WASHINGTON — Barack Obama rode a wave of economic discontent to the White House and now faces the daunting task of turning the weakening economy around.
Business groups wary of Obama’s populist campaign rhetoric hope to make common cause with the Illinois senator and other congressional Democrats by pushing for an economic stimulus package, possibly as early as this year.
Groups such as the U.S. Chamber of Commerce hope to include corporate tax breaks in the stimulus, along with the spending on roads and bridges intended to create jobs that are likely to be key to his plan.
“We start off with a shared and very strong and mutual interest,” said Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce. “The number one issue today is … the economy.”
Still, Obama has promised tougher government regulation for a range of industries, including financial services, energy and health care, and he is likely to be a strong ally for labor unions.
Wall Street “will be surprised by the speed and degree to which the corporatist agenda is replaced by 1970s-style economic populism,” wrote Andrew Parmentier, an analyst at FBR Capital Markets, in a note to clients.
Concerns about the budget deficit, which could approach $1 trillion in the budget year that began Oct. 1, will likely take a back seat in the short term, economists said.
“It’s going to be ‘damn the deficit and full speed ahead on the stimulus,’ ” said Stuart Hoffman, chief economist at PNC Financial Services. Hoffman expects the package to include an extension of unemployment benefits and new spending on roads, bridges and other infrastructure.
Obama supported a $50 billion stimulus during the campaign that included funds for infrastructure spending and grants to state and local governments.
The economy, which many analysts believe is already in a recession, was foremost on most voters’ minds Tuesday. Six in 10 voters said it was the most important issue facing the country.
Economists are urging Obama to quickly put a team in place to oversee the $700 billion financial system rescue approved by Congress last month.
But any honeymoon between the Obama administration and Wall Street and the rest of corporate America could be short-lived.
Obama and Congress could toughen oversight of banks and other financial services companies, enforce environmental rules more strictly, and impose new surcharges on electric utilities and other companies that emit greenhouse gases, Parmentier wrote.
Unregulated corners of the financial industry, such as hedge funds, credit ratings agencies and the derivative instruments known as credit default swaps will likely come under government oversight as part of a broader overhaul of the financial regulatory system, analysts have said.
That overhaul could also place insurers such as Allstate Corp. and MetLife Inc., which are regulated at the state level, under federal supervision.
Obama also promised to take a more pro-consumer focus toward the housing and credit card industries. He supports a controversial measure that would allow bankruptcy judges to alter mortgages, which was strongly opposed by the financial industry, as well as a measure to limit the ability of credit card issuers to unilaterally impose new fees and other terms.
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