Should Obama announce his economic plan soon?

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.


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Reader Comments

Vincent

November 21, 2008 07:19 PM

Obama would greatly help this economy right now if, he told the whole country his plan to at least alleviate some of the economic woes. Any idea except another economic stimulus is good enough for me. His ideas must be fresh and not recycled. The people he must pick for his Cabinet must have some ideas of their own and must not be afraid to speak their mind about what their ideas should be. A crazy idea I had for an economic stimulus was to have everyone in the whole country donate $1 to stimulate the economy. At least were putting our money and faith into an idea that won't take alot out of our pocket.

Tom K

November 21, 2008 11:32 PM

This is exactly the course of action which I called for in comments to other news articles.

If the news that Geithner will be Obama's Treasury secretary has such a beneficial effect on the stock market, just think what a stream of news about his economic plans will do.

The market right now is desperate for any good news. Investors want to know that somebody is going to do something to correct the course this country is on.

If Obama is willing to allow bits and pieces of a proposed stimulus plan to leak out over time, it could keep the market on a reasonably steady course upward, if not dramatically, at least consistently.

ricky

November 22, 2008 12:47 AM

sure let the public donate $1.00 to economy. This low donation might help in igniting the economy once for all.

KK

November 22, 2008 03:03 AM

Obama's plan should be announced and should be picked apart. If it is any good, it will find support. The country cannot afford more mistakes, cloaked in secrecy, the hallmark of Bush administration.

MM

November 22, 2008 06:04 PM

US has a population of about 300 million, even if 2/3rd were to contribute, that would be only USD 200 million.

These days, we're talking about thousands of billions, and almost heading towards trillion.

Am I missing something in what you guys are proposing?

Joe Cushing

November 22, 2008 11:04 PM

I see another problem with announcing now. The benefit to announcing now of course is to provide more certainty for markets. The problem with that is, what if things change between now and Jan 20 and Obama needs to change his plan? That makes him look like Paulson. That makes things seem more uncertain than they are now. If he announces a plan now, he is stuck.

I heard our tab was up to 5 trillion now or maybe it was 3. Whatever it was, it made 700 billion seem insignificant.

Thank you for your interest. This blog is no longer active.

 

About

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.

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