Obama to outline new economic recovery plan
Investors should pay close attention to any clues President Obama will provide regarding the U.S. Treasury's stress test for banks and its toxic asset removal plan. The Treasury is expected to announce additional program details Wednesday and it's not unusual for the nation's highest elected official -- who also serves as de facto chief manager of the economy -- to at least preview program details that Treasury Secretary Tim Geithner will announce on Wednesday.
Also look for Obama to provide more details on the administration's $75 billion mortgage refinance program for at-risk homeowners. Obama will likely cite evidence that will demonstrate how a U.S. taxpayer subsidy of at-risk homeowners will help check the foreclosure rate, stem the decline in home prices, and, by extension, benefit all U.S. homeowners.
Many Americans who've paid their mortgages on time are uneasy -- some are downright angry -- about subsidizing those who haven't. So Obama will need to show why his program is in the nation's long-term economic interest, and also outline the economy's timetable for recovery. Further, if history is any indicator, Obama has about one year to show that U.S. economic conditions are improving; if conditions don't improve by then, his public approval rating will likely drop. Currently, public support for Obama is high.
Budget, health care intertwined
Second, Obama will likely outline his plan to cut the U.S. budget deficit in half to roughly $500 billion by fiscal 2013. The Obama plan will require the reduction or elimination of what the administration calls ineffective programs and efforts to rein in what is arguably the biggest cost concern in the budget -- and in the private sector, for that matter -- health care costs. Look for Obama to outline program revisions for Medicare and Medicaid, the health care systems for senior citizens, and the poor, respectively.
Investors should not expect Obama to announce some new 'New Deal-type' program for health care, but rather look for Obama to show how modifications to and increased efficiencies in existing health care programs can help contain federal spending and begin the process of insuring the nation's uninsured, which totals 30-45 million Americans, depending on the methodology.
Third, investors should also look for Obama to provide his goals for both energy and education policy. On the former, look for Obama to show how increased auto and business energy efficiencies and renewable / alternate energy production can reduce the trade deficit and create good-paying jobs at home; on the latter, look for the president to highlight the importance of education and skills learning at a time when many downsized Americans must train for new jobs and others are preparing for an increasingly-competitive global economy.
Fiscal Analysis: In addition to the economy, President Obama will also have to outline how he plans to win the wars in Iraq and Afghanistan, strengthen the U.S.'s relationship with its key allies in Europe and Asia, and achieve an enduring peace in the Middle East. Other than that, President Obama doesn't have much to work on or be concerned about, to cite well-known Groucho Marx line.
The problems the nation faces are more than any president or Congress can solve in one four-year administration, but it is where the nation is in the first decade of the globalization era. Or as college students frequently say today, "It is what it is." Wall Street, investors, and the rest of world do not expect the aforementioned problems to be solved quickly, but they do expect Obama to demonstrate to them that the road he wants the nation to take represents the correct course -- the road to economic health.