In formally asking for the release of the second half of the $700 billion financial bailout fund yesterday, President-elect Barack Obama is promising Congress that he will do a better job than President George W. Bush in spending the money to help average Americans.
"We're going to focus on housing and foreclosures. We're going to focus on small businesses," Obama told reporters yesterday. "We're going to focus on what's required to make sure that credit is flowing to consumers and businesses to create jobs in the United States."
But Obama must first focus on smoothing over strong resentment on Capitol Hill about the Troubled Assets Relief Program. Many Democrats and Republicans say they were misled last fall by Treasury Secretary Henry M. Paulson Jr. about how the first $350 billion would be spent. Democrats are particularly angry that none of the money has gone to help homeowners facing foreclosure.
"People feel they got burned up here by the current administration," said Senate Budget Committee Chairman Kent Conrad of North Dakota. "I understand the need for the money to be released. I also feel very strongly it's got to be conditioned in a way to avoid what I see are the abuses by the administration" in the handling of the first half.
The Democratic-controlled Congress is unlikely to block the request, which would ultimately require a two-thirds vote of the House and Senate. But Obama is seeking to avoid a confrontation over economic recovery spending that could spill into his push for an approximately $800 billion stimulus package.
Lawrence Summers, who Obama has chosen to head his National Economic Council, promised in a three-page letter to congressional leaders yesterday that the new administration would "act both quickly and wisely." He broadly outlined changes that Obama plans in using the second part of the fund, including more transparency in how the money is spent and "a sweeping effort" to reduce home foreclosures.
"We cannot allow the failures of the past to prevent us from doing what we must to secure America's future," Summers wrote to House Speaker Nancy Pelosi of California, House Minority Leader John A. Boehner of Ohio, Senate Majority Leader Harry Reid of Nevada and Senate Minority Leader Mitch McConnell of Kentucky.
Obama worked behind the scenes to soothe lawmakers. Yesterday morning, for example, he twice made personal phone calls to Democratic Sen. Barbara Boxer of California, who does not serve on any of the relevant committees. But Boxer, like many senators and representatives, has been upset by the handling of the bailout fund.
"I don't like the way Paulson handled this. And I said, 'If we don't get involved in trying to solve this housing crisis, then we're never going to [fix it],' " Boxer said she told Obama after twice leaving a meeting with reporters in her office to field the calls.
"He agreed with that. ... He's going to lay out what he feels the money is needed for, and [housing] would be one of the things it's needed for."
Boxer said she wants Obama to make those commitments publicly.
Conrad echoed that view.
"I think it's going to take more than a letter from Mr. Summers to assure people this money is going to be used in a way that is appropriate and is in line with congressional intent," he said. "It's going to take those who have responsibility for actually spending the funds to put in writing their intentions."