Obama Takes Early Leadership Role In Face Of Economic Crisis

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President-elect Barack Obama said Friday that he would make the middle class his first priority when he assumes the presidency in January. In an unprecedented step, Obama held a press conference well before he is inaugurated. He was solemn in his remarks, stating that the United States is facing the "greatest economic challenge of our lifetime."

Traditionally, president-elects do not host press conferences prior to their inauguration. However, Obama is being held to high standards in his expectations and is already receiving President George W. Bush's daily intelligence briefing. He attempted to temper these expectations, telling reporters that "the United States has only one government and one President, and until January 20th of next year, that government is the current administration."

Dean Baker, an economist and co-director of the Center for Economic Policy Research, says that the prominent press conference could be an attempt by Obama to "give the appearance that he is taking charge" in the face of the economic crisis.

Citing October's dismal employment report and the struggling automotive industry as evidence, Baker told RTTNews that the economy is "really in very very bad shape," and that it "made a lot of sense for (Obama) to step forward."

"People are very scared with cause - this is, with the possible exception of 1980 - 1982, this is the sharpest downturn we've had in the postwar period," Baker said.
Looking ahead, Obama pledged to confront the current economic crisis, which has the U.S. economy in what appears to be a deep and possibly prolonged recession, "head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity."

The press conference was held immediately following a meeting with Obama's Transition Economic Advisory Board, featuring several prominent members from both the private and public sectors on Obama's economic transition board, including billionaire investor Warren Buffett, former Treasury Secretaries Robert Rubin and Lawrence Summers, former Federal Reserve Chairman Paul Volcker, and former SEC Chairman William Donaldson.

While Obama's advisors are some of the most prominent in their field, Baker said that Obama would perhaps want to steer clear of those with connections to Wall Street when outlining his choices.

Specifically, Baker explained that Obama and his advisors appear to be struggling with an "unfortunate confusion" that it is the financial crisis that is causing the current problems in the credit markets, rather than the loss of equity from the housing crisis which is making lending difficult.
"Wall street really messed up," Baker said. "Why you would want to associate yourself" with those officials, he asked.
In his press conference, Obama pledged to work on a "rescue plan for the middle class" that includes job creation, extending unemployment benefits, and a second fiscal stimulus plan. Whether or not the second economic stimulus will pass before Bush leaves office depends in part on the amount Bush will sign off on, Baker explained.

It "doesn't make sense for Democrats in congress to compromise," Baker said, noting that in a little over two months Obama will be President and the Democrats will pad their majorities in both the House and Senate.

Meanwhile, he said to look for an extension of unemployment benefits. Baker predicts that the unemployment rate, currently at a 14-year high of 6.5 percent, will increase even more in the coming months and will be "very close" to 7 percent when Obama is inaugurated in January.

On the auto industry, which is facing dire straits following dismal quarterly reports from Ford (F) and General Motors (GM) Friday, Obama said it is a "high priority" for his administration to help the industry adjust to changing economic times.

"The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil," Obama said. "I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States."

Baker said that it is a good idea for Obama to help the auto industry.

"Seeing the GM and possibly Chrysler, seeing one of those, particularly if it's GM go under would be a serious blow," he said, noting though for the government's role "at the end of the day there is only so much you can do."
In the Question and Answer portion of the press conference, Obama said that he thinks that a new president can do an "enormous amount" to restore the public's confidence in the economy.

He also responded to a question regarding a letter sent by Iranian president Mahmoud Ahmadinejad congratulating Obama on his victory, an unusual move considering the U.S. and Iran have not had diplomatic ties for nearly 3 decades. Obama said he had not yet seen the letter, but would "respond accordingly."

"Iran's development of a nuclear weapon I believe is unacceptable," he said, adding that it is important to mount an international effort to keep Iran from obtaining a nuclear weapon.

President Bush invited Obama and his wife Michelle to the White House, and the couple is expected to visit the Capitol on Monday. Obama said he expects a "substantive conversation" to be held with the current President, adding that in the face of the economic challenges, now is the time to "set politics aside" and think practically.

In his prepared remarks, Obama reinforced the notion that he is prepared to deal with the escalating economic crisis, and that America will emerge a stronger nation.

"Let me close by saying that I do not underestimate the enormity of the task that lies ahead," he said. "I know that we will succeed if we put aside partisanship and work together as one nation. And that is what I intend to do."

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