Nov. 24, 2008 -- President-elect Barack Obama hasn't stepped into the White House yet, but he made it apparent today that he and his team are moving ahead with their plans for the economy.
Announcing his economic team, Obama tried to reassure the country's financial markets and promised that he will honor the bailout commitments already made by President Bush.
"We'll need to bring together the best minds in America to guide us -- and that is what I've sought to do in assembling my economic team," Obama said at a news conference in Chicago. "I've sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold new ideas -- and most of all, who share my fundamental belief that we cannot have a thriving Wall Street while Main Street suffers; that in this country, we rise and fall as one nation, as one people."
The names of Obama's economic team members introduced today were not surprising because they had been leaked in the past few days. New York Federal Reserve head Timothy Geithner will become Obama's Treasury secretary, pending Senate confirmation. Larry Summers, who was Treasury secretary in President Clinton's regime and Geithner's former boss, will head Obama's National Economic Council.
Two new names rounded out Obama's economic brain trust, which also includes University of California-Berkeley economics professor Christina Romer. She will head the Council of Economic Advisers, which is in the executive office of the president.
He also announced that Melody Barnes would be his director of the Domestic Policy Council.
And to prove that his new team is already on the job, Obama said, "I have asked my economic team to develop recommendations for this plan, and to consult with Congress, the current Administration and the Federal Reserve on immediate economic developments over the next two months. I have requested that they brief me on these matters on a daily basis, and in the coming weeks, I will provide the American people and the incoming Congress with an overview of their initial recommendations."
Obama's Team Already Working With Congress
Although he doesn't take office until Jan. 20, Obama said he was outlining the shape of his economic office and policies because "our families cannot afford to keep on waiting and hoping for a solution."
Obama's team is already working with congressional leaders to design and pass an ambitious economic stimulus plan so Obama can sign it into law when he takes office Jan. 20.
That may be overly ambitious because the Democrats won't have their hefty majority until early next year, and the Republicans made it clear today that they are not in favor of massive new spending.
"In his first major economic announcement since the election, President-elect Obama proposed billions of dollars in new government spending that will come at a burdensome cost to American families and small businesses," the Republican National Committee said in a statement after Obama's news conference.
Obama insisted, however, that the "first job of my economic team is to shape that economic stimulus" package and that it should also "lay the groundwork for long-term economic growth."
He declined to say how large the stimulus package would be.
"It's going to be of a size and scope that is necessary to get this economy back on track," he said.
Obama has made it clear that it will be substantially larger than the $175 billion he promised during the presidential campaign.
Incoming White House senior adviser David Axelrod told George Stephanopoulos on "This Week" Sunday that the sputtering economy necessitates a much larger proposal than Obama pitched on the stump.
"He wants a plan big enough to deal with the challenges we face," Axelrod said.
Obama also stressed a recovery plan, "a plan that stabilizes our financial system and gets credit flowing again, while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs -- jobs rebuilding our crumbling roads and bridges, modernizing our schools, and creating the clean energy infrastructure of the 21st century."
Obama cited the Bush administration's new plan to bolster the banking giant Citigroup and said the company's plight "has made it even more clear that we are facing an economic crisis of historic proportions."
"If we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," Obama warned.
As Obama geared up with his new economic team, Bush and Treasury Secretary Henry Paulson held a brief news conference to explain their decision Sunday to engineer a $306 billion deal to prop up Citigroup, the latest megabank that has needed federal backing to survive.
"We have made these kind of decisions in the past," Bush said while standing outside the Treasury Department. "We made one last night and if need be we will make these kind of decisions to safeguard our financial system in the future."
Bush said he alerted Obama about his plans. "Secretary Paulson is working closely with the president-elect's transition team," Bush said. "It's important for the American people to know that there is close cooperation. It's important for the American people to know that we will safeguard the financial system as the first step necessary for financial -- or for economic recovery."
Obama made clear today that he would not undo bailout commitments made by Bush.
"My administration will honor the public commitments made by the current administration to address this crisis," Obama said.
"It's a move his advisers hope will calm the markets and send a signal that he's on top of the financial crisis," ABC News' chief Washington correspondent George Stephanopoulos told "Good Morning America" today.
But despite Obama's swift efforts in selecting his team and formulating plans, a new ABC News poll shows that only 44 percent of Americans believe Obama will be able to improve the economy significantly. While this might buy the president-elect some time, it does not keep the pressure off him completely.
"The 'cuts and sacrifices' that president-elect Obama advocates will not be made by his friends in Washington, but rather by job creators facing devastating tax increases across America," the Republican National Committee said.
Some Republicans have more faith in his plans.
"With this new and strong team coming in at the side of president-elect Obama, we can be quite confident that efforts to rebuild the financial structure of the country, which is a cornerstone of the economy, will continue in a coordinated and effective way," Republican Sen. Judd Gregg, R-N.H., said in a written statement. "This announcement is good news for Main Street and is a very positive first step by our incoming president."
Obama May Not Repeal Tax Cuts for Rich Right Away
Sen. Charles Schumer, D-N.Y., suggested the proposal for the stimulus could be as large as $700 billion.
The president-elect also promised during the weekend to create or save 2.5 million jobs in the next two years.
In addition, Obama is considering keeping the Bush tax cuts on the wealthiest Americans for the time being, letting them expire in 2010 instead of moving early to repeal them sooner.
When pressed on the issue, Obama said, "That's something my economic team will be providing me a recommendation on."
It's a delicate balancing act for the soon-to-be-president who said shortly after winning the vote that he would not undercut Bush, saying there could be only one president at a time.
Obama explained his more aggressive tactics during his weekly address to the nation by saying, "We are facing an economic crisis of historic proportions. We now risk falling into a deflationary spiral that could increase our massive debt even further."
Austan Goolsbee, a top economic adviser, was more blunt, saying the "era of dithering" by the Bush administration is almost finished.
Obama has been picking his players and shaping his team at a record pace for an incoming president, but his economic team is going to hit some serious roadblocks and bone-rattling potholes.
The federal government is working out a $306 billion deal to bolster Citigroup, yet another bank that is considered too big to be allowed to fail. The expensive deal may prove to be little more than a Band-Aid, as previous bailouts have demonstrated.
And the country's three major automakers are begging for a rescue. General Motors has claimed that without help, the venerable carmaker won't survive until Obama takes the Oath of Office.
If GM survives, Obama must decide what to do about the ailing Detroit giant. And if GM collapses, Obama will have to cope with the tsunami of joblessness and rippling effects on other industries.
Obama will hold another press conference Tuesday morning to discuss health care, and budget cuts and reforms.