"The Agenda's been Taken over by Economic Conditions"

How will the financial crisis impact Obama's economic plans?:

Downturn, deficit could hinder Obama's economic plan, by Michael A. Hiltzik, LA Times: ...During two years of campaigning, Obama set forth detailed proposals for tax relief and enhanced government benefits for the middle class, the poor, college-bound students and the elderly.

He called for new government investments in infrastructure and "green" technologies, as well as a dramatic expansion of health insurance largely by making a Medicare-style program available to all.

He now ... will almost certainly have to adapt some of his proposals to accommodate the current financial and economic crisis. ...

"Obviously the agenda's been taken over by economic conditions," said James K. Galbraith,... an economic advisor to the president-elect. "There's no reason to think these are going away in six months."

But insiders say Obama may have to mediate between opposing camps on his own economic team. Moderates are cautioning against stimulus efforts that might sharply increase the budget deficit, while others are urging the kinds of aggressive measures associated with President Franklin Roosevelt. ...

The recessionary economy, and the expense of the government's financial rescue program, will undoubtedly complicate Obama's efforts to implement his economic plan. But some advisors say he won't be inclined to abandon his key goals.

"It would be very difficult to come in and say, 'That agenda I've been pursuing for a year and a half? Never mind it,' " Jared Bernstein ... said...

But Bernstein, a key Obama economic advisor, acknowledged that some economic issues may have to be addressed with greater urgency to provide a foundation for others.

"We can't tackle healthcare until we get the economy working," he said. "If the economy is weak, how can you make good on the promises you made?"

Other proposals, by contrast, may move to the front burner. Obama proposed a national infrastructure reinvestment bank to be funded with $60 billion in federal money over 10 years. But congressional leaders have said they may incorporate as much as $150 billion of infrastructure spending in an economic stimulus package...

Such a program is known to be favored by former Treasury Secretary Robert E. Rubin, perhaps Obama's most influential economic advisor, on the grounds that it would have a more lasting effect than simply handing out rebate checks...

Some advisors argue that a potentially severe recession only underscores the need for a far-reaching stimulus plan focused on infrastructure more than on rebates to spark a short-term bump in consumer spending.

"We don't need more consumption," Joseph Stiglitz ... said recently... This is an opportunity at the national level to say, 'Here are all the things we should have been doing and now have to do to get our economy to grow."

The extent to which the Obama administration should push deficit spending is the subject of a debate bubbling within his economic team... Although most appear to accept the Keynesian axiom that economic stimulus in a time of crisis requires deficit spending, the extent of the budget-busting is at issue. ... At the more cautious end of the spectrum ... are former Treasury Secretaries Rubin and Lawrence H. Summers. ...

I'm on the side of aggressive stimulus devoted, at least in part, to infrastructure.

[With respect to the comment "We can't tackle healthcare until we get the economy working," see Dean Baker's argument in the post below this one.]