pressure to move more swiftly than he wanted. He made his remark yesterday as he unveiled his economic team. And NPR's John Ydstie reports that Mr. Obama appears to be ready to play a major role in addressing the crisis even before taking office.

JOHN YDSTIE: Two weeks ago, during his first post-election news conference, President-elect Obama deferred to the Bush administration on the handling of the economic crisis, saying the United States has only one president at a time. Yesterday, his tone changed decidedly. Flanked by his new economic team, he said it was time to go to work.

(Soundbite of news conference)

President-elect BARACK OBAMA: That work starts today, because the truth is we do not have a minute to waste.

YDSTIE: Obama was forced to take a step into the transition power vacuum in Washington when faith in some of the nation's major banks deteriorated again last week, leading to the rescue of Citigroup over the weekend. President Bush called Mr. Obama to inform him of the rescue plan which taps another $20 billion of the $700 billion TARP program authorized by the Congress. Yesterday, Obama clearly suggested he would be involved in future TARP decisions.

(Soundbite of news conference)

President-elect OBAMA: We need to make sure that that authority is used forcefully in the coming weeks to stabilize the current situation. I will make further assessments about whether it's necessary to draw down additional TARP money as the administration and Treasury Secretary Paulson and Bernanke provide me more real-time information.

YDSTIE: Simon Johnson, former chief economist at the International Monetary Fund, is encouraged by the signs of more involvement from the president-elect.

Professor SIMON JOHNSON (Entrepreneurship, Sloan School of Management, MIT; Senior Fellow, Peterson Institute for International Economics): I think this means that Mr. Obama and his team realize that the situation, far from stabilizing, as Mr. Paulson said last week, is actually deteriorating.

YDSTIE: That means Mr. Obama and his team need to get busy, says Johnson, who is now a professor at MIT and a fellow at the Peterson Institute.

Professor JOHNSON: And I hope and I think that Mr. Bush's administration will cooperate with them fully, but there's no question that there's a lot of constitutional issues here and plenty of scope for people to be uncomfortable.

YDSTIE: Those constitutional issues are diminished somewhat by the fact that Mr. Obama's choice for Treasury secretary, Tim Geithner, already has a seat at the decision-making table. That's because Geithner's current job is president of the New York Federal Reserve Bank. And for the past 18 months, he's worked intimately with the current Treasury secretary, Henry Paulson, and Fed Chairman Ben Bernanke battling the economic crisis. Former FDIC Chairman William Seidman, who dealt with the fallout from the savings and loan crisis two decades ago, says it might seem unlikely the Bush administration would cede decision-making power to the incoming administration.

Mr. WILLIAM SEIDMAN (Former Chairman, FDIC; Chief Financial Commentator, CNBC Network): Although, I think they are convinced that the severity of the problem is so great that they want to make sure they're not in any way making it worse. So I would think they would try to work out something that looked like a joint venture, but the final word would be in the hands of the new administration.

YDSTIE: Speaking from experience, Seidman says that in crisis situations there's got to be one decision maker. Whether President Bush and Treasury Secretary Henry Paulson are ready to be that cooperative is a big question mark. But MIT's Simon Johnson says he believes Mr. Obama's Treasury secretary-in-waiting can make it work.

Professor JOHNSON: Mr. Geithner is a very experienced economic diplomat, and he's very capable of managing that relationship without - getting things done without ruffling too many feathers.

YDSTIE: The first act in this joint venture, the rescue of Citigroup, does seem to have gone smoothly. But with big egos involved and the inevitable differences on policy, working together for the next two months will be a challenge. However, with so much at stake, there is a great incentive for the Obama and Bush camps to find a way to cooperate. John Ydstie, NPR News, Washington.

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Obama Taps Geithner, Summers For Economic Team

As a clear signal that President-elect Barack Obama is focused on fixing the broken U.S. economy, he introduced his choices for an economic leadership team on Monday. Recent disastrous economic news has made it clear, Obama said, "that we are facing an economic crisis of historic proportions."

He said, "If we do not act swiftly and boldly ... we could lose millions of jobs next year."

Obama stood up at high noon EST and told reporters in Chicago that his choice for secretary of the Treasury is Timothy Geithner. Obama has also selected former Treasury Secretary Lawrence Summers to lead the National Economic Council, Christina Romer as head of the White House Council of Economic Advisers and Melody Barnes as director of the White House Domestic Policy Council.

"I've sought leaders who could offer both sound judgment and fresh thinking," he said.

He said that his administration would make good on financial commitments that the Bush administration has made to ease unsettled markets. And Obama said his team will immediately begin working with Congress on a new stimulus package. Some Democratic legislators have said the two-year cost of Obama's plan — which includes creating and saving 2.5 million jobs — could be around $700 billion.

Obama declined to put a dollar figure on the stimulus plan but said, "Our economy is trapped in a vicious cycle. The economy is likely to get worse before it gets better."

Time and again Obama hit on the relationship between Wall Street and Main Street. He reiterated that any successful economic salvation plan must rebuild confidence not only in the world's financial markets but in the minds of middle-class Americans.

At one point Obama said that any recovery plan faces multiple challenges. He said it must, among other things, stabilize the financial system, get credit flowing again, address the continuing mortgage crisis, deal with the skittering automobile industry and create new jobs.

"I am hopeful about the future," he said. "I have full confidence in the wisdom and ingenuity of my economic team, and in the hard work, courage and sacrifice of the American people."

He added, "Families cannot afford to keep on waiting and hoping for a solution" to the economic instability.

Obama emphasized that he wants to see Congress begin to work on an economic stimulus package in early January. However, he told reporters that he did not want to get into specific numbers and details of his stimulus plan.

Obama took a few questions. Asked about the foundering automobile industry, Obama said it is historically "the backbone of America's manufacturing base."

He said, "We can't allow the auto industries simply to vanish." But he added, "We can't just write a blank check to the auto industry."

It is an industry, he says, "that has been resistant to change." And Obama said he was "surprised" that its top executives "did not have a better-thought-out proposal" when they appeared before Congress last week.

He said that the carmakers need to assure taxpayers that they have a plan for "a long-term sustainable auto industry" and that they are not just "kicking the can down the road."

Asked about the present state of the economy, he said that some proposed solutions the Bush administration has tried haven't worked. Others have perhaps helped stabilize rocky markets, he said.

But Obama said that his administration wants to clearly articulate "what our end goals are."

The American people deserve "clarity and transparency to our plan," Obama said. He added that adjustments will be necessary.

"What we have seen," he said, "is confusion on the part of the market sometimes in terms of what the overall direction might be."

Obama said he hopes to "summon that spirit of determination and optimism" within Americans and "bring together the best minds in America to guide us."

Then he introduced his economic team.

Since 2003, Geithner has been the president of the Federal Reserve Bank of New York. He knows Treasury from the inside out. He joined the department in 1988, when he was 27 years old, and has served in an array of positions for five different Treasury secretaries.

Summers was Treasury secretary under President Bill Clinton. From 2001 to 2006, Summers was president of Harvard University, where he now teaches in the Kennedy School of Government.

Romer, a professor at the University of California, is a leading expert in macroenomics and an economic historian with a deep understanding of the Great Depression. Obama referred to her "groundbreaking" research on tax policies and fighting recessions.

Melody Barnes, he said, has a "brilliant legal mind." She will be working "hand in hand" with his economic policy team, Obama said.

"That work starts today," he said, "because the truth is we do not have a minute to waste."

Material from the Associated Press was used in this report.

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