TEXT OF INTERVIEW
Kai Ryssdal: I could set up our weekly wrap of the news from Wall Street and beyond today with a detailed recap of the news. That banks are still cratering and the layoffs are still coming. That Congress is trying to hammer out a stimulus package and Treasury Secretary hopeful Timothy Geithner promises to get tough with the TARP. Or, I could just say, Barack Obama. And then introduce David Leonhardt of the New York Times and Leigh Gallagher of Fortune Magazine. Hi guys.
David Leonhardt: Hello, Kai.
Leigh Gallagher: Hi, Kai.
Ryssdal: Alright, you guys. So it’s been 72 hours, plus or minus, since President Obama’s been on the job. And I know that’s a short track record. But David, what’s your sense so far of how he’s doing economy wise?
Leonhardt: I would say on the little test, which is his speech, he did a really good job. I think there was a lot that was very good in that speech. This notion that we are not only in a crisis, but we’ve had a long period in which we haven’t made the hard choices, as he said, that we need to for the economy. So on the small measure I think it was good. The much bigger question is what they’re going to do with the stimulus package. And I think we just don’t know yet. And I mean, is this going to be good in that it gets the economy moving, but full of pork and does nothing to solve our long-term problems? Or is it going to start to solve the long-term problems, but not do enough to stimulate the economy? Or is it really going to be the right mixture of both?
Ryssdal: Alright. Let’s put that thought on hold for a second and Leigh, let me get your short-term take on the new president.
Gallagher: Short term, I think it’s great. I mean, I agree with David. I think he struck absolutely the right tone. It was a very sobering tone. You know, right out of the gate I think some of the moves he made on the first day — you know, even something simple as freezing salaries among his aides — I mean, that really makes a big statement. It says that these are serious times and things in Washington are going to be no different.
Ryssdal: Alright. Well, let’s pick up on the stimulus package question then and let me get your take on what David said. Is it going to be productive and effective, or are we going to get bogged down, or someplace in the middle?
Gallagher: Some of this falls down on basic party lines and we saw that just with the GOP coming out with their own proposal for a different kind of stimulus plan. But I think that the agreement is that we do need to do something soon. And I mean, you know, Obama’s really looking to the ’30s for guidance. That’s how big this problem is. And he sees, very much, spending as the way out of it. The key here though is, I mean, there’s a lot of talk about spending soon and getting these so-called shovel-ready projects off the ground. Meaning, that they’re ready basically right now. But, that may not even be soon enough. I mean, we really need help literally in the next month or two to start saving jobs.
Ryssdal: Well, David, I mean, you know. The Speaker of the House, Nancy Pelosi, came out today and said she’s confident that it’s going to hit that mid-February deadline. The president said it yesterday. You buying that?
Leonhardt: Yeah, I think I am. When you combine the fact that they are the same party, the congressional control and the White House. And the fact that a huge number of people in the Obama White House came from Congress. Not only the president and the vice president, but Rob Emanuel and a whole bunch of other people. So I think it is likely that it’s going to happen by mid-February. And I think they are going to make a big push to have a lot of the spending happening, soon. But, as Leigh points out, it’s not going to happen soon enough in some ways. At this point it’s almost guaranteed that the economy gets worse for nearly all of 2009. The job market, which is how most people experience the economy, tends to lag the rest of the economy. And so at this point it’s all but sure that that’s going to happen. The question is, how much worse? And, can we avoid this sort of self-reinforcing cycle in which we end up with a problem that’s even worse than where we are now?
Ryssdal: Leigh, pick up on that point and talk to me about expectations. The president-elect a week, and a month, and two months ago, worked really hard at setting expectations and saying, you know, it’s going to get worse before it gets better. Now that he’s on the job, is he appropriately setting expectations for the economy and for our ability to fix it?
Gallagher: I think so. I mean, I think he’s being very careful in the message that he sends. But I think the bigger question in terms of what he’s going to do really, especially this week, concerns the remaining $350 billion in the TARP plan and whether he’s going to add some help for the banks as part of this stimulus plan, or whether he’s going to treat that separately with whatever he does with TARP. I mean, I think this week the markets were really jolted by what happened with the financials.
Leonhardt: I think that’s a really important point because, to some extent, you can’t get stimulus into the pipe-line tomorrow. But you can take steps that shore up the financial system, if not tomorrow, then almost tomorrow. So, I think it’s important to keep in mind that there are really two tracks here. And in some ways the one that can have the first effect is the TARP and these efforts to get the financial system working a little bit better.
Ryssdal: Leigh Gallagher at Fortune Magazine. David Leonhardt is a columnist for the New York Times. Thanks guys.
Gallagher: Thanks, Kai.
Leonhardt: Thank you, Kai.
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