Obama and Democrats need to step up

Fear and uncertainty abound on Wall Street and Main Street, as the stock markets plunged to new lows again today.

Barack Obama has understandably made clear that the U.S. has only one President at a time and he's not it until January 20th. But he and the Congressional Democrats may find the country and themselves in a much worse bind if they wait until January to assert leadership. Deep market and economic uncertainty is being compounded by the power vacuum in Washington. Bush has no power left beyond what he can exercise through a veto. And any successful Congressional majority must be, for now anyway, a bipartisan one. This reality was starkly illustrated today when Congress failed to decide what, if anything, to do about the Detroit Big Three (not incidentally, the markets were up on news of a possible bailout deal and plunged when none materialized).

Obama and his team can't make policy yet -- but they can take some steps that would provide some much-needed clarity and perhaps a little badly needed reassurance. Announcing the major players in his economic team would be a good start. Outlining some key plans that he has in mind for January couldn't hurt either, in particular by putting some numbers on the kind of stimulus package he'll recommend upon taking office.

At the same time, it should not be beyond Pelosi and Reid's capabilities to fashion some sort of stop-gap stimulus, with enough GOP votes to swing it, that could be rolled out before Christmas. Such a package would almost certainly be a modest one and would need Obama's blessing as a "down-payment" on a bigger move to come in January.

Time is not on our side. Obama and the Democrats must do something to fill the power vacuum and get things moving.

The Wall Street Journal makes a similar point today:

"One problem is that this is an especially bad time to have a Presidential transition. Treasury Secretary Hank Paulson has more or less announced that he's done making major policy calls, save for an emergency. He understandably -- if a little too loudly amid a panic -- wants to leave the field to the new Administration. Yet President-elect Barack Obama has seemed in no hurry to assemble an economic team, or perhaps he simply hasn't been able to settle on one. With nerves as taut as they are, picking an HHS Secretary before a Treasury chief is a rookie mistake."

UPDATE -- 11/21/08 -- It was reported this aftenoon that Obama will name New York Fed President Timothy F. Geithner to be Secretary of the Treasury and stocks promptly soared. And that's without a formal announcement of the appointment! Geithner is especially well positioned to begin influencing Treasury actions before the Inauguration Day. A good first step by the Obama team.