White House Economic Fix Still Unfolding
MADELEINE BRAND, host:
This is Day to Day. I'm Madeleine Brand. In a few minutes, the latest trend in Las Vegas living: actually knowing your neighbors. But first, political news. At the White House today, President Barack Obama and Treasury Secretary Tim Geithner are talking up a plan to help small businesses. The idea is to make it easier for small businesses to borrow, to make credit more available. The president and his top aides have also continued to stress the positive side of economic news. And it's a task made somewhat easier after several days of gains on Wall Street. The Dow also up this morning. Joining us now is NPR's senior Washington editor, Ron Elving. And Ron, let's talk about this new package that the president announced today. Well, what did he say?
RON ELVING: It's about injecting funds into the secondary credit market so that they'll be available for private institutions, banks and so on, to make more loans to small business. And, you know, many of thosesmall businesses just cannot survive without a constant flow of credit and the rate, of course, is life and death for them at any given time. So, right now, it's increasingly difficult and loaning to small businesses is down by about half, so the range of support being talked about here is between $10 billion and $20 billion. Now, that's not huge by big bailout standards - that we've been setting new records in the last six months - but it is an amount that the administration hopes will leverage larger amounts of money from the private markets.
BRAND: Right. So, it's acting sort of like a middleman. Is there anything it can do directly to help small businesses?
ELVING: It can. It can also ease some of the costs and the hassle of getting a loan guaranteed from the Small Business Administration. That's how the federal government most often intersects with small business. And it can increase the amount of loan up to 90 percent that the SBA will actually guarantee. So a lot of this, too, is message. It's saying, we care about small-business folks, and we're very concerned about what might happen to them. And they, of course, are very concerned about what may happen to them under the larger Obama program, especially including tax increases coming after 2010.
BRAND: Right. You said message. So, underlying all this, what is the message that the White House is trying to send out?
ELVING: I guess we're going back, Madeleine, to the audacity of hope. Gloom is out at the White House this week, and the emphasis is on what is right and what is still good about the economy. There's a certain ironic moment here for John McCain, who said that the fundamentals of the economy were sound back in September and got clobbered for saying that in the media and in the public-opinion polls because it just sounded as though he was clueless at that moment, when so many things were coming unglued. What's changed, of course, is six months have gone by. The context has changed rather radically and at this point, with confidence being such a key issue, the administration feels that it has to shift over to a little more happy talk, and try to talk people into spending their money and investing their money again.
BRAND: So it sounds a lot like the campaign, when president Obama was candidate Obama and running for office.
ELVING: There is a certain echo of that, as a matter of fact, and the organizational phase of things, there is a group that is actually going to be putting people on the street in the weekend to come, getting people out on the Internet, making telephone calls and talking up the Obama program, talking up the budget, and acting very much the way they did back last fall during the campaign.
BRAND: Now, let's talk about the AIG brouhaha. I mean, people are really angry at this whole story about AIG handing out bonuses after it received a massive government bailout. Did President Obama say anything about that today?
ELVING: He has not spoken directly to that yet today, although we have heard so much over the weekend and from some of his surrogates about how distressed they were, how outraged they were, how they tried to negotiate these bonuses and retention payments back down. Some of this appears to be contractual. There were certainly a lot of payments of large amounts made to European banks that had bought a lot of toxic assets and insured them with AIG. It's a huge insurance operation, global. And then a lot of this also was for the retention of more ordinary level people who were not getting huge bonuses, but just getting paid off for the products they had sold. So, this is a big image problem and it's fallen to the administration, even though they're just as angry at AIG as anyone else.
BRAND: And finally, Ron, let's turn to a personal note because this is really the last time you and I will be speaking on the air. You've been with the program for five years now.
ELVING: Indeed, it is a sad moment, Madeleine, and I regret it very much. If there is something that we've learned over the years we've been doing this, I guess it's that all things must pass, and that includes much of our radio programming and much of where we look to in the American media. And it also, I suppose, applies to our politics and our economics as well. You know, four years ago, we were talking about privatizing Social Security. That seems unimaginable now, given what we've seen in the markets. And so much has changed, I guess, usually faster than we expect. The message is, stay loose.
BRAND: OK. I'll try to keep that in mind as we continue forward. NPR's senior Washington editor, Ron Elving. It has been a great, great pleasure speaking with you most Mondays on this program. NPR's Day to Day will continue in a moment.
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