OUR OPINION: With team in place, time to get cracking
U.S. President-Elect Barack Obama announced Monday the players who will be tasked to help resurrect a national economy that is fairly close to flatlining.
Obama announced Timothy Geithner as treasury secretary, while Lawrence Summers will serve as head of the National Economic Council. New Mexico Gov. and former presidential candidate Bill Richardson will join Obama’s cabinet as secretary of commerce.
Obama is also pushing an economic plan that that is likely to far exceed the $175 billion he originally proposed during his election campaign. Obama’s plan would include an infusion of money for various infrastructure projects, new environmental technological advances and tax cuts for low- and middle-income taxpayers. During his campaign, Obama said he would pay for increased tax relief by raising taxes on people making more than $250,000.
News also broke Monday that the government is prepared to provide more than $7.76 trillion to help get the economy out of the doldrums. This comes after guaranteeing $306 billion Sunday toward saving floundering Citigroup Inc.
The pledges amount to half the value of everything produced in the nation last year. Yes, you read that right.
These figures are in addition to the already promised $3.18 trillion to bail out other financial institutions in the biggest response to a national economic emergency since the famouns “New Deal” of the 1930s. In March, the Fed provided financial backing to JPMorgan Chase’s buyout of Bear Stearns. Six months later, the government took over mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) and also threw a lifeline to insurer American International Group (AIG), which was recently retooled.
We’re glad to see Obama take the first steps to address the crisis which he will inherit in January. We are also cautiously optimistic about this economic game plan. While we do not believe another series of bailouts is the fix-all method and we certainly do not agree with higher taxes, we do think that something needs to be done to bring immediate relief. If such a bailout comes to pass, our government must ensure that the funds will not simply go to line the pockets of industry big wigs.
Simply throwing money at the problem will not fix it. These companies must restructure and find ways to stop the bleeding, or all of these efforts will go for naught.