5 p.m. ET: The markets may well tank again tomorrow, but for today at least, Tim Geithner and the rest of the drama-filled Obama economic team can sit back and enjoy the fact that investors seem to like their plan to take those "troubled" assets off the books of the nation's "very troubled" banks.
Beyond today's happy reaction, the longer-term politics of the bank plan remain unclear. Congressional Democrats were full of praise for the administration's proposals but the liberal blogosphere is much less enthusiastic, with a few exceptions. Most conservatives aren't sure what they think yet, beyond complaints about some of the specific details. There may well be a few snap polls out in the coming days that attempt to gauge broader public opinion, but they probably won't matter. Won't the average voters make up their minds about this plan six months or a year from now? If the economy has improved, they'll like it. If it hasn't, they won't. Will Geithner still be around when they reach their verdicts?
8 a.m. ET: It's the start of a new week, and that means it's time for the Obama administration to unveil yet another sweeping, ambitious plan to fix the economy. In this case, it's the White House's blueprint for creating a public-private partnership to buy troubled assets from banks, thereby clearing their books and -- hopefully -- setting them and the larger financial system on the path back to recovery.
Tim Geithner, who still has the "confidence" of President Obama, lays out the details of the plan in an op-ed and an interview in this morning's Wall Street Journal. He will explain more this morning at a pen-and-pad press briefing, a format that often is used when the briefer is worried about being caught saying something stupid or controversial on camera.(A free piece of semantic advice: Be sure to call them "troubled" rather than "toxic" assets. Who wants to buy something that's toxic? Calling them troubled makes them sound salvageable, like the patients on a rehab reality show or a teenager in an after-school special.)
How the Obama administration fares during this continued crisis seems dependent on two factors -- how much the public actually understands about the White House's latest plans, and how much more the public will tolerate. How will average voters decide what they think of the latest plan, which is exceedingly complicated and involves both significant public risk and the chance of lucrative private gain? Paul Krugman, for his part, is filled with "despair" at the idea. Fellow economist Brad DeLong is much more positive. The former has a much larger readership than the latter, but the jury is still out on which narrative will take hold with the public.
As for the public's overall tolerance, it may be that "bailout fatgue" could work in Obama's favor in this case. Does the public understand that this is a new bailout plan, and that it's different from the original TARP program and the housing rescue plan and all the others? On top of all that,
per the Washington Post, the administration "is expected to announce new proposals for financial regulation, executive pay, accounting standards, the structure of the International Monetary Fund and other issues" this week before the upcoming G-20 summit. Oh, is that all?
Maybe the public will be so overwhelmed with all the different plans and blueprints that its rage will subside a bit over the AIG bonus scandal, giving the administration the chance to negotiate a compromise measure on the Hill. The White House became more clear over the weekend in stating its opposition to the House bill, which would heavily tax the bonuses of employees of AIG and other companies receiving public money. That idea is also getting criticism from some key Senators, making it more likely that chamber will pass a weaker bill than the House did. Will voters rise up in anger if Congress doesn't follow through on its vows last week to tax those AIG bonuses into oblivion? The White House certainly hopes not, but if they do, the administration could always roll out another plan to deal with it.
Actually, there already is another plan out there that could distract everyone in Washington from the AIG mess -- the budget plan. The House and Senate budget committees will begin considering their respective resolutions this week, days after the Congressional Budget Office released new deficit estimates that appeared to make the administration's task even tougher. Christina Romer said Sunday, "There is a question whether the CBO is right," indicating that the White House plans to continue its more optimistic approach to the budget numbers and economic recovery. And Obama's budget army was out in force this weekend, looking to sell his spending blueprint to unsuspecting average folks. If people thought the new bank rescue plan was complicated, just wait until they hear the details of the budget.
March 23, 2009; 5:00 PM ET
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