Obama's honeymoon period with Congress may well be over before it's even properly started.
WASHINGTON – Democrats are growing impatient with President-elect Barack Obama's refusal to inject himself in the major economic crises confronting the country. Obama has sidestepped some policy questions by saying there is only one president at a time. But the dodge is wearing thin. "He's going to have to be more assertive than he's been," House Financial Services Committee Chairman Barney Frank, D-Mass., told consumer advocates Thursday.
Frank, who has been dealing with both the bailout of the financial industry and a proposed rescue of Detroit automakers, said Obama needs to play a more significant role on economic issues.
"At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time," Frank said. "I'm afraid that overstates the number of presidents we have. He's got to remedy that situation."
Say what you will about the man, but you have to admit: Rep. Frank knows how to spin a pithy phrase.
And, what, ho! It seems, more or less, to have even worked. Sort of.
By David Cho and Lori Montgomery
Washington Post Staff Writers
Friday, December 5, 2008; 4:37 PM
President-elect Barack Obama's transition team has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders to help the Bush administration gain access to the second half of the $700 billion financial rescue package, government sources familiar with the matter said.
With lawmakers on both sides of the aisle expressing heated opposition to granting such a request, Treasury officials have come to realize that they need the president-elect's help to obtain the rescue money and are actively engaged with his aides, the sources said. Separately, the sources said, Treasury staffers are working on several proposals to unfreeze the troubled credit markets. But these initiatives would not be possible without the next installment of the rescue package. Transition officials want to see the Treasury's plans before they agree to support tapping the rescue package....
[...] House Financial Services Committee Chairman Barney Frank (D-Mass.) said today that he has told both Paulson and Obama that they won't get the money unless a substantial part of it goes toward reducing residential foreclosures, which continue to skyrocket.
"I have said to both parties that the key here is to get some money into foreclosure diminution and if they don't get that done, then they can forget about the second $350" billion, Frank said in an interview.
Frank has been critical of the Treasury for failing to use the money to help distressed U.S. homeowners, whose defaulting mortgages have sparked a global recession. But Frank said he is also critical "a little bit of the Obama campaign for not being more forthcoming on this."
Frank said the financial bailout was sold to lawmakers in part as a way to help homeowners, and that Obama was helpful in making that point. But now, Frank said, "I think they are underestimating the importance of" following through on that pledge.
"Not just economically, which is very important, but politically," he said. "If they want to keep the confidence of the Congress in terms of these kinds of politically risky things, then they can't have people feel that they were mislead."
It's not that I'm particularly in disagreement with Representative Frank's goals. I rather think it should have been done earlier. What I am curious about is just how long it's going to take Congress to realize that $750 billion is simply not enough to get through even the early stages of this crisis. Supporting the banks burned through $325 million of the first $350 million installment from Congress in only four months, with Citibank needing repeated applications of lavish amounts of money. Stabilizing the automakers, if they choose that route -- and I get the impression, somehow, that much of Congress is minded to let those companies take their lumps in Chapter 11 bankruptcy before trying to prop them up, since coming out of bankruptcy without the complete dissolution of the company would require them to construct viable plans for moving forward -- will almost certainly require more than the $38 billion in loans they're currently requesting. (There is the rather puzzling question of how, precisely, they plan to repay those loans when such small numbers of people are buying their cars, but that's another issue.) Neither the auto industry bailout nor the homeowner bailout were included in the initial $750 billion; that was only to stablilize the banks and lubricate lending. (Which really isn't happening much anyway; if you don't have a job, you don't have anything to repay with, so you don't get loans. When the economy is this bad, you defer buying big ticket items, and thus, you don't need loans. Company-to-company loans for whatever purpose simply aren't sufficient to bring back all those parts of the economy that are staggering around right now. We will also ignore, for the sake of sanity, the fact that no matter how you stretch it, the language of the grant of power to Treasury from Congress simply does not extend this far. We will also ignore, again for the sake of sanity, the mind-boggling array of Constitutional issues involved in that grant in the first place.)
In any event, it's clear that the current amount is massively insufficient unto the various bailout needs. I do wonder what Congress and our new president-in-waiting will do when they realize that not only are they about to induce the first trillion dollar single year budget deficit in our history, but that they're going to have to keep doing it for the foreseeable future. The only way to get out of a very hard recession, in general, is massive government spending in the right places. The national debt is never going to recover; unless we repudiate it -- and that's not likely to happen -- interest on the national debt will remain the largest single government expenditure for quite some time.
Posted by iain at December 05, 2008 04:30 PM
