Obama has much to do on economy before taking office

Even policies that don't have a major price tag could become politically tougher. Labor unions, who backed Obama, say their priority is passage of the Employee Free Choice Act, making it easier to organize unions. James Sherk, a labor policy analyst at the conservative Heritage Foundation, calls the bill a "jobs killer and an investment killer."

House Financial Services Committee Chairman Barney Frank, D-Mass., says Obama "doesn't have the luxury of waiting" on stimulus or the $700 billion rescue plan, but says there is less urgency to dive in on rewriting financial rules. The slow economy is limiting risky dealmaking.

Contributing: Dan Reed

Some Obama priorities

Taxes: Markets could delay increases

Obama won despite strong Republican opposition to his tax proposals, which critics said would hurt small business and tilt the U.S. toward socialism.

As part of his plan, Obama wants to make the 10%, 15%, 25% and 28% tax brackets permanent but would boost the top two tax rates to 36% and 39.6%, their pre-tax-cut levels. Currently, the top tax rate for individual taxpayers is 35%. The increase would raise taxes for Americans who earn more than $250,000 a year.

Some analysts say Obama's strong showing Tuesday gives him the mandate to move forward with his tax proposals. The tax increases "were part of his platform, and it's an electoral college landslide," says Mel Schwarz, partner at Grant Thornton's national tax office.

Others argue that market developments could hold Obama back. Bob Scharin, senior tax analyst for Thomson Reuters, says the sharp stock market decline could force Obama to postpone his plan to raise capital gains rates to 20% from 15% for top earners. Critics of Obama's proposal say it would encourage investors to sell before the new rates take effect, further damaging the market.

By Sandra Block

Housing: Foreclosure moratorium coming?

Obama comes to office in the midst of the worst housing crisis since the Depression. Home prices are falling and foreclosures increasing. Growing numbers of people are making late payments on home loans, and adjustable-rate mortgages are resetting, causing surging payments for homeowners.

The Bush administration has been working on a plan to help up to 3 million homeowners.

Obama wants financial firms receiving help under the $700 billion rescue plan to institute a 90-day moratorium on foreclosures.

The rescue fund gives the administration power to buy troubled mortgages from banks and then "restructure them, allow a moratorium or do whatever they want," says Joel Naroff at Naroff Economic Advisors.

Obama has also supported giving bankruptcy judges power to write down mortgage debt, which the Bush administration opposes. "It's a good thing and appropriate if limited to loans that have already been made," Zandi says.

Lawrence Yun, chief economist at the National Association of Realtors, would prefer to see the $700 billion rescue fund used to buy loans and modify them. Permitting judges to modify loans could lead to higher mortgage rates for a new set of home buyers, he says.

By Anna Bahney and Stephanie Armour

Automakers: Obama in favor of some assistance

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