The Note, 3/24/09: Deep Breath — Obama wins a window to reset his agenda

By RICK KLEIN The markets gave President Obama some breathing room — will the Washington press corps follow? Wall Street gave Treasury Secretary Tim Geithner a thumbs-up — will lawmakers second the notion?  The president and his team can’t be happy about the fact that their moves are being judged in real time by that most fickle of tracking polls, the one that flickers with green or red arrows in the corners of cable TV screens. But they’ll take good news where they can get it — and a confluence of events (some external, some internal) may allow the president to reset his agenda after a rough stretch. Geithner gets to clear the AIG-heavy (though the fog is already breaking) air on Capitol Hill on Tuesday, and he comes bearing new details of how Treasury wants to handle the economic crisis. (Wall Street and Congress like details, you’ll recall.) Then it’s another prime-time press conference for a president who hasn’t (to public eyes) been distracted by the considerable distractions around him. Assuming the market gains aren’t lost as quickly as a 14 seed surrenders its first-half lead, the storyline coming into this news conference will be quite a bit different than it would have been had it been held 48 hours earlier. For a day, at least, the rollout worked — just maybe providing a way to handle toxic assets (that would cover both loans and personnel): “This time President Obama directed some of the stagecraft. This time Treasury Secretary Timothy F. Geithner fleshed out the substance of their long-anticipated program to remove banks’ toxic assets and revive the financial system. And this time the reaction was widely positive, giving the embattled Mr. Geithner a critically needed boost,” Jackie Calmes writes in The New York Times.  “Did we do things differently? It’s self-evident that we did,” said Rahm Emanuel, White House chief of staff. But a rollout does not constitute policy — and that’s where the president’s real challenge lies now. This has to work both so he can salvage the banking system and get back to the rest of the agenda that he’s continued to tout as intricately interconnected to the economic recovery. (This is, don’t forget, the real start of budget season on Capitol Hill.) Still to be determined: “For now, a chess match of sorts is playing out between banks and private investors. Bank executives indicate they are reluctant to sell assets at fire-sale prices, which for some could lead to more write-downs and erode already-frayed capital cushions,” The Wall Street Journal’s Peter Lattman, Jenny Strasburg and Deborah Solomon report. “The challenge for the White House was to design a plan palatable enough for both Wall Street, which was looking for notable government incentives, and Main Street, which views such incentives as benefiting some of the very people who caused the economic crisis.”  As for Tuesday, Geithner will appear before the House Financial Services Committee to make the case for the federal government to gain “resolution authority,” which Treasury argues could have allowed the government to intervene in an AIG to reorganize or wind the company down. “This is an extraordinary time and the government has been forced to take extraordinary measures. We will do what is necessary to stabilize the financial system, and with the help of Congress, develop the tools that we need to make our economy more resilient and our system more just,” Geithner plans to say, according to a Treasury official.  “We must ensure that our country never faces this situation again. To achieve that goal, the Administration and Congress have to work together to enact comprehensive regulatory reform and eliminate gaps in supervision. All institutions and markets that could pose systemic risk will be subject to strong oversight, including appropriate constraints on risk-taking. Regulators must apply standards, not just to protect the soundness of individual institutions, but to protect the stability of the system as a whole.” That’s ALL institutions: The changes would mark “unprecedented powers to initiate the seizure of non-bank financial companies,” per The Washington Post’s Binyamin Appelbaum and David Cho.  “Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process,” they write. “The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to [an administration] document.” “The expanded powers, which require Congressional approval, could help monitor risk and detect problems across an array of financial-services firms to prevent shocks to the global economy such as the one caused by the collapse of Lehman Brothers Holdings Inc. in September,” Bloomberg’s Julianna Goldman and Rebecca Christie write.  One storyline in Tuesday’s hearing: “Questions remain about how early Geithner knew about the AIG retention payments,” ABC’s Matthew Jaffe reports. “Some analysts don’t believe that Geithner didn’t know about the payments earlier, citing the fact that before he took over at Treasury, he headed the New York Federal Reserve, which is involved in the oversight of AIG.”  Look for the president’s press conference, at 8 pm ET and televised nationally, to start with a progress report. (We’ll be Twittering @thenote, and live on ABCNews.com and ABC NewsNOW.) Per ABC’s Jake Tapper, “This will be an update on the steps that are being taken to strengthen our economy and move it from recession to recovery . . . focusing on job creation, housing, getting credit flowing and crafting a budget that will ensure long-term growth.” Said Tapper, on “Good Morning America”: “The President will say there are no quick fixes, but a comprehensive strategy can lead us to more prosperous days again.” The president lays out his broader vision, in advance of the G-20 meeting, in an op-ed running Tuesday in more than 30 newspapers, from Australia to Thailand to Spain to Chicago:  The president writes: “The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose. Our leadership is grounded in a simple premise: We will lift the American economy out of crisis and reform our regulatory structure, and these actions will be strengthened by complementary action abroad. Through example, the United States can promote a global recovery and build confidence around the world; and if the London Summit helps galvanize collective action, we can forge a secure recovery, and future crises can be averted.”  Just in time — a return to full-on politics. The GOP reluctance to criticize the president directly is falling away, fast. It’s AIG and earmarks and deficits and Geithner in the National Republican Senatorial Committee’s new Web video, timed for release in advance of the news conference.  One with money behind it: “American Issues Project, a conservative-aligned outside group, plans to spend more than $500,000 on ads that slam President Barack Obama and his Administration over the bonuses being paid out to AIG executives,” per Washingtonpost.com’s Chris Cillizza. Says the narrator: “The Obama Administration says it’s shocked, shocked to learn AIG passed out $165 million in bonuses. But who wrote the law protecting these bonuses? Obama’s own Treasury Department.”  Coming at if from another direction: “Campaign for America’s Future co-director Robert Borosage and USAction president William McNary will join progressive blogger Jane Hamsher on Tuesday to launch a push against conservative Democrats who are blocking the reforms President Obama promised during the campaign.” (Yes, Democrats.) About that army . . . “President Barack Obama’s army of canvassers fanned out across the nation over the weekend to drum up support for his $3.55 trillion budget, but they had no noticeable impact on members of Congress, who on Monday said they were largely unaware of the effort,” McClatchy’s David Lightman and William Douglas report. “The group Obama most needs to lobby this week are the approximately 51 conservative-to-moderate Democrats in the House of Representatives and the 16 in the Senate. Their numbers are big enough in both chambers to deny the president the majorities he needs to win budget approval, assuming near-unanimous Republican opposition as well.”  Of the supposed million doors knocked on by some nebulous number of volunteers: “How many of these folks have read the budget?” wondered Rep. Stephen Lynch, D-Mass. Anyone have a guess as to what happens next? “While the Wall Street reaction can be read in part as a vote of confidence in the Obama administration’s plan, experts cautioned not to see it as a silver bullet,” ABC’s Betsy Stark reports. “ABC News asked 27 of the nation’s largest banks who have received TARP funds whether they will use the plan to sell their toxic mortgage assets. They were largely non-committal: 10 banks responded with no comment.”  “One day does not make a plan successful,” Geithner said at a Q-and-A session Monday evening, per ABC’s Matthew Jaffe.  “The next hurdle: showing results soon enough to convince a skeptical Congress to approve more money,” Bloomberg’s Robert Schmidt and Rebecca Christie write.  “If Geithner’s plan succeeds in establishing some preliminary pricing, and the market begins to revive, the administration is likely to seek more money to help it grow. However, Congress must approve such a move, and the mood on Capitol Hill is hostile to more taxpayer bailouts,” McClatchy’s Kevin G. Hall writes.  The New York Timed editorial board is not impressed: “President Obama’s long-awaited plan to revive the banks could work if certain assumptions about the future are right. But there is not much, beyond faith, to believe those assumptions will pan out — and even if there were, it is hard to see how the plan is the best way to go.”  Washington Post columnist Eugene Robinson: “The goal that Geithner describes sounds like an improved system but not one that is fundamentally different from the system we have now. If populism is resurgent in the land, it doesn’t get past Geithner’s desk. Wall Street should be toasting the guy — but with beer, not champagne.”  One reason Wall Street cheered: “Over the weekend, the White House worked to tone down its Wall Street bashing and to win support from top bankers for the bailout plan announced Monday, which will rely on public-private investments to soak up toxic assets,” The Wall Street Journal’s Monica Langley writes. “After brainstorming about what to do about that problem, the White House resolved to try to take control of the debate, according to several administration officials. In weekend television appearances, President Barack Obama and other administration officials tempered their criticisms of the financial sector.”  Does this take Geithner off the firing line? Notice than even when he was on it only a handful (three) GOPers were calling for him to resign. “One senior GOP Senate aide said that most Republican Senators view Obama as the responsible party — both in the AIG fiasco and in terms of getting the economy moving again — and that they’re not about to let the president off the hook by calling for Geithner’s resignation en masse,” David M. Drucker writes for Roll Call.  “The reaction offered relief to Treasury Secretary Timothy Geithner, who suffered a week of heavy criticism and some calls for his resignation over his role in allowing insurance firm AIG to pay at least $165 million in bonuses,” The Hill’s Silla Brush writes.  Once again — a signal that the president is more popular than the policies and personnel behind him. The new USA Today/Gallup Poll shows Obama with a 65 percent approval rating — but the numbers are nowhere near that for his administration’s handling of AIG. “Geithner gets low marks for his handling of the AIG bonuses. By 2-1, those surveyed say they are dissatisfied rather than satisfied with what he’s done. Congress’ rating is a bit worse, and AIG management has a nearly 7-1 negative rating,” USA Today’s Susan Page writes. “Obama, however, fares pretty well. By 54%-39%, those surveyed say they are satisfied with the way he has handled the issue. The president seems likely to be asked about the subject at his news conference tonight in the East Room.”  What you don’t need numbers to see: “Beyond the substance of the rescue plan, the administration’s shift to a lower profile for Geithner reflected a worrisome fact: Aside from President Obama, the administration has yet to find a commanding figure who can carry economic policy messages and inspire confidence in White House prescriptions,” Peter Nicholas and Peter Wallsten write in the Los Angeles Times.  That’s one big reason the president is reaching around the filter: “At a time when his Washington honeymoon is turning into a hazing, President Barack Obama and his team are launched on a strategy to sail above the traditional White House press corps by reaching out to liberal commentators, local reporters and ethnic media,” Politico’s Jonathan Martin writes. It’s part of “a much larger strategy aimed at communicating directly with audiences the White House believes are more sympathetic to the president’s agenda — and one in which much of the work is being done by Obama’s top advisers.”  Did the AIG bonus tax just die — just like that? “A confluence of events has slowed momentum for congressional action on bonuses handed out to firms receiving federal bailout money, which ignited a public furor and had President Obama chiding and cautioning Congress against any hasty moves,” CQ’s Phil Mattingly and Richard Rubin report.  Not just Democrats: “When it comes to paddling against the populist wave aimed at greedy bankers, President Obama and Senate Republican leaders are in the same little boat,” ABC’s Z. Byron Wolf reports. “Just as Obama has given a cool reception to proposals to tax the AIG bonuses back into the federal coffers on two national TV appearances in the past four days, it’s Senate Republicans who put the Senate version of that proposal on ice for the moment.”  The Kicker: “News to me.” — Rep. Lloyd Doggett, D-Texas, told of Team Obama’s nationwide canvassing over the weekend. “Tending a legacy is best done in a memoir.” — Rep. Mark Kirk, R-Ill., to The Hill’s Molly Hooper, on Vice President Dick Cheney’s recent volubility. We’ll be Twittering Tuesday night’s presidential press conference, @thenote. Join us for live coverage on ABCNews.com and ABC News NOW, starting at 8 pm ET and running through 9:30 pm ET, hosted by Rick Klein, Yunji de Nies, and John Donvan. We’ll be incorporating Twitter messages into the coverage, through “Nightline” Tuesday night. That’s @thenote, @yunjid, and @JohnDonvanNL Follow The Note on Twitter: http://twitter.com/thenote For up-to-the-minute political updates check out The Note’s blog . . . all day every day:

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