I’ve never been in the White House kitchen, but I hope it has a stove with plenty of back burners. Our new president will need them for the economic issues that he spent most of the campaign talking about.
By the time Barack Obama takes office Jan. 20, the worldwide recession will be the only economic issue that matters. Every initiative the new administration introduces will be viewed through a single lens: Does it make things better or worse?
Impose higher taxes on the rich? Even Obama’s Democratic allies in Congress realize that a recession is the wrong time to raise taxes.
Increase the capital gains tax? That would send the stock market, already down more than 40 percent from its peak, into another tailspin.
A cap-and-trade program to reduce greenhouse gas emissions? If it raises the cost of running a power plant or a factory, this also feels ill-timed.
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Reform health care? Business groups will try to turn this into a jobs issue. They’ll say the mandate-or-tax part of Obama’s plan makes hiring more expensive. With unemployment likely to be high and rising, their argument will be hard to ignore.
Obama can’t be expected to abandon any of these issues, all of which seem popular with voters.
Stimulus package first
Obama’s domestic policy team, when it is assembled, must make the economic mess its top priority. That means enacting a stimulus package, something Congress may tackle even before Inauguration Day. It also means carrying out the Bush administration’s bank bailout, putting new financial regulations into place and maybe helping homeowners who can’t afford their mortgages.
We don’t know what details Obama will put into his recovery plan, but financial markets are eager to hear a coherent, confident approach.
"It’s almost like the regulators, both here and in Europe, have been throwing spaghetti at the wall," Ezrati said. "Because confidence is such an issue, the fact that they are flailing around is making things worse. Obama has to at least give the appearance, or field a team of people who give the appearance, of having a handle on things."
As for those non-recession-related campaign promises, the president-elect may tweak some of them to fit the current circumstances.
Other platform planks may be handed to blue-ribbon study commissions, or simply put off until the economy looks healthier.
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There’s nothing wrong with that, says Murray Weidenbaum, the Washington University economist who was a top adviser to Ronald Reagan after the 1980 election.
Pick your issues
"Issues like health care and education will be vitally important, but the phrase ’quick fix’ isn’t what comes to mind," Weidenbaum said.
Obama can’t afford to focus too much attention on divisive — albeit important — issues during his first year in office.
Until financial markets return to normal and the economy starts growing again, everything else gets pushed to the back burner.
David Nicklaus is a columnist for the St. Louis Post-Dispatch.
