Vice President Joe Biden
Democrats on television this weekend acted quickly on the heels of Obama’s inauguration to temper hopes that a change in administration necessarily means a swift economic recovery.
“There’s been no good news,” said Vice President Joe Biden on CBS’ “Face the Nation,” “and there’s no good news on the immediate horizon.”
Lawrence Summers, head of the president’s National Economic Council, told NBC’s “Meet the Press” that Americans will need to be patient.
“These problems weren’t made in a day or a week or a month or even a year, and they’re not going to get solved that fast,” Summers said. “The next few months are, no question, going to be very, very difficult and it may be longer than that.”
Instead, the newly empowered party is asking for more time, money and power to attempt its fix on the nation’s economic woes.
Congress has already given Obama permission to spend the second $350 billion of a bailout package approved last fall, and the president is pushing Congress to pass an additional $825 billion economic recovery package.
House Speaker Nanci Pelosi further told George Stephanopoulos on ABC’s “This Week” that “some increased investment” may be necessary and that spending the money would likely be tied to more government involvement in the banking sector.
“Whatever you want to call it, if we are going to put money into the banks, we certainly want equity for the American people,” Pelosi told Stephanopoulos when the host asked if more government involvement meant nationalization of the country’s banks. “In other words, if we are strengthening them, then the American people should get some of the upside of that strengthening.”
“Some people call that nationalization,” Pelosi admitted, but then qualified, “I’m not talking about total ownership.”
Pelosi also insisted on accountability of how government stimulus and bailout money is spent.
“Whatever we have to do will have to be clearly explained to Congress and to the American people as to what the purpose of the money is, why it is urgent, and then accountability for it as it is distributed,” she said. “So hopefully this next second installment will help turn our financial crisis around, but it’s not – if they come back –there’s going to have to be a justification, because people will be very, very disappointed in how his money was dealt with at first.”
Approving Obama’s proposed $825 billion in tax cuts and stimulus spending may be difficult in light of the plan’s critics, some of whom point out that much of the money won’t be spent as soon as Americans are expecting.
House Minority Leader John Boehner, R-Ohio, a critic of Bush’s $700 billion bailout plan, also criticized Obama’s $825 billion plan on NBC’s “Meet the Press.” Boehner cited a non-partisan Congressional Budget Office review of the plan’s $355 billion targeted toward infrastructure, pointing out that less than half the amount would actually be spent in the next two years.
Pelosi told Stephanopoulos, however, that Obama has given assurances of spending the money within his administration’s first two years.
“First of all, the Congressional Budget Office only looked at 40 percent of the investments in the bill, by their own admission,” Pelosi said. “They didn’t even take a complete look at the bill. We have a letter from the administration that says 75 percent of the investments will be paid out in the first 18 months.”
Battling over billions
Obama’s proposed stimulus plan faces more opponents than simply time, however. Chief among those opponents are Republicans still stinging after the $700 billion package pushed through by the Bush administration.
“I think a lot of Republicans will vote no,” Boehner said on NBC, “because they see this as a lot of wasteful Washington spending, padding the bureaucracy and doing nothing to help create jobs and preserve jobs.”
Rep. Mice Pence, R-Ind., said, “The American people know we cannot borrow and spend and bail our way back to a growing economy.”
Sen. John McCain, R-Ariz., has already announced he will vote against the plan.
The economy itself presents another opponent. Unlike other economic downturns, Associated Press economics writer Jeannine Aversa reports, the economy is facing “a three-headed economic monster: crises in the housing, credit and financial markets that – taken together – haven’t been seen since the 1930s.”
Aversa reports that the Federal Reserve is likely to hold its key interest rate at all-time lows, possibly for the rest of the year in hopes an eventual turnaround will slay the convergent crises.
“Fed policymakers don’t want to let up until they are absolutely sure an economic recovery has taken hold,” said Bill Cheney, chief economist at John Hancock Financial Services. “Overall, their tone is going to be pretty pessimistic. The economy is still spiraling down and all the negative forces are feeding on each other.”
Nonetheless, Summers defended Obama’s $825 billion proposal.
“We believe that this is a properly sized approach to move the economy forward,” Summers told “Meet the Press.”
“We can make important progress and get started with the support that has been provided,” Summers said. “What ultimately will be necessary is something that will play out over time.”