Democrats want more action out of president-elect

December 6, 2008 at 12:00a.m.

WASHINGTON (AP) — With bad economic news stacking up like cord wood, President-elect Barack Obama is ceding pressing decisions to the Bush administration and members of Congress. But judicious and respectful deference risks looking like avoidance.

Obama has offered to let his team participate in talks between Bush officials and congressional leaders over how to spend the second half of a $700 billion Troubled Asset Relief Program for the financial sector. But Obama officials want Treasury Secretary Henry Paulson to take the lead in fashioning a plan for the money in the face of broad congressional skepticism.

Obama has history and the Constitution on his side. Before he takes office Jan. 20, he wields no executive authority. The only power he has emanates from his current popularity and the decisiveness of his presidential victory.

But Democrats publicly and privately are getting anxious for action. Just this week, House Financial Services Chairman Barney Frank, D-Mass., called on Obama “to be more assertive than he’s been.” Democratic senators seeking to structure a rescue loan for the auto industry have urged him to step in and settle a squabble over the source of the money.

Obama has focused the first weeks of his transition on rolling out his economic team and pressing for an economic recovery package that he wants to sign into law shortly after taking office.

One has to go back 76 years to find precedent in a similar economic catastrophe. Then, Franklin Delano Roosevelt famously let his five-month transition pass by keeping his distance from Herbert Hoover. The two men had sharp policy differences over how to address the Great Depression. When FDR took office in March of 1933, he had a major crisis on his hands.

“The same inhibitions would apply to Obama as they did to FDR,” said Ross Baker, a political scientist at Rutgers University and congressional expert. “You don’t want to become completely involved in an outgoing administration. In a sense, it has made its mess and you’re not in any obligation to come in and make it look prettier.”

Obama has not sugarcoated the state of the economy. In fact, he has prepared the public for more bad news. At the same time, he has made it clear that the blame rests with policies of the past.

“There are no quick or easy fixes to this crisis, which has been many years in the making, and it’s likely to get worse before it gets better,” he said Friday as news broke that employers eliminated 533,000 jobs in November, the most in 34 years.

Faced with an auto industry that says it is in imminent danger of collapsing, Obama made a pitch for his two-year recovery plan instead. At a news conference earlier this week, he deflected a question about whether to use Troubled Asset Relief Program money for the automakers or whether to tap a fund aimed at manufacturing more energy efficient cars.

“I think it’s premature to get into that issue,” Obama said at the conference.

How to spend the second half of the Troubled Asset Relief Program illustrates Obama’s dilemma. The Government Accountability Office criticized the program’s oversight in an audit this week, while members of Congress from both parties have voiced doubts about its use and success. And Paulson wants access to the remaining $350 billion.

Obama will inherit Paulson’s work, and he has insisted the program needs to be aimed more at reducing mortgage foreclosures. As a result, his economic team has agreed to be part of talks with Congress, but wants Paulson to fashion the plan.

“They’re a transition team, not a government,” said James Galbraith, an economist at the University of Texas at Austin who was an informal adviser to the Obama campaign. “Paulson is looking to them for guidance; I would share their reluctance to provide it.”

The auto bailout faces not only an internal party squabble over its funding. It also has little public support.

But Obama could use his political muscle to help drive the debate. Just days after last month’s election, 72 percent of people polled said they were confident that Obama would be able to improve the economy, according to an Associated Press-GfK survey.