Now comes the hard part. President-elect Barack Obama, having won a historic mandate for change, must make it happen.
He faces monumental problems: "Two wars, a planet in peril, the worst financial crisis in a century," as he put it in his victory speech to a quarter-million supporters Tuesday night in Chicago. The financial mess will not wait until he takes office in January. He must start working now to revive the economy.
He can't do so officially, but he can act to instill confidence in the still-shaken financial markets. The American banking system is on life support, dependent on a $700 billion infusion of taxpayer capital to prevent collapse. The credit crisis is dragging the nation into recession, possibly a deep one.
What the country needs now is an injection of confidence and a road map to recovery. Obama must begin to act quickly to lay a plan, in detail, well before taking office.
Obama has shown an unflappable cool and an ability to work with members of the opposing party. He will need both virtues now. Very soon, he should name a "shadow" Treasury secretary to work alongside Bush administration officials, Congress and the Federal Reserve. The goal should be to influence decisions now, so that they don't have to be done over in January.
A lot of policy will be made before Inauguration Day. The lame-duck Congress will meet this month to consider a new $100 billion pump-priming stimulus plan, an idea Obama supports. It's crucial that the details of this plan pack some real economic punch, rather than merely pander to special interests looking for tax breaks and wasteful subsidies. Obama, as a sitting senator and president-to-be, is in a unique position to shape it.
Federal Deposit Insurance Corp. Chairwoman Sheila Bair has a solid plan to guarantee renegotiated mortgages for strapped homeowners. It could save up to 4 million Americans from foreclosure and help build a floor under housing prices. Bair's plan is getting little support from the Bush administration. Obama's support could get it moving.
Meanwhile, the Big Three automakers are very sick; General Motors and Chrysler may be headed for bankruptcy within a year. That threatens hundreds of thousands of auto workers and retirees. The auto companies are asking for help, too. One of Obama's more difficult early decisions may be whether the auto industry is too big to be allowed to fail or whether it is past saving.
Throughout his campaign, Obama's team of economic advisers has included two sages: Robert Rubin, who was Treasury secretary under President Bill Clinton, and Paul Volcker, who crushed inflation in the early 1980s as chairman of the Federal Reserve. Both are said to be under consideration by Obama for the top Treasury post.
But Rubin says he doesn't want the job, according to Bloomberg News, and Volcker's age, 81, makes him a less likely candidate.
Another possibility is economist Lawrence Summers, 53, who succeeded Rubin as Treasury secretary under Clinton and later had a stormy tenure as president of Harvard University. Also on the list is Timothy Geithner, 47, a Treasury veteran who now serves as president of the Federal Reserve Bank of New York. Early on, Summers and Geithner started advocating for a bailout for the financial system.
Obama needs someone with deep knowledge of the financial markets and a reputation that will inspire confidence. Rubin and Geithner meet that standard extremely well.
Uncertainty is the enemy. It creates worry, making banks unwilling to lend and consumers afraid to spend. By showing a steady hand and making smart decisions, Obama could begin restoring the economy to health even before he takes the oath.
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