Economic Reform

The Obama administration will unveil within the next couple of weeks details of its plan for dealing with the toxic assets that lie at the heart of the financial crisis, Treasury Secretary Timothy F. Geithner said Tuesday. He predicted the plan, calling for federal financing to help private investors buy the bad assets held by banks, would succeed, but he said it would take time to end the crisis.

Critics across a broad ideological spectrum are ramping up their attacks on the Treasury Department's $700-billion banking bailout, saying it is now doing more damage to credit markets than good. Lending is flat, investors are fleeing bank stocks, and the huge investment by the government into troubled banks has plummeted in value by more than $100 billion, according to some recent studies.

The Obama administration's plan to stave off foreclosures could fall flat in California, where nearly one-third of mortgage holders are underwater on their loans -- many of them by amounts that would disqualify them for government-sponsored refinancing. The problem is likely to be especially acute in areas like the Inland Empire, where homes have lost more than 40% of their value in the last year and nearly half the homeowners owe more on their loans than the properties are worth.

A massive spending bill expected to be approved by Congress this week is filled with more than 8,500 earmarks -- those pet projects that lawmakers love -- costing $7.7 billion. Despite the tough economy, mounting federal budget deficit and pledges by President Obama and members of both parties to crack down on the practice, a number of lawmakers have defended their earmarks as important to the nation's economic recovery.

House Democrats, under pressure from a group of moderates in their ranks and the banking lobby, agreed Tuesday to narrow legislation that would give bankruptcy judges the power to force lenders to rewrite mortgages for debt-strapped homeowners. The compromise was expected to come to a vote in the House as early as Thursday.

From front to back and on nearly every page, President Obama's new budget plan delivers a stark message: It's time for the rich to lighten the load on the middle class. In education, healthcare and an array of other proposals, the budget focuses more benefits on middle-class and lower-income Americans and looks to the affluent to help pay for them. The change is meant to reverse a long-running trend in the opposite direction.

Not since Lyndon B. Johnson and Franklin D. Roosevelt has a president moved to expand the role of government so much on so many fronts -- and with such a demanding sense of urgency. The scope of President Obama's ambition was laid bare in the budget blueprint issued Thursday. The budget would account for 24.

You just can't please some people. In the wake of President Obama's signing of a historically ambitious economic recovery program last week, the nitpickers and pettifoggers have come out in force. The program's too big, the program's too small. It's got too many local make-work projects, it's got too many long-term projects. There are too many tax cuts, there are too few tax cuts. Eight bucks more in your week's take-home pay won't save anyone, let's give millions to corporations instead.

Compared with the epic approach of President Franklin D. Roosevelt's New Deal, President Obama's economic recovery strategy could be summed up as: Think small -- in a huge way. FDR left a legacy of engineering marvels that still adorn the landscape: the San Francisco-Oakland Bay Bridge, the Grand Coulee Dam in Washington state, and New York's LaGuardia Airport and Triborough Bridge among them.

If the fight to end the economic crisis is a war, the stock market's continuing dive, deepening troubles in the global economy and recent developments at home show that the enemy still has the upper hand -- and we're going to need reinforcements. Maybe massive reinforcements. That could be a tough sell in Washington, where the rapidly increasing price tag is leading many Republicans and some conservative Democrats to adopt an old battle cry: Hell no, we won't go.