"A Time for Change: The Obama Agenda"-Economic Recovery Plan
Wednesday, January 14, 2009SUZANNE PRATT: President-Elect Obama continued to press Congress to release the rest of the money in the Troubled Asset Relief Program or TARP. While that's up in the air, House Speaker Nancy Pelosi says there's progress towards finalizing a massive economic stimulus bill. She's expected to announce details tomorrow. In part two of our series, "A Time for Change: The Obama Agenda," Darren Gersh reports on a key goal of the new administration's recovery plan, restoring the nation's battered sense of confidence.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Listen to Barack Obama over the last couple months and it is clear what's on the president- elect's mind. Economist, Mark Zandi says Obama understands the economy needs a confidence boost as much or maybe more than it needs a new injection of cash.
MARK ZANDI, CHIEF ECONOMIST, MOODY'SECONOMY.COM: The collective psyche has been obliterated. Everyone is panicked. People are selling their stock portfolios, putting everything into cash. literally putting their money in the mattress. And if that psychology continues to be pervasive, then no matter what the Obama administration and Congress do, it's going to be difficult to get the economy moving again.
GERSH: One of the new administration's strategies for restoring confidence is to replace economic spin with a realistic assessment of the problem, something Obama tried to do in his most recent weekly address.
PRESIDENT-ELECT BARACK OBAMA: We start this New Year in the midst of an economic crisis unlike we have seen in our lifetime.
GERSH: Of course, talk is not enough. So Obama's economic advisers have focused on programs they believe could create three to four million jobs, not only because the economy needs them, but also because polls show focusing on job creation helps bolster consumer confidence in the economy. To restore the confidence of bankers and loan officers, the Obama administration is pushing hard for Congress to approve the second installment of the financial rescue money though that effort today ran into opposition from Republicans like Louisiana's David Vitter. He argues the program has been a failure.
SEN. DAVID VITTER, (R) LOUISIANA: TARP has really devolved into a slush fund for the administration.
GERSH: The president-elect hopes to change that view by promising more accountability and transparency in using financial rescue funds. George Mason University Professor Tyler Cowen, says the president elect is determined not to repeat mistakes that undermined confidence in the Bush administration's handling of the crisis.
TYLER COWEN, ECONOMICS PROF., GEORGE MASON UNIVERSITY: He has shown us a detailed plan. There has been a fair amount of transparency. Everyone has sounded reasonable and open. Compare that to Bush and Paulson where we are told the sky will fall unless you vote us $700 billion and then TARP passes and the sky is falling anyway.
GERSH: Yale's Robert Shiller has a new book out studying the role psychology plays in the economy. He's impressed with Obama's confidence building moves so far, but says they are not enough. Shiller says it's critical the new administration be more forward looking.
ROBERT SHILLER, AUTHOR, "ANIMAL SPIRITS": We should be really thinking about moving into the 21st century. And I think that's how we help produce confidence. If people see that we are moving forward, we're not just patching. The problem is the fixes to date look old fashioned. They look like patches.
GERSH: Obama will have many opportunities to rework the economy out of whole cloth. After the initial economic recovery efforts, the president- elect hopes to bolster confidence with an overhaul of financial regulation and plans to reform the nation's entitlement programs. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
