For Obama, the economy can't wait
His top priorities are stimulus proposals, the 'G-20' summit, and picking a Treasury chief.
The economy and financial markets are amplifying a message that Barack Obama knew about well before Election Day: The president-elect must start acting right now – not just upon his Jan. 20 inauguration – to forge his response to the crisis.Skip to next paragraph
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As of Thursday morning, US stocks had erased the gains of an Election Day rally. A sagging world economy also hammered stock markets overseas Thursday. And the weekly pace of unemployment claims continues to hover near the half-million mark.
Honeymoon? Victory lap?
Presidential transitions tend to be hectic, but for President-elect Obama, the combination of economic weakness and financial-market volatility calls for front-loading some big decisions:
•Next week, a so-called G-20 summit of 19 nations plus the European Union gathers in Washington to consider how to repair the global financial system. President Bush will host the meeting, but Obama will want to help shape the agenda, since this effort will continue under his watch.
•Congress is considering additional stimulus measures to restart economic growth and end a downward spiral in the housing market. Again, Obama will want to put his stamp on those plans.
•Naming his economic team, starting with the Treasury secretary, is an immediate priority – driven both by the policy decisions such as those involving the G-20 summit and also by the broader benefits of reassuring Wall Street that steady hands will be at the economic tiller.
"He needs to have a transition team that identifies the best people … and puts them in place as quickly as possible," says Scott Lilly, an economic policy expert at the Center for American Progress in Washington. "You're already seeing this."
The urgency is such that Obama's pick for Treasury secretary may be known by Friday or even Thursday, although no announcement had come by press time for this story.
Potential nominees include people with hands-on experience in periods of financial crisis: Timothy Geithner, president of the Federal Reserve Bank of New York; former Treasury Secretaries Lawrence Summers and Robert Rubin; and former Federal Reserve Chairman Paul Volcker. The last three served as advisers to Obama during his campaign.
Mr. Geithner rose through the ranks at the Clinton Treasury Department, while his current job puts him at the center of efforts to restore confidence in a banking system battered by mortgage losses.
"Considering the economic backdrop ,… getting a team in place sooner rather than later and starting the transition quickly would make a lot of sense," says Michael Darda, chief economist at MKM Partners, an investment firm in Greenwich, Conn.
An imperative for the new team will be to send signals that they will do no harm to an economy now in recession. Mr. Darda predicts that the unemployment rate could climb to 8 percent in the next year or so, up from 6.1 percent last month.