Sunday, March 15, 2009

One of President Obama’s economic advisers said Sunday that the economy is fundamentally sound, a striking reversal from the Democrat’s campaign rhetoric as his administration now guides the nation’s financial health amid dire conditions.

Mr. Obama’s Democratic allies pleaded for patience for an administration hitting the two-month mark this week, while Republicans said the White House’s plans ignore small business and the immediate need to fix what ails the economy.

During the fall campaign, Mr. Obama mercilessly mocked his Republican opponent, Sen. John McCain, for declaring, “The fundamentals of our economy are strong.” Mr. Obama’s team painted the veteran senator as out of touch and failing to grasp the challenges facing the country.

On Sunday, economic adviser Christina Romer was asked during an appearance on NBC’s “Meet the Press” if the fundamentals of the economy were sound.

“Of course, they are sound,” she replied.

“The fundamentals are sound in the sense that the American workers are sound; we have a good capital stock; we have good technology,” she said. “We know that — that temporarily we’re in a mess, right? We’ve seen huge job loss; we’ve seen very large falls in GDP. So certainly in the short run we’re in a — in a bad situation.”

Just a week ago, Peter Orszag, director of the White House Office of Management and Budget, declared that “fundamentally, the economy is weak.”

The seesaw message from the new administration drew sharp criticism from Senate Minority Leader Mitch McConnell, Kentucky Republican, who said Mr. Obama’s team was exploiting the economic situation for political gain.

“They’re taking advantage of a crisis in order to do things that had nothing to do with getting us into the crisis in the first place,” Mr. McConnell said.

Democratic lawmakers, meanwhile, promoted a potential plan to help move so-called toxic assets off bank ledgers.

“And I think, as I said, they are well along in this,” said Rep. Barney Frank, Massachusetts Democrat. “If they wait a week or two more, no one ought to get all in a twitter about that. It’s very important to do it right.”

The president’s team largely rejected suggestions that officials were considering taxing employees’ health benefits. As a candidate, Mr. Obama called such a proposal a “multitrillion-dollar tax hike.”

“I’m not leaving the door open,” said Austan Goolsbee, staff director of the Council of Economic Advisers, responding to a report in Sunday’s New York Times. “The president has laid out a series of clear principles on the health plan that we will do whatever it takes to get affordable quality coverage to all Americans.”

Ms. Romer said she wouldn’t take the idea off the table, but she added that Mr. Obama hasn’t supported it.

Lawrence Summers, the president’s chief economic adviser, said it wasn’t part of Mr. Obama’s principles but left open the possibility of such a move from Congress, where Democrats control both chambers.

Republicans were not resigned to accept Democrats’ plans. Rep. Eric Cantor, Virginia Democrat and the GOP’s No. 2 leader in the House, promised an alternative budget, in part to counter Democratic attacks that his party provided only “no” but not other ideas.

Mr. Cantor said Mr. Obama’s plan ignored the needs of small businesses and the middle class and would pass along an extra $800 in taxes to each American.

Members of both parties, however, joined in the criticism of troubled insurance giant American International Group, who paid out tens of millions in bonuses despite posting the largest corporate loss in history during the fourth quarter of last year.

Mr. Summers called the payout “outrageous,” given AIG has received more than $170 billion in a public bailout and reported a loss of $61.7 billion.

Mr. Frank said the AIG leaders who approved the bonuses shouldn’t stay in power.

Mr. McConnell said the payments do little to boost public confidence.

“This is an outrage,” Mr. McConnell said. “And for them to simply sit there and blame it on the previous administration or claim contract — we all know that contracts are valid in this country, but they need to be looked at.”

Mr. McConnell appeared on ABC’s “This Week With George Stephanopoulos”; Mr. Summers, also on “This Week” and CBS’ “Face the Nation”; Ms. Romer and Mr. Cantor, on NBC’s “Meet the Press”; and Mr. Goolsbee and Mr. Frank, on “Fox News Sunday.”

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