By Caren Bohan - Analysis
WASHINGTON (Reuters) - A calm manner, rhetorical gifts and the promise of new ideas all contributed to Barack Obama’s rise to the U.S. presidency as Americans put their trust in him to rescue the economy from its worst crisis in decades.
Now the public and the financial markets want to see if he can deliver.
When he takes the oath of office on Tuesday, Obama will inherit a deepening recession, a shattered financial system, a housing-market meltdown and trillion-dollar budget deficits well into the future.
Well aware that stemming the economic decline is the No. 1 priority for his first 100 days in office, Obama is diving in.
With only one day to go before he succeeds President George W. Bush, Obama is working with lawmakers to craft an $825 billion fiscal stimulus package and has successfully lobbied for the second $350 billion of a financial rescue fund.
He has promised quick action to reform a dysfunctional Wall Street regulatory system that has been blamed for the subprime mortgage fiasco and a cascade of problems that led to the collapse of once-venerable investment firms including Lehman Brothers.
A more immediate challenge is securing confirmation for his Treasury secretary nominee, Timothy Geithner, whose selection has hit a snag over errors on his personal taxes and questions about the work papers for a housekeeper.
But a key task confronting Obama is managing the daunting expectations the public has laid out for him.
“The expectations for the Obama administration are off the charts. He is regarded as a potential savior for the country in a number of ways,” said William Keylor, a history professor at Boston University. “Whatever he accomplishes will be below the extraordinary expectations that people have for him.”
Ross Baker, a political scientist at Rutgers University, said even if the stimulus plan were to pass quickly, its effects will not be felt for at least several months.
“The economy does not respond to defibrillation,” Baker said. “People have this notion that you can put the paddles on it and restore it back to life and that’s quite unrealistic.”
Obama is trying to tamp down some of the expectations.
In a recent speech calling for urgent action on the stimulus, Obama painted a picture of gloom, warning of double-digit unemployment and telling Americans the economic crisis was “unlike any we have seen in our lifetime” and emphasizing the problems could not be fixed overnight.
Further ratcheting up the expectations on Obama are comparisons between him and President Franklin Delano Roosevelt, who took office at the depths of the Great Depression and created a mystique around the “first 100 days.”
Roosevelt pushed 15 major pieces of legislation through Congress in his initial 100 days as part of the New Deal that created much of the modern U.S. social safety net.
Like Roosevelt, Obama has a Democratic majority in Congress and a popular mandate that will lend momentum to his agenda.
But Keylor and other historians said the comparisons to Roosevelt have been overplayed.
“It’s far-fetched,” said Leo Ribuffo, professor of history at George Washington University, who noted that when Roosevelt took office in 1933, the Depression had been going on for three-and-a-half years and the jobless rate was roughly 25 percent -- far higher than the current 7.2 percent rate, or even the rate of 10 percent some forecasters fear it may hit.
The economic downturns of the late 1970s and early 1980s are more comparable to the current slump than the Great Depression, Ribuffo said, though Democrats may see it in their political interest to tacitly encourage the comparisons to the 1930s to help galvanize support for Obama’s economic agenda.
Obama has set mid-February as a target for passage of his package of public works programs, tax cuts, unemployment aid and other measures aimed at jump-starting the economy.
A Senate panel has set Wednesday as the date for a hearing on Geithner’s nomination.
Now that the Senate has agreed to release the remaining $350 billion from the financial bailout program, Obama must follow through on promises to better address the mortgage foreclosure crisis and ensure accountability for firms receiving money from the rescue fund.
Analysts believe those priorities will crowd out other top items on Obama’s domestic agenda. These include overhauling the health care system and enacting broad legislation to stem climate change -- although some elements of Obama’s proposals to encourage energy efficiency are part of the stimulus package.
The debate over the stimulus plan hit some resistance last week as Democrats pushed to rewrite some of the tax provisions and fresh forecasts for skyrocketing deficits added to some lawmakers’ nervousness.
But analysts believe the package will ultimately pass and that Obama is making the right calculation in putting some of his other priorities on a back burner for now.
Ribuffo said Obama, known for his charisma, must walk a fine line between inspiration and avoiding inflated expectations. If he can manage that, pass the stimulus plan and steer clear of major mistakes, his first 100 days will be judged a success.
Writing by Caren Bohan; Editing by Anthony Boadle