On Fox News over the weekend, Republican presidential candidate Michele Bachmann blamed the the nation’s falling credit rating on President Barack Obama and called on the president to fire Secretary of the Treasury Timothy Geithner. Bachmann lays the “destruction” of the nation’s credit rating squarely at Obama’s feet, but Standards & Poors, the agency that issued the lowered credit rating blamed the move on a volatile political environment where making consensus is difficult. Bachmann voted against the consensus between Obama and congressional Republicans last week.

“This president has destroyed the credit rating of the United States through failed economic policy and his inability to control government spending by once again raising the debt ceiling,” Bachmann told Fox’s Greta Van Susteren. “We were warned by all of the credit agencies that a failure to deal with the debt would lead to this downgrade in our credit rating. But instead, this president submitted a budget that had a $1.5 trillion deficit and then he requested a $2.4 trillion blank check on top of that.”

Bachmann added, “President Obama is destroying the foundations of our economy one beam at a time. I call on the president to seek the immediate resignation of Treasury Secretary Tim Geithner and to submit a plan with his list of cuts that balance the budget this year, turn this economy around and put our people back to work.”

S&P, the agency that downgraded the United States’ credit rating, noted that partisan bickering played a role in its decision.

“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,” the agency wrote. “The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.”

S&P also noted that it takes no position in the debate over whether spending cuts or revenue increases or both are an appropriate way to manage the nation’s debt.

But despite S&P’s assertion that lack of consensus between Democrats and Republicans led, in part, to the credit rating downgrade, Bachmann suggested that Obama was at fault and might try to blame the tea party.

“I’m very concerned that this administration tomorrow might look for anyone else to blame,” she said. “They may blame the tea party. They may blame the rating agencies or anyone else. They knew this was coming this year in January but they didn’t write a plan and they still don’t have a plan.”

Geithner released a statement Sunday that he’s staying on the job.

Here’s the full interview:

It’s not the first time Bachmann had strong words for Geithner. In 2009, at a Financial Services Committee hearing, she questioned him on whether or not there was a push to abandon the dollar as the nation’s currency.

Treasury Secretary Timothy Geithner. Photo: WDCpix

WASHINGTON — The latest political clamor over AIG, poised to combust next Wednesday at a House hearing on backdoor payments to banks that made risky deals with the company, centers on the Federal Reserve’s effort to conceal details of those payments. But senior officials, including Treasury Secretary Timothy Geithner, have so far evaded a key question: Why were AIG’s trading partners fully paid with taxpayer money instead of being told to take a loss?

“They chose to pay some people off entirely,” Bill Black, an economics and law professor at the University of Missouri and a leading critic of the government’s bailout managers, said in an interview. “They have never given a coherent explanation of why those particular folks. Under their own logic, there was no reason to pay off these parties at 100 cents on the dollar.”

Geithner, who led the New York Fed when it orchestrated the $62.1 billion payout to 16 banks that held AIG’s credit default swaps, has been asked to explain that controversial decision numerous times over the past year. And his answers have varied, depending on the questioner, causing Black and other critics to wonder whether the nation’s financial regulators can be counted on to spot the next economic crisis.

In November, bailout inspector general Neil Barofsky quoted Geithner as stating that AIG’s bank counterparties — including Goldman Sachs, Merrill Lynch and 10 foreign firms — were not at direct risk if the troubled company defaulted on its debts. “The direct effects of that failure would not have been particularly significant,” Geithner reaffirmed last month during testimony on Capitol Hill.

In May, however, Geithner suggested that AIG could not have negotiated lower payments to its trading partners without endangering the health of the whole financial system.

“We have no option now to selectively diminish the value of those claims without taking risks that you would have a default,” he told Sen. Chris Dodd (D-Conn.). Rep. Jo Ann Emerson (R-Mo.) was told that “you can’t selectively allow the institutions to default on particular types of creditors without risk that the whole thing comes unwound.”

So which explanation is true: Were AIG’s creditors hedged against the risk of a default — as Goldman has argued — or not? And if the banks had already mitigated the risk of losing their deals with AIG, why didn’t that allow Geithner’s Fed to negotiate a cut in repayments?

“There’s no way to prove it and no way to know,” former New York governor Eliot Spitzer, who took on Wall Street as the state’s attorney general, told The Washington Independent. “It’s part and parcel of the willingness of the Fed and Treasury to obscure from public view transactions involving tens of billions of dollars.”

Spitzer, who co-wrote a New York Times op-ed with Black calling for the public release of all AIG emails, said the Fed’s inability to intelligibly explain its actions cast doubt on the central bank’s fitness to lead the monitoring of systemic risk — as envisioned in the House-passed financial reform bill.

“Maybe [that power] should go to the Treasury, maybe it should go to the New York State attorney general,” Spitzer quipped. “But certainly, the Fed hasn’t done very well.”

Under the House’s financial reform legislation, the Fed chief would take a senior role on an “oversight council” of regulators, including the Treasury Secretary, that would be asked to neatly dissolve failing companies. The bill also allows the Fed to declare a financial “emergency” that would allow it to extend up to $4 trillion in discounted loans to banks.

Jane D’Arista, who spent 20 years as a congressional economist and now leads the Political Economy Research Institute’s financial reform project, said the AIG saga shows Fed officials “didn’t have a real handle” on the collapsed insurance firm’s web of complex deals.

“I don’t feel the team in place in this administration … understands institutions that well, and that was shown in Geithner’s response to the crisis,” D’Arista said. “He thinks he did a good job.”

Geithner told CNBC last week that he believes that paying off AIG’s counterparties in full was “absolutely” the right thing to do, adding: “Personally, I feel like I have a good sense of what the principal failures were” that caused the nation’s lingering financial crisis.

Barry Ritholtz, chief of the financial research firm Fusion IQ and creator of the The Big Picture blog, connected the Fed’s failures to spot burgeoning bubbles and abuse of lending rules to its lack of staff with Wall Street experience.

“The Fed is filled with economists and academics, none of whom have been on a trading desk or managed assets for a living,” Ritholtz said. “They have nothing to do with what’s actually going on on Planet Earth.”

Federal Reserve Chairman Ben Bernanke and Geithner were neither traders nor financial regulators before they joined the central bank. Bernanke’s background lies in academia, while Geithner focused on international monetary policy for 15 years before ascending to the New York Fed.

“These guys were fighting a forest fire, and they did the equivalent of clear-cutting a region,” Rob Johnson, a Roosevelt Institute senior fellow and former chief economist at the Senate Banking Committee, said in an interview.

“The frontier they chose was to use AIG as a conduit … the result of using that logic is, they fortified stockholders and bondholders and management, and did so at the expense of taxpayers.”

Among the most fortified bondholders was Goldman, which played a role in an estimated $33 billion of AIG’s riskiest deals. The company has argued that AIG was a “sophisticated investor” which should not be given free rein to renege on its contracts with big banks, even in the case of an effective takeover by the government.

But Janet Tavakoli, founder of Tavakoli Structured Finance and an expert on the credit derivatives that swamped AIG, countered that the game changed when public money was used for a “backdoor bailout” of firms that took hazardous gambles.

“We, the taxpayers, are not sophisticated … I’m saying, now we should revisit it,” Tavakoli said, by clawing back some of the payments the Fed made to big banks. “Without trying to get inside peoples’ heads and trying to read particular motivations, I’d say it’s about the money. Goldman Sachs is saying they’re entitled to it all and get to keep it all.”

Two Republican members of the bailout’s congressional oversight panel made a similar suggestion last week as part of a broader report on government rescue efforts.

To tamp down furor over its role in the counterparty payments, the Federal Reserve on Tuesday endorsed a Government Accountability Office audit of the AIG rescue. A spokesman for the central bank’s New York branch referred The Washington Independent to a lengthy statement released that day, disputing that it sought to withhold public information about the choice to bail out the 16 banks in question.

For its part, the Treasury Department has said that Geithner recused himself from discussions about repaying AIG’s counterparties on November 24, 2008, when his nomination to lead the agency became public, and “began to insulate himself weeks earlier.”

Yet Geithner took at least nine meetings related to the AIG rescue in the month before his nomination, according to his official daily calendar, which was released by the New York Times last spring.

One of those meetings occurred on November 21, 2008, and another on October 30, the day before AIG’s senior vice president of financial services emailed a colleague that a New York Fed official “asked me to stand down on all discussions with counterparties on tearing up/unwinding” the trades that have sparked the current controversy.

Rep. Michele Bachmann and Rep. Ron Paul (R-Texas) (bachmann.house.gov, Flickr)

From time to time, a few members of Congress — as many as 10, sometimes fewer — gather with Rep. Ron Paul (R-Tex.) to eat lunch and hear from an author or expert whose opinion he thinks is worth promoting. They grab something to eat off of a deli plate. They take notes. They loosen up and ask questions.

“It’s not all that easy for the other members to get here,” said Paul in an interview with the Washington Independent, sitting just outside of his office before heading back to Texas for a few days. “It’s just that there’s so much competition. Once they get here and they get going, they all seem to enjoy it.”

A funny thing has started happening to Paul since his long-shot presidential campaign ended quietly in the summer of 2008. More Republicans have started listening to him. There are the media requests from Fox Business and talk radio where he’s given airtime to inveigh on sound money and macroeconomics. There is HR 1207 , the Federal Reserve Transparency Act of 2009, a bill that would launch an audit of the Federal Reserve System, and which has attracted 112 co-sponsors. When Paul introduced the Federal Reserve Board Abolition Act just two years ago, no other members of Congress signed on.

And then there are the luncheons. The off-the-record talks have brought in speakers such as ex-CIA counterterrorism expert Michael Scheuer, libertarian investigative reporter James Bovard, iconoclastic terrorism scholar Robert Pape, and George Washington University law professor Jonathan Turley. Perhaps the most influential guest has been Thomas Woods, a conservative scholar whose previous books include “The Politically Incorrect Guide to American History” and “Who Killed the Constitution?: The Fate of American Liberty from World War I to George W. Bush,” and whose current book “Meltdown” has inspired Rep. Michele Bachmann (R-Minn.) to question Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner about economic fundamentals.

Paul’s unexpected and sudden clout with his fellow Republicans — even some of Paul’s staff have been surprised with the momentum of his “Audit the Fed” bill — come as the GOP engages in a tortured internal dialogue about its future. Since January, no small number of new coalitions have formed between current members of Congress, former advisors to President George W. Bush, and perennial party leaders such as former Gov. Mitt Romney (R-Mass.) and former Gov. Jeb Bush (R-Fla.). Few of those conservatives, however, have spent much time criticizing the very foundations of America’s modern economic system and worrying about a 1929-style crash. Few of them had a drawer stuffed with off-brand economic ideas and forgotten libertarian texts, ready to explain what needed to be done. Ron Paul did, and as a result the ideas that made the Republican establishment irate enough to bounce him from a few primary debates are more popular than ever.

“There’s a growing recognition that the GOP is intellectually bankrupt and morally bankrupt,” explained Bovard. “Most of these Republican ‘rebranding’ efforts amount to a group of overpaid consultants getting detached from reality, but I’m glad that Paul is putting together these meetings. I hope the battle of ideas is changing.”

The success of Paul’s events, however under-the-radar, have been a pleasant surprise for the experts. “I’ll admit it,” said Thomas Woods. “I was dead wrong in my first reaction when I heard Ron talking about the Fed on the campaign trail. I said, ‘This is too complicated for most Americans. This isn’t going to galvanize people.’ I was wrong! He’s taken an issue that wasn’t even an issue, and he’s got a lot of Americans suddenly fascinated by the Fed, by monetary policy, by the Austrian business cycle theory,” economic ideas promoted by thinkers like Ludwig von Mises and Murray Rothbard that blame central banks for painful business cycles.

Since his congressional comeback in 1996 — after a long stint as a Libertarian Party politician, and after only narrowly defeating a Democrat-turned-Republican that Newt Gingrich’s Republican leadership supported — Paul has maintained a small circle of allies in Congress. Some of them, like Rep. Walter Jones (R-N.C.), are regular guests at the expert luncheons. But the most prominent new face is Bachmann, the rising conservative star who left C-Span and YouTube watchers scratching their heads with a grilling on the Constitution that seemed to puzzle Geithner. “What provision in the Constitution could you point to to give authority for the actions that have been taken by the Treasury since March of ‘08?” asked Bachmann during a hearing on March 24. “What in the Constitution could you point to to give authority to the Treasury’s extraordinary actions that have been taken?”

Bachmann “goes to these luncheons on a weekly basis,” said Debbee Keller, Bachmann’s press secretary. Keller noted that Bachmann was reading “Meltdown,” which argues that the New Deal failed and that the Federal Reserve is responsible for the current economic crisis. “Just as Austrian theory suggests,” wrote Woods, “the Fed’s mischief was responsible for the Great Depression.”

“I had a feeling she’d have some interest in the book,” said Woods, “because she asked some good questions. She was taking notes. She was asking if this or that point could be found in the book. I thought I recognized a sincere person who wanted knowledge, not the usual politician who couldn’t care less about what the truth is and just wanted to propagandize.”

Paul didn’t take credit for turning Bachmann on to Austrian theory (“He’ll give credit to everyone on the planet except himself,” laughed Woods) but said he was pleased to see more members of Congress delving into economics. “She’s very open to studying,” said Paul. “In fact, she’s been working really hard to get me back to Minneapolis. She says, ‘You’ll get such a great reception there!’”

Paul’s other influence has reached further across the aisle. Since he introduced the Federal Reserve Transparency Act of 2009, he has locked in the support of a majority of the Republican conference as well as 13 Democrats, for a bill that would mandate an “audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks” before the end of 2010 to reveal how the board makes it decisions and moves around money. “As Congressman Paul pointed [out] many times,” said freshman Rep. Alan Grayson (D-Fla.) after co-sponsoring the bill, “the Federal Reserve should have come clean with the American people a long time ago. The Fed is disbursing trillions of dollars and the taxpayers have a right to know who is getting it.”

It’s been a rapid rise for an idea that, only months ago, was located firmly in the political fringe. The John Birch Society, the far-right group that Paul has often defended from media criticism, was one of the first groups to encourage members to contact their members of Congress to support an audit of the Fed. Paul’s own coalition, the Campaign for Liberty, has engaged in a months-long grassroots campaign for the bill, something that Paul credited for a surge in support unlike anything he’s introduced in his second stint in Congress.

“People today are clamoring for transparency,” said Paul, “and there is more awareness of the Federal Reserve. I do think it has something to do with the focus we put on this during the campaign. It’s not so much that I’m personally converting people, it’s that we’ve got people at the grassroots converting their members of Congress.” Rep. Zach Wamp (R-Tenn.), a conservative who is running for governor of Tennessee next year, has told Paul that his support for the Fed audit and his condemnation of a Missouri law enforcement policy to watch out for cars with Ron Paul bumper stickers get some of his loudest, most positive reactions on the campaign trail.

Paul has remained surprised and bemused at his new influence. “I was talking with one of the other Republicans on the floor,” he remembered, “one of the types that had been voting with Bush, for big spending and all of that. I asked him: ‘Are you voting with me now or am I voting with you?’ They just laugh. They know what the situation is.”

David Weigel is a politics reporter for the Washington Independent.

Original photo by AFP

MnIndy mock-up

Beware the trappings of the office. Pranksters and demented detractors made devilish depictions of President Barack Obama during last year’s campaign, but this week the president almost created his own demonic image when he sat for a photo just inches away from a potentially satanic wall sconce. Obama, who seems to lead a charmed life, narrowly avoided growing a pair of horns.

It was just this sort of thing — being photographed before an undesirable (or overly desirable) background object  – that led the Justice Department under Attorney General John Ashcroft to hide the semi-nude “Spirit of Justice” statue behind drapes. Photographers had made a sort of sport of capturing images of solemn attorneys general before the topless female figure.

The photograph of Obama at a table with Treasury Secretary Timothy Geithner, the dangerous sconce between them, was distributed this week by Agence France Press.

An Obama-as-Antichrist theme found enthusiasts last year — despite debunking by Snopes — via Web videos, e-mails, rightwing radio and TV, and suggestions from political candidates that were both subtle and brazen.

It seemed to peter out once the election was over, though protesters from Kansas’ notorious Westboro Baptist Church continued to draw the connection and the controversy was stirred to some extent by Obama’s scheduled commencement address at the University of Notre Dame. Meanwhile, mysterious reports of Christlike imagery  – on cats and toast — continued unabated on local TV news shows.

Or perhaps she thought that cap-and-trade rules allow members of Congress to add a syllable to a foreign country’s name as long as they remove a syllable from another word, as she did in committee — and again later on FOX-TV (video) — when she said “jetissing” for ”jettisoning.”

Or perhaps she was laying a sophisticated trap for Geithner — the kind of double-game they play in the United Kingdom’s Parliament, until you don’t know who’s been had and who simply doesn’t know how to pronounce “Kazakhstan.”

From Parliament, Oct. 23, 2006:

Rob Marris: Does not the wording of amendment No. 201 fall into the very trap that the hon. Gentleman gave of the difficulty of proving a negative in terms of the capital of Kazakistan—or whatever it is called? It would require the individual to prove a negative.

Tim Loughton: The hon. Gentleman would be expected to know how to pronounce Kazakhstan, even if he does not know its capital or how to spell it. …

Rob Marris: …I have to tell the hon. Member for East Worthing and Shoreham (Tim Loughton) that he has been had in the Chamber — by me. Of course, I know how to pronounce Kazakhstan. When, during my earlier intervention, I indicated that I might not, the hon. Gentleman immediately said that I ought to know how to pronounce it.

Tim Loughton: Quite right.

Rob Marris: Exactly. But in my intervention I did not intend to seek to indicate to the House that I did not know how to pronounce Kazakhstan, which is precisely the problem with the hon. Gentleman’s amendment. That light-hearted example shows that, if the amendment were accepted, I would get off scot-free from the charge of not knowing how to pronounce Kazakhstan. He quite reasonably points out that I should be expected to know how to pronounce Kazakhstan. I do know; he has been had. But it was to make the point that his amendment will create, inadvertently — I stress that word for him — a loophole that I am sure he and his colleagues do not want to create.

Anne Main: The hon. Gentleman freely admitted that he did not know how to pronounce Kazakhstan even though he had heard the pronunciation at least twice. That is not intent but a sure-fire case of not paying attention —

The topic of the debate was actually school policy toward pedophiles … as I said, in Parliament they play sophisticated double games.

For clarity, then, here is the Kazakhstan’s faux national anthem, from the movie “Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan”:

Bachmann: “What provision in the Constitution could you point to to give authority for the actions that have been taken by the Treasury since March of ’08?”

Geithner: “Well, the Congress legislated in the Emergency Economic Stabilization Act a range of very important new authorities.”

Bachmann: “What in the Constitution could you point to to give authority to the Treasury’s extraordinary actions that have been taken?”

Geithner: “Every action that the Treasury and the Fed and the FDIC has been using authority granted by this body, the Congress.”

Bachmann: “In the Constitution, what could you point to?”

Geithner: “Under the laws of the land, of course.”

Geithner and Fed Chairman Bernanke’s answers were simple: The Constitution in Article I, Section I grants Congress the right to legislate, and the TARP funds were legislated to give authority to the Treasury.

Bachmann also asked if the United States was giving up the dollar. “I’m wondering would you categorically renounce the United States moving away from the dollar and going to a global currency as suggested this morning by China and also by Russia, Mr. Secretary?”

Geithner and Bernanke: Of course.

Photo: MHS

Contracts guaranteeing bonuses to executives at collapsing businesses — like American International Group (AIG) — are held inviolable, while labor union contracts regularly get voided or reneged-on when corporations declare (or even threaten) bankruptcy. Labor experts say it’s the law of the land.

Today President Obama told Treasury Secretary Timothy Geithner to find a way to stop AIG — which took in $170 billion in public bailout funds — from paying $165 million in executive bonuses. But even if Geithner succeeds, management’s preeminence in law will remain deeply seated in the American legal system.

The most local and recent example of workers whose contracts became casualties to corporate collapse are the Star Tribune’s pressmen. Only by caving to concession demands on Friday did they avoid having a bankruptcy judge void their contract. (The week began with news arising from the negotiations that the Star Tribune burned through as much as $11 million in a court battle with the rival Pioneer Press defending Par Ridder, the publisher who in 2007 oversaw half a year of the newspaper’s hurtle toward insolvency.)

As University of Minnesota Prof. John Budd tells the Minnesota Independent, it comes down to who calls the bankruptcy shots.

“I imagine that AIG could void its executive bonus contracts if it filed for bankruptcy,” he said. “But you have executives making the decision whether or not to file for bankruptcy so the right incentives are not there.”

Other experts say contrasting contract situations are only part of the picture. The real matter is one of “the different ways that workers are treated in this economic crunch from the ways [executives] are treated, law or no law,” says Peter Rachleff, professor of labor history at Macalester College.

“I have commented on this issue for years in my classes,” adds Prof. James Scoville, Budd’s Carlson School of Business colleague, who teaches ethics and labor relations.

Scoville cites a maxim by Jim Gross, professor of labor policy and labor arbitration at Cornell University’s School of Industrial and Labor Relations: “Property rights have trumped labor rights at every turn.”

Gross tells MnIndy he coined the phrase a decade ago in his book “Broken Promises: The Subversion of American Labor Relations Policy, 1947-1994.”

It has wide application as a general proposition, he says, “despite rhetoric to the contrary about workers’ rights and human rights.”

Contractual rules developed over centuries of common law overwhelmingly favor property owners and the management that serves them, in Gross’ view.

“The last time we had major labor law reform in favor of workers’ rights was in the Great Depression,” he says, and even as much as that era’s Wagner Act supported labor, its “underlying core principle was freedom of contract.”

The resulting balance of power between employers and unions “far favors employers in this country because we have employment at will,” says Gross.

The Employee Free Choice Act (EFCA) would bring United States’ labor policy into alignment with that of nearly every other developed country, he adds, but recent efforts for its passage are not encouraging.

Tim Geithner – Secretary of the Treasury

Larry Summers – Director of the National Economic Council

Christine Romer – Chair of the Council of Economic Advisors

Melody Barnes – Director of the Domestic Policy Council

Read Obama’s remarks after the jump.

Good morning.

The news this past week, including this morning’s news about Citigroup, has made it even more clear that we are facing an economic crisis of historic proportions. Our financial markets are under stress. New home purchases in October were the lowest in half a century. Recently, more than half a million jobless claims were filed, the highest in eighteen years – and if we do not act swiftly and boldly, most experts now believe that we could lose millions of jobs next year.

While we can’t underestimate the challenges we face, we also can’t underestimate our capacity to overcome them – to summon that spirit of determination and optimism that has always defined us, and move forward in a new direction to create new jobs, reform our financial system, and fuel long-term economic growth.

We know this won’t be easy, and it won’t happen overnight. We’ll need to bring together the best minds in America to guide us – and that is what I’ve sought to do in assembling my economic team. I’ve sought leaders who could offer both sound judgment and fresh thinking, both a depth of experience and a wealth of bold new ideas – and most of all, who share my fundamental belief that we cannot have a thriving Wall Street while Main Street suffers; that in this country, we rise and fall as one nation, as one people.

Today, Vice President-Elect Biden and I are pleased to announce the nomination of four individuals who meet these criteria to lead our economic team: Timothy Geithner as Secretary of the Treasury; Lawrence Summers as the Director of our National Economic Council; Christina Romer as Chair of the Council of Economic Advisors; and Melody Barnes as Director of the Domestic Policy Council.

Having served in senior roles at Treasury, the IMF and the New York Fed, Tim Geithner offers not just extensive experience shaping economic policy and managing financial markets – but an unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency. Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today’s markets – and a clear vision of the steps we must take to revive them.

The reality is that the economic crisis we face is no longer just an American crisis, it is a global crisis – and we will need to reach out to countries around the world to craft a global response. Tim’s extensive international experience makes him uniquely suited for this work. Growing up partly in Africa and having lived and worked throughout Asia; having served as Under Secretary of the Treasury for International Affairs – one of many roles in the international arena; and having studied both Chinese and Japanese, Tim understands the language of today’s international markets in more ways than one.

Tim has served with distinction under both Democrats and Republicans and has a long history of working comfortably, and as an honest broker, on both sides of the aisle. With stellar performances and outstanding results at every stage of his career, Tim has earned the confidence and respect of business, financial and community leaders; members of Congress; and political leaders around the world – and I know he will do so once again as America’s next Treasury Secretary, the chief economic spokesman for my Administration.

Like Tim, Larry Summers also brings a singular combination of skill, intellect and experience to the role he will play in our Administration.

As undersecretary, deputy secretary, and then secretary of the Treasury, Larry helped guide us through several major international financial crises – and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. He also championed a range of measures – from tax credits to enhanced lending programs to consumer financial protections – that greatly benefitted middle income families.

As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class. This idea is the core of my own economic philosophy and will be the foundation for all of my economic policies.

And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges. With respect to both our current financial crisis, and other pressing economic issues of our time, his thinking, writing and speaking have set the terms of the debate. I am glad he will be by my side, playing the critical role of coordinating my Administration’s economic policy in the White House – and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis.

As one of the foremost experts on economic crises – and how to solve them – my next nominee, Christina Romer, will bring a critically needed perspective to her work as Chair of my Council of Economic Advisors.

Christina is both a leading macroeconomist and a leading economic historian, perhaps best known for her work on America’s recovery from the Great Depression and the robust economic expansion that followed. Since 2003, she has been co-director of the National Bureau of Economic Research Monetary Economics program. She is also a member of the Bureau’s Business Cycle Dating Committee – the body charged with officially determining when a recession has started and ended – experience which will serve her well as she advises me on our current economic challenges.

Christina has also done groundbreaking research on many of the topics our Administration will confront – from tax policy to fighting recessions. And her clear-eyed, independent analyses have received praise from both conservative and liberal thinkers alike. I look forward to her wise counsel in the White House.

Finally, we know that rebuilding our economy will require action on a wide array of policy matters – from education and health care to energy and Social Security. Without sound policies in these areas, we can neither enjoy sustained economic growth nor realize our full potential as a people.

So I am pleased that Melody Barnes, one of the most respected policy experts in America, will be serving as Director of my Domestic Policy Council – and that she will be working hand-in-hand with my economic policy team to chart a course to economic recovery. An integral part of that course will be health care reform – and she will work closely with my Secretary of Health and Human Services on that issue.

As Executive Vice President for Policy at the Center for American Progress, Melody directed a network of policy experts dedicated to finding solutions for struggling middle class families. She also served as Chief Counsel to the great Senator Ted Kennedy on the Senate Judiciary Committee, working on issues ranging from crime to immigration to bankruptcy, and fighting tirelessly to protect civil rights, women’s rights and religious freedom.

Melody’s brilliant legal mind – and her long experience working to secure the liberties on which this nation was founded and secure opportunity for those left behind – make her a perfect fit for DPC Director.

I am grateful that Tim, Larry, Christina and Melody have accepted my nomination, and I look forward to working closely with them in the months ahead. And that work starts today, because the truth is, we don’t have a minute to waste.

Right now, our economy is trapped in a vicious cycle: the turmoil on Wall Street means a new round of belt-tightening for families and businesses on Main Street – and as folks produce less and consume less, that just deepens the problems in our financial markets. These extraordinary stresses on our financial system require extraordinary policy responses. And my Administration will honor the public commitments made by the current Administration to address this crisis.

Further, beyond any immediate actions we may take, we need a recovery plan for both Wall Street and Main Street – a plan that stabilizes our financial system and gets credit flowing again, while at the same time addressing our growing foreclosure crisis, helping our struggling auto industry, and creating and saving 2.5 million jobs – jobs rebuilding our crumbling roads and bridges, modernizing our schools, and creating the clean energy infrastructure of the twenty-first century. Because at this moment, we must both restore confidence in our markets – and restore the confidence of middle class families, who find themselves working harder, earning less, and falling further and further behind.

I have asked my economic team to develop recommendations for this plan, and to consult with Congress, the current Administration and the Federal Reserve on immediate economic developments over the next two months. I have requested that they brief me on these matters on a daily basis, and in the coming weeks, I will provide the American people and the incoming Congress with an overview of their initial recommendations. It is my hope that the new Congress will begin work on an aggressive economic recovery plan when they convene in early January so that our Administration can hit the ground running.

With our economy in distress, we cannot hesitate or delay. Our families cannot afford to keep on waiting and hoping for a solution. They cannot afford to watch another month of unpaid bills pile up, another semester of tuition slip out of reach, another month where instead of saving for retirement, they’re dipping into their savings just to get by.

Again, this won’t be easy. There are no shortcuts or quick fixes to this crisis, which has been many years in the making – and the economy is likely to get worse before it gets better. Full recovery won’t happen immediately. And to make the investments we need, we’ll have to scour our federal budget, line-by-line, and make meaningful cuts and sacrifices as well – something I’ll be discussing further tomorrow.

Despite all of this, I am hopeful about the future. I have full confidence in the wisdom and ingenuity of my economic team – and in the hard work, courage and sacrifice of the American people. And most of all, I believe deeply in the resilient spirit of this nation. I know we can work our way out of this crisis because we’ve done it before. And I know we will succeed once again if we put aside partisanship and politics and work together, and that is exactly what I intend to do as President.

Thank you, and I’m now happy to take questions.