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Obama’s Economic Strategy Begins to Emerge as Team Takes Shape

In an attempt to combat the economic crisis, President-elect Barack Obama has appointed key members of his economic team, including former Fed Chair Paul Volcker, to lead an economic advisory panel. Two financial writers assess his team and financial recovery plans.

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    Now a look at how the president-elect is shaping his team and response to a major financial crisis and all but certain recession. NewsHour correspondent Kwame Holman begins with this report on today's developments.


    Launching his third news conference in as many days focused on the economy, the president-elect again underscored it as his top priority, today announcing he was forming an Economic Recovery Advisory Board.

    BARACK OBAMA, President-elect of the United States: At this defining moment in our nation's history, the old ways of thinking and the old ways of acting just won't do.


    Mr. Obama's advisory board will be headed by former Federal Reserve Chair Paul Volcker. In that role, from 1979 to 1987, Volcker was credited with promoting policies that helped tame rampant inflation. He served with presidents from both parties. Mr. Obama touted that experience today.


    Paul has served under both Republicans and Democrats and is held in the highest esteem for his sound and independent judgment.


    The board's staff director and chief economist will be longtime Obama adviser Austan Goolsbee, currently a professor of economics at the University of Chicago.

    Mr. Obama said the board would exist for only two years, unless he determined there was a need to extend it. He said its members would include people outside of government and would be charged with giving him independent recommendations on his economic recovery plans.

    The president-elect said the board would provide a "fresh perspective" that's needed on economic policy.


    The reality is, is that sometimes policy-making in Washington can become a little bit too ingrown, a little bit too insular.

    The walls of the echo chamber can sometimes keep out fresh voices and new ways of thinking. You start engaging in groupthink. And those who serve in Washington don't always have a ground-level sense of which programs and policies are working for people and businesses and which aren't.


    The new board would be in addition to two traditional bodies that advise presidents on financial matters: the Council of Economic Advisers and the National Economic Council.

    On Monday, Mr. Obama named former Treasury Secretary Lawrence Summers to be the council's director and tapped New York Federal Reserve Chair Timothy Geithner as treasury secretary. The men served together in the Clinton administration.

    Answering questions today, the president-elect took on the charge that this week's appointments do not represent the change he talked about during the campaign.


    You were talking about changing Washington, your campaign was. Paul Volcker has been around a long time. He's somebody whose knows the ways of Washington. But what do you say, you know, say to your supporters who are looking for change?


      Actually, Paul Volcker hasn't been in Washington for quite some time. And that's part of the reason he can provide a fresh perspective.

    When it comes to the people that we've pulled together — because I know this has been sort of conventional wisdom floating around Washington, that, well, you know, there's a recycling of people who were in the Clinton administration, although Paul dates before that.

    The last Democratic administration that we had was the Clinton administration. And so it would be surprising if I selected a treasury secretary who had had no connection with the last Democratic administration, because that would mean that the person had no experience in Washington whatsoever.

    And I suspect that you would be troubled and the American people would be troubled if I selected a treasury secretary or a chairman of the National Economic Council at one of the most critical economic times in our history who had no experience in government whatsoever.

    What we are going to do is combine experience with fresh thinking.

    But understand where the vision for change comes from, first and foremost. It comes from me. That's my job.


    Mr. Obama also was asked if his three appearances this week indicate dissatisfaction with the way the Bush administration has dealt with the crisis.


    When you say that there needs to be a new way of thinking and the old way of thinking won't do anymore, does this suggest a bit of a frustration or disappointment with the way the Bush administration and Secretary Paulson is handling the crisis to this point?


    No, I think what it speaks to is the frustration of eight years in which middle-class wages have gone down or, in real terms, their family incomes have been reduced.

    It speaks to my frustration about all the families that I've met over the last two years who have lost their health insurance or their pensions are in danger, young people who can't afford to go to college.

    It expresses frustration about our inability to tackle some of the long-term problems that we've been facing and have been talking about for decades, whether it's health care, energy, an education system that's been slipping behind in critical areas like math or science, and most of all, I think, frustration with the incapacity of Washington to take bold, clear, decisive steps to deal with our economic problems.


    The president-elect also sought to ease concerns of Americans as they head into the traditionally busy Thanksgiving shopping weekend, saying, "Help is on the way."