- The Washington Times - Wednesday, January 21, 2009

WASHINGTON (AP) — President Barack Obama and Congress tackled the troubled economy on Wednesday, weighing tactics for fixing the struggling financial industry and pushing ahead with a massive economic recovery package of new spending and tax cuts.

Obama, in his first full day in office, planned to meet with his White House economic advisers. On Capitol Hill, Timothy Geithner, Obama’s nominee for secretary of the Treasury, told senators the country needs a “forceful course” to meet the economic crisis.

The president assumes office with access to the remaining half of a $700 billion financial bailout fund, and with Congress eager to get him a stimulus plan worth at least $825 billion within the next three weeks. In a sobering welcome to the president, stocks plunged Tuesday amid fears that governments would be forced to take over wobbly banks. Financial stocks rebounded Wednesday morning.

With a Congress that so far has acquiesced in his strategies, the combined rescue and stimulus tools would give Obama extraordinary resources to confront the recession.

A House committee was ready to put the final touches on much of the spending side of the stimulus plan, readying that portion of the bill so the House can consider the entire package next week. The House also planned a vote Wednesday afternoon on legislation setting goals and conditions for spending the financial rescue money, provisions that the Obama administration has already embraced.

“The ultimate costs of this crisis will be greater if we do not act with sufficient strength now,” Geithner told the Senate Finance Committee. “In a crisis of this magnitude, the most prudent course is the most forceful course.”

There were words of caution, as well. Federal budget experts warned Congress that even as it moved to dramatically increase short-term spending, it should also look to long-term reductions in the increasing deficits and bring the federal budget under control.

“It may be politically more viable to enact future restraint at a time when significant amounts of more immediate pleasure are being allocated through the stimulus package,” Robert Reischauer, president of the Urban Institute and a former director of the Congressional Budget Office, told the Senate Budget Committee. “This appears to be one of those rare moments in history when seeking sacrifice for the common good may be politically viable.”

House Republicans, meanwhile, seized on a new Congressional Budget Office study that predicts just $26 billion of the $358 billion in infrastructure and other appropriated spending in the stimulus bill would be delivered to the economy in the eight months left in the fiscal year.

“Less than 10 percent of the spending in this package will even go out the door in 2009,” said Rep. Paul Ryan of Wisconsin, top Republican on the Budget Committee. “2009 is the year we’re worried about.” While the stimulus faced its critics, lawmakers also sought assurances from the new administration that it would add transparency and oversight to the spending of the remaining $350 billion of the financial bailout, known as the Troubled Asset Relief Program.

The Senate last week agreed to release the second half of the fund to the Obama administration, a legislative victory for the incoming president even before he assumed office.

The House was scheduled to vote in the afternoon on legislation introduced by House Financial Services Committee Chairman Barney Frank, D-Mass., that would place restrictions and spending goals on the money. In a letter to congressional leaders last week, top Obama economic adviser Lawrence Summers indicated that Obama agreed with many of the key provisions in the legislation, including plans to spend up to $100 billion of the money to reduce mortgage foreclosures.

Geithner told senators at his confirmation hearing that he and Obama “share your belief that this program needs serious reform.”

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