By Michael D. Shear and Peter Slevin
Washington Post Staff Writers
Tuesday, November 25, 2008
President-elect Barack Obama sought to assert his authority over the country's deepening financial crisis yesterday, unveiling his economic team and making it clear that he will not wait until Inauguration Day to set his plans for recovery in motion.
Declaring that America is caught in a "vicious cycle" affecting both Wall Street and Main Street, Obama said his advisers will begin work immediately toward passage of a stimulus package large enough to "jolt" the faltering economy back into shape.
Timothy F. Geithner, president of the New York Federal Reserve Bank, will lead that effort as Treasury secretary, along with Lawrence H. Summers, the former president of Harvard University and Geithner's mentor for the past decade, who was named to lead the National Economic Council. Christina D. Romer, a professor at the University of California at Berkeley, will head the Council of Economic Advisers, which advises the president on domestic and international economic matters.
"And that work starts today, because the truth is, we don't have a minute to waste," Obama told reporters at a news conference in Chicago, where he was joined by his new team. "With our economy in distress, we cannot hesitate and we cannot delay. Our families can't afford to keep on waiting and hoping for a solution."
Geithner, 47, will coordinate the Obama administration's response to the faltering economy, serving as the primary architect of the stimulus package. While Geithner will assume broad authority to direct hundreds of billions of dollars in government funds from his post at Treasury, Summers is expected to have Obama's ear as the head of the NEC and could play an important role in synthesizing the economic advice the new president receives.
Obama has maintained a low profile in the weeks since his election, resigning his Senate seat and quietly vetting his Cabinet as Congress and the White House haggled over proposals for a stimulus package and a bailout of the automobile industry, neither of which came to pass.
But in his second news conference since becoming president-elect, Obama appeared much more willing to assume ownership of the current turmoil, easing away from his emphatic statement that America has only "one president at a time" and signaling a shift in the balance of power between the current and incoming administrations as the financial crisis engulfs more banks and threatens millions of jobs.
Obama urged Congress to convene in early January to pass a new stimulus package, with the goal of having it ready for the new president's signature immediately after he is sworn in on Jan. 20. And he made it clear that he expects President Bush's economic team to work with his own during the transition.
"A lot of authority has already been provided to the administration," Obama said. "And we need to make sure that that authority is used forcefully in the coming weeks to stabilize the current situation."
Obama was briefed by Bush yesterday as the government agreed to protect Citigroup from billions in potential losses from troubled assets. The president-elect said the news about Citigroup added to the evidence that the country faces "an economic crisis of historic proportions."
Bush appeared reconciled to Obama's newly aggressive approach to the economic crisis. In comments to reporters yesterday morning, Bush promised that "anytime we're to make a big decision during the transition, he will be informed, as will his team. . . . It's important for the American people to know that there is close cooperation."
White House officials heralded that cooperation while suggesting that the current president remains cool to the idea of additional stimulus. Bush said he will continue to consider new bailouts before Obama takes office, meaning that even larger financial commitments could face the next president.
"We have made these kinds of decisions in the past, made one last night, and if need be we're going to make these kinds of decisions to safeguard our financial system in the future," Bush said after returning from Lima, Peru, his last scheduled overseas trip as president.
Obama would not say whether he agrees with Democrats in Congress who are calling for the government to pump as much as $700 billion into the economy. But he repeatedly emphasized the need for quick and transparent action, saying: "If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year."
The words contrasted sharply with the cautious approach Obama took two weeks ago, when he stood in the same room in the Chicago Hilton and said: "The United States has only one government and one president at a time. And until January 20th of next year, that government is the current administration."
Yesterday, he was more decisive. "We have to put people back to work," Obama said. "Not only do I want this stimulus package to deal with the immediate crisis, I want it also to lay the groundwork for long-term, sustained economic growth."
Today, Obama is expected to name Peter R. Orszag, the head of the Congressional Budget Office, to lead the White House Office of Management and Budget. Aides said he will also discuss reeling in the federal budget deficit once the economy returns to health through spending cuts and holding down the cost of health care. That focus is meant to reassure Democratic deficit hawks in Congress, whose votes will be needed to approve a stimulus package.
"To make the investments we need, we'll have to scour our federal budget, line by line, and make meaningful cuts and sacrifices as well," Obama said yesterday, hinting at his plans for today's news conference.
Last week, Obama aide Jason Furman met with House Majority Leader Steny H. Hoyer (Md.) and other moderate Democrats to discuss the gloomy budget outlook. "Any stimulus package has to have a strong mechanism to develop a plan to reduce the debt once the economy has stabilized," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Obama said he will appoint Melody C. Barnes, a former top aide to Sen. Edward M. Kennedy (D-Mass.), as director of the Domestic Policy Council, which advises the president on domestic policy and helps coordinate strategy across federal agencies. Heather A. Higginbottom, who was a top adviser to Sen. John F. Kerry (D-Mass.), will be her deputy.
During his campaign, Obama vowed to raise taxes on couples making more than $250,000 a year, and he said yesterday that he has not decided whether to try to repeal the Bush administration's tax cuts for wealthier Americans or to allow those cuts to expire in 2010. He reiterated, however, that "the very wealthiest among us will pay a little bit more."
He also said Detroit automobile executives must make a stronger case before they receive billions of dollars from the federal government. He called the auto industry "resistant to change" and said government help is for making automakers more competitive in a global economy, "not just kicking the can down the road."
"I was surprised that they did not have a better-thought-out proposal when they arrived in Congress," Obama said. "I think Congress did the right thing, which is to say, 'You guys need to come up with a plan and come back before you're getting any taxpayer money.' " Obama said he will seek to convey a sense of clarity and strength to the financial markets, something he believes has sometimes been missing from the Bush administration's approach.
"That doesn't mean that there aren't going to be adjustments over the course of weeks or months to respond to changing situations," Obama said, "but I think part of what we've seen is confusion on the part of the markets sometimes in terms of what the overall direction might be."
Slevin reported from Chicago. Staff writers Dan Eggen and Lori Montgomery contributed to this report.