CHICAGO - Saying the country faces the "greatest economic challenge of our lifetime," President-elect Barack Obama yesterday pledged his support for state and local government assistance and said passage of an economic stimulus package would be his first priority if the current Congress doesn't act.
"A fiscal stimulus plan that will jump-start economic growth is long overdue. I've talked about it throughout this, the last few months of the campaign. We should get it done," he said at his first post-election news conference held at a downtown Chicago hotel Friday. "I want to see a stimulus package sooner rather than later. If it does not get done in the lame-duck session, it will be the first thing I get done as president of the United States."
House and Senate Democratic leaders said last week they will push for a second economic stimulus package when Congress returns to Washington for a lame-duck session on Nov. 17.
Local and state governments - who have been left out of the economic initiatives pushed by President Bush and are pressing Obama for federal help - also received a boost.
"I think it's going to be very important for us to provide the kinds of assistance to state and local governments to make sure that they don't compound some of the problems that are already out there by having to initiate major layoffs or initiate tax increases," Obama said.
Obama's news conference, with Vice President-elect Joe Biden alongside him, came after a meeting with his 17-member transition economic advisory board that is charged with finding ways to help stimulate the economy.
Obama sought to offer reassurance that the economy is a top priority as he cited the gloomy news of Friday from the Labor Department that employers cut 240,000 jobs in October, bringing total cuts to 1.2 million for the year. It's the 10th consecutive month the economy cut jobs and unemployment stands at 6.5% - a 14-year high.
Obama made a brief statement and took questions in an appearance that lasted less than a half hour and offered few specifics on how he plans to calm the markets and jump-start the economy aside from pushing for the stimulus package. He said he remains behind his tax proposals that would increase income taxes for the wealthiest Americans and said he would not rush to fill key fiscal posts like Treasury secretary.
"I want to move with all deliberate haste, but I want to emphasize deliberate as well as haste," he said, adding they would be announced in "subsequent weeks." Two members of his advisory board - Lawrence Summers and Robert Rubin - are considered at the top of Obama's list. Timothy F. Geithner, president of the Federal Reserve Bank of New York, also is said to be on Obama's short list.
Obama's transition economic advisory board includes a mix of prominent business leaders, elected officials, former regulators, and former members of President Bill Clinton's administration.
They include former Democratic congressman from Michigan David Bonior, who served between 1977 and 2003; Warren Buffett, chairman and chief executive officer of Berkshire Hathaway; Roel Campos, a former Securities and Exchange Commissioner; and William Daley, Midwest chairman of JPMorgan Chase & Co. who served as commerce secretary under Clinton from 1997 to 2000. Daley is also the brother of Chicago Mayor Richard Daley.
Also tapped for the board was William Donaldson, the SEC chairman from 2003 to 2005; Roger Ferguson, president and CEO of TIAA-CREF and the former vice chairman of the board of governors of the Federal Reserve; Democratic Michigan Gov. Jennifer Granholm; Anne Mulcahy, chairman and CEO of Xerox; Richard Parsons, board chairman of Time Warner; and Penny Pritzker, CEO of Classic Residence by Hyatt who served as Obama's campaign finance chair.
Other members also include Robert Reich, of the University of California, Berkeley, and secretary of Labor between 1993-1997; Rubin, chairman and director of the executive committee, Citigroup, and Treasury secretary between 1995 and 1999; Eric Schmidt, chairman and CEO of Google; Summers, of Harvard University and a managing director at D.E. Shaw who served as Treasury secretary between 1999 and 2001; Laura Tyson of the Haas School of Business at the University of California, Berkeley, and chairman of the National Economic Council between 1995 and 1996; Los Angeles Mayor Antonio Villaraigosa; and Paul Volcker, chairman of the Fed between 1979 and 1987.
Obama, who will take the oath of office in January to become the 44th president, last week named a transition team and tapped as his chief of staff a fellow Chicagoan, Rep. Rahm Emanuel, D-Ill., a former policy adviser to Clinton.
Local and state governments have taken every opportunity to push their cause as they seek access to assistance under Treasury's $700 billion Troubled Asset Relief Program. While traveling with Obama on the campaign trail in Florida in late October, Alex Sink, Florida's chief financial officer, said Obama inquired if Florida and its localities were have trouble accessing the credit markets.
"I said, 'Yes, absolutely,' and when he mentioned that he was in almost daily contact with Treasury Secretary Henry Paulson, I said, 'Please, implore him to make part of the rescue package monies available for state and local governmental entities,' " she said.
In an interview last week, Sink said that she has tried to speak directly with Treasury officials but did not receive any response to her requests. On a trip to Washington on behalf of the National Association of Insurance Commissioners in mid-October, she participated in a panel in the main Treasury building that sits next to the White House. But she was unable to reach officials working on TARP, she said.
Sink said that many localities and tax-exempt authorities in Florida are unable to access the debt markets, leading to the delay of many infrastructure projects, which she said could in turn lead to job losses.
"Now I'm of a mind that I'm going to get a word into Obama's transition officials working on finance to see whether they can encourage the current administration to open up the borrowing windows to these municipalities," she said. "There's a huge liquidity issue and the only entity that appears to have sufficient liquidity right now is the federal government."
She added that declining revenues in the state's coffers have constrained its ability to provide liquidity to its own localities. Sink also said that she had not yet received a response to a letter that she sent to Fed chairman Ben Bernanke on Oct. 14 requesting that the Fed include government commercial paper in its Commercial Paper Funding Facility.
Under the CPFF program, the Fed will buy unsecured and asset-backed paper from corporations and financial institutions, and Fed officials have said that there are no current plans to include state and local debt in the program.