Posted by: Michael Mandel on November 21
[Saturday morning: That didn’t take long, did it?]
Now that it seems likely that President-elect Barack Obama will select Tim Geithner as his next Treasury Secretary, should he soon announce his economic plan as well?
Under ordinary circumstances, the answer would be an emphatic no. As Obama has said, the U.S. has “only one president at a time.” That’s especially true when it comes to foreign policy and command over the armed forces, where the U.S. needs to speak and act with a single voice.
But with the economy and financial markets still choking on excess debt, it may be time to consider a break with tradition. Between now and January 20, the stock market could keep dropping and the holiday shopping season could turn into a rout.
That opens up the possibility that Obama, supported by Treasury Secretary-to-be Geithner, should offer up the outline of his fiscal stimulus/financial bailout plan sometime over the next few weeks. The advantage of such a move: A credible plan could put a floor under the stock market and pump some energy into consumer buying. If households feel there’s some help coming, widespread price cuts could ignite a holiday shopping spree.
Such a plan obviously can’t come from the Bush Administration, which has no sway with Congress at all right now. Whatever legitimacy Henry Paulson once had has been eaten away as well.
But an early announcement by Obama also carries risks. For one, it will give time for opposition to build, since any program can’t be introduced into Congress until after inauguration. The more detailed the plan, the more it will be picked apart.
In addition, once Obama announces a plan, it becomes ‘his economy’. The December employment report, announced in early January, is likely to be utterly horrible (Reason: the government’s seasonal adjustment factors assume a lot of retail hiring which is not likely to appear this year). Coming after an Obama announcement, it may look like his plan has failed even if it hasn’t been approved yet.
On net, it probably makes sense for Obama to lay out his economic plan in December. But it’s just the first of many tough decisions he will have to make.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.