The rescue package
The $700 billion emergency rescue package that Congress passed last month gives wide latitude to the Treasury secretary; now the Obama administration will have to decide how to use the bulk of it. The Bush administration, after initially focusing on buying troubled mortgage assets, is now using some of the money to make capital injections into banks and other financial institutions. Obama may look to put more stringent requirements on institutions that receive cash. He will also have to determine whether to move forward with buying mortgage assets or whether to find other ways of using the cash to try to stabilize the financial system.
Economic stimulus
Obama has called for quick passage of about $175 billion in stimulus spending, including a tax rebate of $500 for individuals and $1,000 for families, a tax credit for firms that create jobs, $25 billion in fresh spending on roads, bridges and other infrastructure projects, and $25 billion in aid to strapped state governments. Democrats in Congress are cool to the idea of a second round of rebate checks. But they are pressing for some kind of stimulus and stand ready to consider a package of about $100 billion as soon as Nov. 17 if the Bush administration and Senate Republicans agree to come to the table.
Foreclosure relief
During the campaign, Obama did not introduce any sweeping proposals to use government money to help people at risk of foreclosure, though that could change given the mounting demands for action. He and his advisers have put forth other proposals that could help homeowners.
One would allow bankruptcy judges to rewrite the terms of mortgage contracts; another would establish a 90-day foreclosure moratorium for homeowners who are “acting in good faith” to pay their mortgages. With the expanded Democratic majority in the Senate, such plans stand a strong chance of being made law.
Bailout for automakers
Obama has proposed providing struggling automakers with as much as $50 billion in low-interest loans - double the $25 billion currently available - to retool factories to produce fuel-efficient vehicles. He has also said he would find a way to speed up the issuance of the first round of loans.
Obama has not taken a position on government aid for a potential merger of General Motors and Chrysler but last week told NBC News that he would meet with company leaders and union officials to develop a plan for an industry overhaul.
Offshore drilling
Obama had long opposed an expansion of offshore drilling to areas currently off limits but shifted his position in August as voters grew angry about rising gasoline prices.
He has since said that he would support expanded drilling if it were part of a compromise that would promote renewable energy and energy-saving measures. He continues to oppose drilling in the Arctic National Wildlife Refuge. President Bush recently rescinded an executive order that banned offshore drilling, and a congressional ban expired Sept. 30. Drilling could soon be permitted as close as three miles off U.S. shores unless Obama issues a new executive order or Congress renews its moratorium.
The brain trust
Lawrence Summers
Summers, Treasury secretary in the final two years of the Clinton administration, has emerged as a top candidate to return to the job. He is regarded by his peers as one of the country’s foremost macroeconomists and was one of the youngest people ever to receive tenure at Harvard. After his time in government, he became president of the university before being pushed out in 2006 after making inflammatory remarks about women in the sciences and alienating many of the university’s faculty members. He has advised Obama and advocated for more extensive government intervention to protect the economy throughout the financial crisis.
Paul Volcker
Volcker led the Federal Reserve from 1979 to 1987 and moved aggressively to end the high inflation of the 1970s. His policies laid the groundwork for a quarter-century of strong economic growth. Since then, he has been an eminence grise on a wide range of economic issues and even warned of developing risks to the financial system in the years leading up to the crisis.
He has also advised Obama. At 81, he has been semi-retired for years, but he could make a final stop in Washington to add credibility and heft to the Obama administration as it responds to the crisis.
Robert Rubin
Rubin, another Clinton Treasury secretary and a Wall Street veteran, has served as another unofficial, behind-the-scenes adviser to Obama in recent months. The former Goldman Sachs chief executive became a top official at Citigroup after his time at the Treasury, though in most of that time has played little role in the day-to-day management of Citi. He has a quiet and deliberative manner and a consensus-building style that matches well with Obama’s, though at 70, it is an open question whether he would return to a full-time job in government.
Austan Goolsbee
Goolsbee, an economics professor at the University of Chicago, has been among Obama’s closest advisers on economic issues. Another centrist, he has focused on applying economics to everyday behavior - studying, for example, how the wealthy respond to tax increases. He was temporarily sidelined by the campaign after allegedly telling Canadian officials that Obama’s vow to renegotiate the North American Free Trade Agreement was political bluster. (Goolsbee denied having said as much.) He is considered likely to continue as one of Obama’s chief economic advisers.
Jason Furman
A senior economic adviser to the Obama campaign, Furman came to Washington in the mid-1990s as an aide to Nobel laureate Joseph Stiglitz, then chairman of President Bill Clinton’s Council of Economic Advisers. A deficit hawk, he served as director of the Brookings Institution’s Hamilton Project, which promotes the benefits of globalization, free trade and federal spending restraint. His praise for Wal-Mart, which he once declared “a progressive success story,” infuriated some union officials and liberal activists. Furman could be named White House budget director or a member of the administration’s economic team.
