Treasury Secretary Henry Paulson says the government should keep part of the first installment of the $700 billion financial bailout in reserve for the incoming Obama administration. Paulson told lawmakers Monday that the financial crisis is "unpredictable," so it's important to maintain flexibility for both the current president and the incoming team.
The president-elect's economic team includes advisers from a wide range of backgrounds who hold a variety of political views. But one word is often used to describe the group: pragmatic.
"Most of the advisers around the president-elect are from what I would call the pragmatic wing of the party," said Fred Bergsten, director of the Peterson Institute for International Economics.
University of California, Berkeley economist Harley Shaiken echoes that view. "There's a desire to make it work and make it work in a pragmatic way," he said.
Although candidate Obama was criticized during the campaign as coming from "the far left lane" of Democratic politics, the president-elect has been seeking input from all sides of the road.
"He is not driven by ideology," said Jared Bernstein, an economist with the liberal Economic Policy Institute in Washington, who has served as an informal adviser to Obama. "He kind of sits atop these discussions and cherry-picks one good idea from one side, and one from the other. If you look at the people he surrounds himself with, it's a pretty broad spectrum."
The president-elect has consulted billionaire investor Warren Buffett as well as former labor leaders. He has heard from dedicated free-traders and from skeptical protectionists. Faced with a sharp rise in unemployment and a sharp drop in the stock market, Obama has shown a willingness to consider all kinds of ideas.
"That's what the American people expect," Obama said this week in a 60 Minutes interview. "We do expect that if something doesn't work, that they're going to try something else until they find something that does. That's the kind of common sense approach that I want to take when I take office."
During the primary campaign, Obama vowed to rewrite the North American Free Trade Agreement. But as president, he is likely to be more accommodating towards free trade, Bergsten said.
"In light of President Obama's objectives on overall foreign policy, on climate change in particular, I think it would be pretty hard to go off in a protectionist or a restrictive direction on trade, and still carry out those initiatives in a successful way," he said.
On Tuesday, the president-elect renewed his commitment to global cooperation on climate change. While different Obama advisers hold conflicting views on free trade, Shaiken said they tend to share a couple of common threads.
"One is that trade can be a vital and positive force. Second, for that to happen, we need rules of the game that ensure that ordinary people benefit from trade," he said.
Obama's economic policy director, Jason Furman, for example, has suggested spreading the benefits of trade through a more progressive tax code, while offsetting the uncertainty of globalization with a stronger social safety net — two main planks of the Obama platform.
Middle-class tax cuts and expanded access to health care don't come cheap, though, raising questions about how much the government can afford.
"It's really a key test for the Obama administration as to whether or not you can economically walk and chew gum at the same time — by allowing an expansionary fiscal policy in the short term while maintaining long-term fiscal discipline," said Robert Bixby, executive director of the Concord Coalition, a deficit watchdog.
Some of the president-elect's advisers are more hawkish on the deficit than others. Shaiken said Obama's gift is getting advisers not to muffle their differences but rather to air them out, and then work together toward a common goal.