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Analysts: Bush, Obama not taking lead in righting economy

  • Story Highlights
  • Bush noticeably quiet on economy, Obama says he will wait till January 20
  • Senator says Obama not advising Dems on bailout, analyst says that's unlikely
  • Analysts concur Obama needs to name treasury secretary, and quickly
  • Obama wise not to blow all his political capital before taking office, some say
  • Next Article in Politics »
By Eliott C. McLaughlin
CNN
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(CNN) -- As the United States writhes in a collapsing economy, analysts and observers are wondering: Who's skippering the ship?

Neither Barack Obama nor President Bush has been visible in efforts to save the sinking economy.

Neither Barack Obama nor President Bush has been visible in efforts to save the sinking economy.

President Bush has been noticeably absent from the machinations aimed at righting the nation's financial course. Analysts and key players differ over whether President-elect Barack Obama should get his economic team in place and take charge, or sit back and await his turn at the helm.

"Somebody has to speak up soon," said CNN senior political analyst David Gergen, explaining that he understands why Americans are growing anxious and yearning for direction and leadership.

"I think ... sort of the bottom feels like it is falling out for many people," said Gergen, who has advised four presidents. "They sense there's a total lack of leadership in Washington, that the White House is silent, the treasury secretary has been battered, the Federal Reserve can't speak up. These automakers come up to Capitol Hill and fail. And the president-elect is silent in Chicago."

Senate Majority Whip Dick Durbin said Obama has avoided entering the congressional tussle over whether to bail out the Big Three automakers. Video Watch why one economist thinks bankruptcy would be better for Detroit »

"I think that President-elect Obama is being very careful to remind people that we still have a president who still makes the final decision about things being signed into law," said Durbin, one of Obama's closest Senate confidantes.

Asked if Obama was offering guidance on the issue, Durbin replied, "No, no."

Obama noted shortly after his election that "the United States has only one government and one president at a time, and until January 20th of next year, that government is the current administration."

Meanwhile, jobless numbers are skyrocketing, the stock market is plummeting and the banking industry continues a decline, outpaced only by the fall of the U.S. auto industry.

The Bush administration has not said much about the issues other than to quietly state its positions.

The executive office has approved extending unemployment benefits, has opposed a wholesale bailout of the auto industry and frowns on the idea of using the $700 billion in Temporary Asset Relief Program funds to help homeowners or to provide bridge loans to automakers. Video Watch how Bush will push for answers on his last trip abroad »

Obama said last week that neglecting to provide relief to the auto industry would be disastrous, but he has done nothing to break a deadlocked Congress.

House Speaker Nancy Pelosi said Thursday that automakers must come up with a plan if they expect to receive any federal loans or funds. iReport.com: How are the auto industry struggles affecting you?

"Until they show us the plan, we cannot show them the money," she said.

"That will only happen if they can get their act together," added Senate Majority Leader Harry Reid.

Durbin said Obama is staying out of it for now because the present Congress is divided, and that won't change until Obama and the 111th Congress take their posts next year.

"There's a limited amount of opportunity and authority on a very contentious issue," he said. Video Watch why a union boss says Congress must 'act now' »

Greg Valliere, chief political strategist for the Stanford Group, a policy research firm based in Washington, D.C., concurred, saying earlier this week, "The lame-duck session of Congress will earn its 'lame' label and pass only a grab-bag of modest stimulus, leaving the heavy lifting until early 2009."

But even if the Big Three were to present a viable plan to Congress by their December 2 deadline, there are other troubling matters on the U.S. economic horizon.

Most notably, the S&P 500 -- used to gauge the stock market's health -- has hit an 11-year low. The Dow Jones Industrial Average, another indicator, closed Thursday around 7,552 points -- it was hovering around 14,000 just over a year ago. Video Watch how the markets continue a downward spiral »

And jobless claims -- the number of people filing for unemployment benefits -- is close to doubling in the span of a year, from about 300,000 people in January, to 524,000 people this week. Four million people -- about the population of Oregon -- are on unemployment insurance as well.

"If all these people are out of work getting money from the government, they're not net spenders or contributors to the economy. They're not net taxpayers. It means it's going to be a lot longer to get us out of this recession," said CNN senior business correspondent Ali Velshi.

Gergen said he has spoken to investment advisers who are downright fearful, especially after this week's economic convulsions.

It's understandable that Obama is staying visibly out of the fray, Gergen said, but the president-elect needs to work behind the scenes to persuade Congress to provide bridge financing for the automobile companies, and the White House has to take a more active role in mitigating the situation. Video Watch how restructuring the auto industry might affect the economy »

No president since Franklin Roosevelt has faced this sort of economic crisis, Velshi said, but the tumult also provides an opportunity that hasn't been seen since the days of FDR.

If Obama can quickly name a treasury secretary and get working on the green economy that he says will drive U.S. finances for the next 15 to 20 years, it could create the jobs necessary to reverse the tumbling economy, Velshi said.

"We need to see if this is an opportunity we can turn around into the new New Deal," he said, referring to the program Roosevelt kicked off in 1933 to create jobs and mend the broken economy.

The Wall Street Journal reported Friday that Obama plans to nominate New York Federal Reserve President Tim Geithner to lead the Treasury Department.

Other names on Obama's short list to head Treasury include JP Morgan Chase President Jamie Dimon, former Treasury Secretary Robert Rubin, former Treasury Secretary Lawrence Summers and former Federal Reserve Chairman Paul Volcker. Video Watch treasury secretary explain what went wrong »

CNN senior political analyst Gloria Borger said Obama and his team are probably trying to gauge the totality of the situation, and many internal questions also have to be answered: Do we need someone younger? Would a former treasury secretary bring vital experience? Does it matter if the secretary has ties to Sen. Hillary Clinton?

"I think they're having these kinds of conversations, and so I would expect, though, that we're going to see something on the economic team in early December, if not sooner," she said.

There is speculation that Obama may name the incoming treasury secretary by Thanksgiving, but he may be distracted by the hullabaloo surrounding the potential appointment of Clinton as secretary of state. See how Obama's Cabinet is shaping up »

"I cannot stress enough that, while we go through this Kabuki dance about Hillary -- will she, won't she, will she be there or not -- the issue, increasingly, for the president-elect is the economy," Gergen said.

Borger concurs that the Obama team may be preoccupied with the prospect of appointing Clinton to head the State Department, but, she said, "I'm surprised, honestly, that they haven't put in a treasury secretary yet."

However, Borger said she thinks Obama is already working behind the scenes through his chief of staff, Rahm Emanuel, and she doesn't think the Democrats would have postponed their decision on a Big Three bailout without checking with Obama.

Borger said she expects a "big push" from Democrats to find a way to save Detroit when the lame-duck Congress reconvenes in December, and Emanuel and Obama will be a part of it.

"But honestly, you can't expect a president-elect, who hasn't even been sworn in, to use all of his political capital -- and, by the way, he's going to have a lot -- before he takes office," she said.

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There's a lot of risk involved in Obama pushing his economic agenda before he takes office, and it would be unwise to publicly state what the Bush administration should do, said Stephen Hayes, a conservative columnist and CNN contributor.

"Politically, he wants to stay as far away from this as he can," Hayes said. "I think it's smart of him to say, 'We have one president at a time; I have got my four years.' "

CNN's Ted Barrett and Dana Bash contributed to this report.

All About George W. BushBarack ObamaNational EconomyU.S. Department of the Treasury

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