Washington — President-elect Barack Obama Monday launched an aggressive campaign to convince a deeply skeptical Congress to permit him to spend another $350 billion to stabilize the still-fragile U.S. financial system, as the Bush White House formally notified lawmakers of Obama’s intention to use the money.
Obama began calling lawmakers, promising to respond to their intense criticism of the financial rescue program by expanding its scope to aid struggling homeowners, small businesses and others. His top economic adviser, Lawrence Summers, sent a three-page letter to congressional leaders, vowing to better track how the money is spent and bolster oversight.
The president-elect plans to appear today at a luncheon in the Capitol where he will ask Senate Democrats to stand with him on an issue that is shaping up as an early test of his ability to build bipartisan consensus. Monday, he was forced to relent to skepticism on a separate politically complicated initiative, the economic stimulus package, by dropping his proposal to give businesses a $3,000 tax credit for every job they save or create.
The Treasury Department has already committed the first $350 billion of the financial rescue program. Lawmakers from both parties have complained that the Bush administration rushed the bailout through Congress and then badly mismanaged the program.
Some lawmakers were upset that no help came for struggling homeowners. Others said banks and other financial institutions that have received money have failed to resume lending.
Congress has 15 days to approve a resolution blocking the funds. With anger over the financial bailout at a boiling point in the House, Obama and Democratic leaders are focusing on the Senate, which could vote as soon as Thursday on a measure to prevent release of the money.
Obama has already secured an important ally: Sen. Judd Gregg, R-N.H., who helped negotiate the October passage of the financial rescue package known as the Troubled Asset Relief Program, said he spoke to Obama Monday and has agreed to help him navigate the stormy waters of the Senate.
“It is critical that they have (the money) and that they have it with maximum flexibility” to keep the financial system functioning, Gregg said. If Congress blocks the cash, he said, “we’ll be forcing them to manage this economy with one arm tied behind their back. There’s no point in doing that to them.”
But other lawmakers from both parties said Obama has offered insufficient information about his plans. Several said they would oppose release of the funds unless Obama offers more specific assurances about how he will use the money.
“I didn’t see a whole lot of detail in the Summers letter,” said Sen. Blanche Lincoln, D-Ark., who said she cast a reluctant vote to create TARP but now has “great reservations about approving” the rest of the money. “I’m persuadable to the extent that somebody’s got a plan and an idea of how it’s going to be administered, and how it’s going to be accounted for and how it’s going to help Arkansas.”
Congress created the Troubled Asset Relief Program after dire warnings from the Bush administration that panic had seized credit markets and that the global economy was on the verge of meltdown.