Inside Obama's economic crusade
Furman, who met with House and Senate budget writers nearly a dozen times before taking office, notes, "We did go to Congress with a reasonable degree of specificity in terms of the overall size, in terms of the breakdown between taxes and spending, in terms of priority areas for spending. But this timetable was thrust on the President by the state of the economy. It wasn't a timetable he chose."
Obama's economic team sees both the TARP and the stimulus as just the first steps in their prolonged war against a deepening recession. In interviews, both Summers and Geithner left open the possibility of asking Congress for more funds beyond the $700 billion already slated for the financial rescue effort, which now includes a new public-private investment fund to buy bad assets and a $50 billion measure to stem foreclosures. But they note that the partnership to buy up toxic assets is an investment cost that the government can recoup, not outlays of taxpayer dollars never to be seen again.
"We're going to do it at a minimum cost to the taxpayer, with maximum benefits. But we've got to make sure we do enough," says Geithner. "There's this big, dangerous dynamic" of an ailing financial sector working against the economy - and an ailing economy working against a turnaround in finance. "It's like riding your bike into a 40-mile-an-hour headwind," he says.
The economic team is geared up to monitor the stimulus plan, with the possibility of mid-course corrections. "We have to make sure it works the way it's designed to work, to make sure all the money hits the ground the way we want it to," says domestic policy advisor Melody Barnes. Adds Goolsbee: "Within six months, for sure, you want to see that the recovery package is doing things." The University of Chicago economist says he'll consider the effort successful if the worst scenarios don't come to pass, "if by the end of 2009 we aren't looking at GDP numbers that are huge negatives, if unemployment rises to the 8% range rather than the 11% that some are predicting."
Even in this rush of events, close associates say Geithner understands (more than his predecessor did) that he needs to spend considerable time as salesman to both Congress and the public. As with Summers, the brilliant and sometimes abrasive former Harvard president, people skills aren't his strong suit. Where Geithner succeeds, though, is in internal bureaucratic warfare, where he has a reputation for coming to the table with a smart and detailed plan that trumps opponents.
"He's the guy who can bring order to chaos in a roomful of people," says a former Treasury official. "He can get 15 exhausted people in a room on a Sunday night before the Asian markets open and come to a conclusion." Already the Treasury Secretary has beat back efforts by White House political strategists to put more controls - including more stringent pay caps - on banks receiving federal aid.
