Spurred on by President Barack Obama, an $827 billion economic recovery plan advanced in the Senate Monday, clearing a last procedural hurdle with the help of three Republicans and the return of Sen. Edward Kennedy, ill with cancer.
The 61-36 roll call vote – with Republicans Sens. Susan Collins, Olympia Snowe and Arlen Specter voting yes — set the stage for passage Tuesday. And it capped a day in which Obama grabbed hold of the presidential microphone as never before, campaigning in the industrial Midwest and then preparing to host a primetime televised press conference back at the White House.
With Treasury Secretary Timothy Geithner scheduled to speak Tuesday on the banking and foreclosure crisis, the administration seems intent on conveying a greater urgency—and more human face—to a complex agenda that can seem a maze of frightening numbers to nervous voters.
“We have inherited an economic crisis as deep and as dire as any since the Great Depression,” the president said at a town hall appearance in Elkhart, Ind. “Economists from across the spectrum have warned that, if we don't act immediately, millions of more jobs will be lost…And our nation will sink into a crisis that at some point we may be unable to reverse.”
Geithner’s Treasury speech is confined to the second half of a $700 billion financial markets rescue fund already approved by Congress last fall. But with banks teetering near insolvency, the government will almost certainly need much more soon and Senate Republican Leader Mitch McConnell (R-Ky.) suggested the White House was “trying to kind of slow walk the cumulative effect of quite a lot of spending.”
In truth, Treasury can’t ask for more money without first healing the rifts left by former Secretary Henry Paulson’s handling of the first $350 billion. The recovery bill before Congress and Geithner’s speech are each of a piece to try to do this, by focusing on job losses in the real economy and committing more than $50 billion of the rescue funds toward mitigating home foreclosures—a major issue for Democrats.
Like his predecessor, Geithner’s most complex challenge is finding a way to attract private capital back into the market to buy up bad mortgage assets that are hanging over the banking industry.
One option is a partnership of sorts in which government would support private sector purchases of bad assets or help minimize the risk for investors. But Geithner must also take steps to greatly increase the transparency of Treasury’s interaction with banking interests and require better reporting by them of what is done with the capital invested by the government.
In meeting with House Democratic leaders last week, he went out of his way to avoid “bashing” Paulson with whom he worked as president of the Federal Reserve Bank of New York. But he also made clear that he disagreed with some of Paulson’s handling of the funds and presented himself as more of a career public servant than the former Goldman Sachs CEO and investment banker.
Geithner spoke of his wife, a social worker in New York City, and his children in public schools, striking a chord with Democratic members, House Majority Whip Jim Clyburn (D- S.C.) urged him to speak more about himself to rank-and-file members, and Geithner did so at his request at a party issues conference in Virginia later in the week.