Two for one

Economic upheaval creates virtual parallel presidency

November 28, 2008|By Paul West | Paul West,

WASHINGTON - President-elect Barack Obama is grabbing the mantle of national leadership in unprecedented ways, creating what has emerged as a virtual parallel presidency just three weeks after his election.

Obama indicated this week that he felt he had no choice. During one of three nationally televised events on the economy in as many days, he said "extraordinary circumstances" had forced his hand.

His actions have drawn the attention of the public, the news media and financial markets, which appear to be responding at least as much to the decisions of the incoming administration as to the one still in power. Since Obama began to reveal the members of his economic team last week, the stock market has rallied by about 15 percent. The Dow Jones industrial average closed up a fourth day in a row Wednesday for the first time since May.

Obama is attempting to reassure a country struggling with the worst economic downturn in decades that "we don't intend to stumble into the next administration," he said.

"People should understand that help is on the way," he said Wednesday in announcing the creation of an Economic Recovery Advisory Board to be led by former Federal Reserve Chairman Paul A. Volcker.

Since late last week, Obama's statements and public appearances have been designed to fill a leadership vacuum and generate public confidence in his abilities as a crisis manager. The moves represent an abrupt shift from a hands-off approach he had announced two weeks earlier.

"It's rather like George Bush has checked out, and if Obama doesn't take more drastic action than he originally promised, he gets blamed for whatever happens," said Paul Light, a New York University professor who specializes in presidential transitions.

New presidents "have tried to stay away from the outgoing administration's policies as much as possible," Light added. "They want to start with a clean slate, and Obama is clearly not starting with a clean slate."

Obama's early focus on the economy, the most difficult issue he is likely to face when he takes office, comes with an unusual twist.

His Treasury secretary-designate, Timothy Geithner, is also a high-level player in the Bush administration's financial-rescue deliberations, as president of the Federal Reserve Bank of New York. That gives the incoming administration a rare opportunity to participate directly in the current government's decisions.

Because Geithner has a seat at the table, "this is not an entirely arms-length transaction" between the Bush and Obama teams, said William Galston, a Clinton White House domestic policy adviser. "This is a complicated and somewhat murky area, and the president-elect is going to have to proceed deliberately. But that seems second nature to him."

Also blurring the line: Obama's widely reported intention to keep Defense Secretary Robert M. Gates in office to oversee U.S. military forces in Iraq and Afghanistan.

Obama began shifting to a take-charge approach last weekend, when he announced a plan for creating 2.5 million jobs. This week, he indicated that he is preparing a major economic stimulus package that the new Congress, which takes office in early January, could act on even before he is sworn in as president.

On Tuesday, he plans to meet with governors of both parties in Philadelphia to discuss the worsening financial squeeze that most states are experiencing.

Obama's leadership efforts provide a counterpoint to those of the current administration, which has nearly two months left.

Treasury Secretary Henry M Paulson Jr. has largely been the face of the Bush response to the economic crisis, and Bush's efforts to spur public confidence in his ability to deal with the crisis have been notably unproductive. Bush said this week that there was close cooperation between his administration and his successor's and that he was keeping Obama informed of any big decisions he makes.

While Obama was introducing the latest members of his economic team in Chicago this week, Bush was on a pre-Thanksgiving holiday visit to an Army base in Kentucky. Two days ago, Bush altered his schedule to let Obama's economic announcement take precedence over his ceremonial pardoning of a turkey at the White House.

Obama had hoped to remain in the background during the transition. In his first postelection news conference, he emphasized that the United States has only one president, a ritualistic statement widely applauded as appropriate for a newly elected president.

Obama repeated the axiom this week, after a reporter asked him to square his recent high-profile approach with his earlier remark.

Referring to himself in the third person, Obama said it was "important, given the uncertainty in the markets and given the very legitimate anxiety that the American people are feeling, that they know that their new president has a plan and is going to act swiftly and boldly."

Many, including members of the incoming and outgoing administrations, have likened the current economic upheaval to the plight that Franklin D. Roosevelt faced when took office in the depths of the Great Depression.

Roosevelt adopted a strict hands-off approach to the policies of his predecessor, Herbert Hoover, during the transition period. By the time Roosevelt became president, in March, the economic situation had become more dire. The 20th Amendment, drafted largely to shrink the four-month transition to fit modern government needs, advanced the inauguration to Jan. 20, beginning in 1937.

The risks for Obama in maintaining a remote stance from the government's actions are complicated by the demands of 24-hour communications worldwide and a tightly woven global financial system.

As president-elect, "you continually have to send signals that you know what you're doing," said Martha Kumar, a Towson University professor who directs the scholarly White House Transition Project.

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