Financial crisis complicates Obama transition

updated 7:04 p.m. ET Nov. 6, 2008

WASHINGTON - As president-elect, Barack Obama faces a tricky task as he begins dealing ever more directly with the economic meltdown, grappling with the worst financial crisis in seven decades but not yet wielding the power to do much about it.

He won't be a participant at President Bush's global summit next week, although the 20 leaders attending are no doubt keenly interested in his views. And he may have to eventually push back against some members of his own party in Congress over details of a new plan to stimulate the economy.

Congress convenes for a lame-duck session on Nov. 17, and Obama is giving all indications that he'll play a direct role rather than keeping his distance until he is sworn in.

"The president-elect has said he wants another stimulus, the president-elect therefore has views on what that stimulus should be, and the Democratic Congress should take its cues from the president-elect," said economist Rob Shapiro, a top Commerce Department official in the Clinton administration who now is on Obama's team of transition advisers.

Will Obama be able to pull off a smooth changeover in economic management in such trying times? "He'll have to work very hard at it, but of course he can. This is a man who pulled off the smoothest campaign in history," said Shapiro, now associated with NDN, a think tank formerly known as the New Democratic Network

The Illinois senator meets on Friday with his economic team and holds his first postelection news conference.

Obama's victory emboldened Democrats and helped them expand their House and Senate majorities. "The fact is that this president goes into office with more expectations than any president I can ever remember in my lifetime," said House Speaker Nancy Pelosi.

But some liberal Democrats may expect him to deliver more than they're likely to get. As Pelosi was quick to note, "The country must be governed from the middle," and that will increase pressure on Obama to make compromises.

He may have to scale back some of the long-term spending programs he advocates to pay for crash legislation to keep what already looks like a recession from turning into something much worse.

AP Jobs, spending data hint at recovery   In a hopeful sign for the economy, the number of newly laid-off workers filing claims for unemployment benefits fell below 500,000 last week for the first time since January.   New-home sales rise to highest level in a year Consumers log stronger-than-expected rebound Durable goods orders fall unexpectedly Recovery's pace slower than first thought

"The need has never been greater for the absolutely seamless transition of economic teams," said William Galston, who was a White House domestic policy assistant in President Clinton's first term. "We're in a race against time to prevent a global financial meltdown, and I think everybody knows it."

Obama has called for about $175 billion in new stimulus spending, including money for roads, bridges and aid to hard-pressed states. He wants a rebate of $500 for individuals, $1,000 for families and a new $3,000 tax credit for businesses for each new job created.

Many congressional Democrats have been cool to the notion of more tax rebates, on top of the $168 billion handed out earlier this year.

Obama and congressional leaders will have to sort out any differences, said James Thurber, a political science professor at American University. "He has to hit the ground running or he'll be left behind on some of these key policies dealing with the economy," Thurber said.

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