Bank Bailout Plan Delayed until Tuesday
President Barack Obama's economic adviser Lawrence Summers said the administration would delay unveiling its new bank bailout plan until Tuesday, in an effort to keep Washington's focus on the stimulus package now before Congress.
The House passed a stimulus bill with overwhelming support from majority Democrats, but not a single Republican vote. Senate Democrats, needing at least two Republican votes to avoid a filibuster, stripped out some spending measures and reduced proposed tax cuts in the Senate version of the bill to win the support of three moderate Republicans.
Mr. Summers, appearing on "Fox News Sunday," sought to play down differences between the House and Senate versions of the bill, which will eventually have to be merged, and urged rapid passage.
"We believe there are strong elements in the Senate bill, there are some very strong elements in the House bill," he said. He added that "ninety percent of these bills are essentially overlapping" and urged lawmakers not to focus on "the bit of difference."
On ABC News's "This Week," Mr. Summers said the administration had pushed back Monday's scheduled announcement of its plans for spending the remainder of the $700 billion financial-industry rescue fund authorized last year.
"There's a desire to keep the focus on the stimulus" on Monday, so Treasury Secretary Timothy Geithner will release the plans for how to spend the remainder of funds under the Troubled Asset Relief Program Tuesday, he said.
Mr. Summers sought to deflect Republican complaints that elements of the stimulus bill, such as financial aid for college students, reflected Democratic social-spending priorities. By easing the financial burden on parents with children in college, he said, families would have more money to spend and they would be less likely to have trouble paying mortgages and having their homes fall into financial jeopardy.
Although the stimulus plan calls for expanding health insurance benefits for the unemployed, Mr. Summers denied that it represented a permanent expansion of federal spending. When unemployment declines, so will the spending, he said.
Regarding the plan for how to spend the remaining TARP money, Mr. Summers said it was aimed in part at drawing private investment back into the economy.
"With the right strategic approaches, Secretary Geithner believes we can bring in substantial private capital," he said on "Fox News Sunday." But because credit markets are frozen and banks are fragile, the government will have to take the initiative.
"We're inheriting the worst financial system since the Depression," Mr. Summers said. "We're not going to solve it in a day or a week, we're not going to solve it without" substantial public spending.
Mr. Summers, speaking on "This Week," said the administration would carve out at least $50 billion to help stabilize the housing market, in the financial-industry rescue plan Mr. Geithner plans to unveil Tuesday.
"The focus is going to be on increasing the flow of credit and doing it with transparency, with accountability for those who receive support, and with a kind of consistency that, frankly, we haven't seen so far," Mr. Summers said, addressing how the Obama approach toward handing out TARP funds would differ from that of the Bush administration.
In addition to propping up banks and credit markets, he said, the plan would apply "support and pressure that assures that these needless foreclosures are avoided and that government is acting aggressively to contain the damage in the housing markets," Mr. Summers said.
On CNN's "State of the Union," Transportation Secretary Ray LaHood said the stimulus plan will focus on infrastructure projects that the administration believes could put people to work rapidly. He said he would hold a summit meeting of state transportation secretaries on Wednesday in Washington "to lay out for them what we believe are the opportunities for every state in the country to put people back to work on projects that are ready to go."
The meeting would also be "an opportunity for every state in the country to bring to Washington a couple of examples of projects that they will be able to implement quickly, within the timeframes that are in the legislation, so that people will be building roads and bridges and other infrastructure projects this spring, summer and fall," Mr. LaHood said.
CNN host John King said some local officials wanted Mr. Obama to waive environmental or other regulations that could hold up some projects. Mr. LaHood replied, "There are lots of roads, bridges, infrastructure that can be implemented immediately. We don't need to waive anything. This is going to be done by the book, according to the rules, no shortcuts, no earmarks."
Mr. LaHood, a former congressman from Illinois and one of three Republicans whom the Democratic president has tapped for his cabinet, said he had tried to get his former House colleagues to back the stimulus bill, before its passage by the House. Both the House and Senate versions of the bill currently have a price tag of abut $820 billion.
"Obviously, I wasn't very persuasive, since I wasn't able to persuade anybody to vote for it," he said, "But, look, I've been talking to some senators when I've had the opportunity and I'm going to continue to do that for the next 10 days until this bill is passed. And I think the conference report that will come out … will be … something that Republicans, some Republicans will look very carefully at."
Michael Steele, the new Republican National Committee chairman, expressed doubt on "This Week" that the stimulus bill would gain much Republican congressional support. Host George Stephanopoulos observed that some Republican governors, including Arnold Schwarzenegger of California and Charlie Crist of Florida, were backing the president's plan. Steele suggested they were seeking money to shore up troubled state budgets, while Capitol Hill Republicans would stay true to the party's free-market philosophy by voting against the bill.
Tax credits for small business is a better way to "create wealth in this nation" than investing in infrastructure projects, said Steele, a former Maryland lieutenant governor. Instead of creating "sustainable jobs," he said, "what this administration is talking about is making work. It is creating work."
Write to Jess Bravin at jess.bravin@wsj.com
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