Early transition? Obama takes the lead in economic crisis

McClatchy NewspapersNovember 23, 2008 

WASHINGTON — President-elect Barack Obama took center stage in the economic crisis for the third day running Sunday as he dispatched aides to pitch his rapidly expanding stimulus plan on TV and announced plans to introduce his economic team Monday.

Appearing on the Sunday talk shows, his advisers indicated that the ambitious plan he announced Saturday to create 2.5 million public works and alternative-energy jobs, will be far more costly than previously discussed. Along with other possible steps to turn around the economy, it could cost the government as much as $700 billion.

This would be four times the size of the $175 billion stimulus package Obama promoted as a White House candidate.

"The economy has gotten much worse since then," Austan Goolsbee, a University of Chicago economist and top Obama adviser, told CBS News' "Face the Nation."

"This is as big of an economic crisis as we've faced in 75 years, and we've got to do something that's up to the task of confronting that," Goolsbee said.

Obama's aides also did not dispute a New York Times report that fear of worsening the economy might lead him to postpone advancing a centerpiece of his campaign - a tax increase for people earning more than $250,000 a year.

Whether by design or necessity, Obama appeared to be using the deepening economic crisis to step to the forefront and seize the stage in order to reassure a nervous nation two months before he takes office.

One prominent Republican, former Secretary of Treasury James Baker, suggested that Obama and President George W. Bush take the almost unprecedented step of sitting down and trying to work together to address the crisis.

Obama's scheduled news conference and formal introduction of his top economic aides will be the fourth day he has revealed his plans for the economy - in the process overshadowing the activities of Bush.

Chief Obama strategist David Axelrod acknowledged that the leak Friday of New York Fed chief Timothy Geithner as Obama's treasury secretary was calculated to stem plunging stock markets.

In addition to announcing Geithner's appointment Monday, Obama is expected to name Lawrence Summers, treasury secretary under President Bill Clinton, as head of the National Economic Council.

Word has also emerged that Sen. Hillary Clinton of New York, the former first lady and Obama's main Democratic primary foe, will be secretary of state. Obama aides said a formal announcement be made after Thanksgiving week.

Asked several times whether the price tag of Obama's economic-stimulus plan will be in the range of $500 billion to $700 billion, Axelrod said he was "not going to throw a figure out there." But he finally told George Stephanopoulos on ABC News' "This Week":

"I think he's going to do what's necessary. And I suspect you're asking a question that you know the answer to."

Revenue from Obama's proposed tax hike on the wealthy, a central campaign pledge, was to have paid for middle-class tax cuts he said would benefit 95 percent of Americans. If those tax cuts are implemented without the corresponding tax increase for high-earners, his total economic package will become more costly still.

Goolsbee, noting "the current dangerous time," said no previous president-elect had named a Cabinet member before December.

It was scarcely two weeks ago, during his first post-election news conference Nov. 7, that Obama said he would defer to Bush and his economic team until Inauguration Day.

"The United States has only one government and one president at a time," Obama said.

Now at least one of the most prominent members of the Republican party has urged him to step forward. Baker, who served as treasury secretary under President Ronald Reagan, urged Bush and Obama to take the almost unprecedented step of working together in the coming days to revitalize the tanking economy.

"What we're seeing out there today is a lack of confidence," Baker told NBC News' "Meet the Press." "And the president-elect and, as a matter of fact, the current president have to face this problem over the next 60 days."

Praising Obama's appointment of "some extraordinarily capable people," Baker said that "something very useful might even come out of the two of them (Obama and Bush) sitting down together and addressing ... (the) stability of our financial system."

Obama's aides gave little indication that he will pursue that suggestion.

"Putting together members of an economic team and beginning work on a plan now will ensure he can move forward with an ambitious agenda when he is sworn in," said Jen Psaki, an Obama spokeswoman.

Republican congressional leaders offered only mild reservations when asked whether they would accept an ambitious and expensive economic-stimulus plan.

"What we need is to really get the economy going," Sen. Richard Shelby of Alabama, senior Republican on the Senate Banking Committee, told ABC News. "I think it's fair to say that we Republicans will look at the details and see if we can support it."

Domestic stock markets have fallen nearly 50 percent from their historical highs of almost a year ago - and more than 20 percent just since Obama's Nov. 4 election.

Paul Light, a government professor at New York University's Robert F. Wagner School of Public Service, said the rapidly deteriorating economy is forcing Obama to become the nation's Booster-in-Chief before he becomes president.

"The markets are saying that George Bush is irrelevant to the economic future of the country, and they want to hear from Obama," Light said. "Obama doesn't have much choice but to reassure the markets as best he can. The ball is in his court whether he likes it or not."

If Obama "doesn't get specific and weigh in now," Light said, "people will look back on January 20th and say, 'Where was Obama when we needed him?'"

John Burke, a University of Vermont political scientist and author of several books on presidential transitions, said Obama and his campaign aides prepared for his assumption of power long before Nov. 4.

"They did a lot of extensive work before Election Day, which positioned them to move very quickly after the election," Burke said.

Burke noted that the last Democratic president, Bill Clinton, announced his White House chief of staff Dec. 12, 1992, five weeks deeper into the interim period than Obama made his choice of Rep. Rahm Emanuel for that key post on Nov. 6, two days after the election.

"They're just much-better organized," Burke said of Obama and his aides. "They were ready to hit the ground running right after the election."

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