Talking taxes, calming markets on agenda

President Obama will lay out his
long-term vision for the economy this week against the backdrop of a
nervous Wall Street, which on Friday witnessed a run on the nation’s
troubled banks.

After the turbulent end to last week, all eyes this week
turn to Treasury Secretary Tim Geithner and the Obama administration, as it
explores additional options to stabilize the flagging U.S. economy.

{mosads}The administration will explain its budgetary priorities
during several high-profile events early in the week, while Treasury
officials confirmed that Geithner will provide more details on his plan to
assist banks this week.

The week will begin with a “fiscal responsibility summit”
at the White House, in which lawmakers from both parties and economists will
meet for several hours to discuss solutions to the country’s long-term fiscal
issues.

President Obama will then address a joint session of
Congress on Tuesday, in which he is expected to detail his budget proposals. The
plans will reportedly allow for larger deficits in the short-term, while
raising taxes on wealthy Americans and reducing some spending in several years.

The dramatic elements in economic news this week, though,
will take place not at the White House but next door at the Treasury
Department.

A series of headaches for the secretary await, after the
markets seemed to have reacted adversely to proposals by Geithner to shore up
banks and provide relief to foreclosed homeowners.

After facing complaints that his plan to take more
aggressive action to assist banks lacked specificity, the details – and the
reaction they inspire – could prove to pose somewhat of a vote of confidence
for the financial guru.

A Treasury official confirmed that more details on the
plan would come this week, but would not say when exactly, or what the plan
would encompass.

Bank nationalization seems to be waning in popularity as
an option, with lawmakers and the administration having pushed back against
comments by Senate Banking Committee Chairman Chris Dodd (D-Conn.) that
temporary nationalization may be necessary.

Dodd joined earlier calls from Sen. Lindsey Graham
(R-S.C.) and former Federal Reserve Chairman Alan Greenspan to explore
nationalization options, including the idea that the banks could be taken over
by the government for a short period of time.

White House Press Secretary Robert Gibbs said the Obama
administration “continues to strongly believe that a privately held banking
system is the correct way to go” Friday afternoon, restoring some confidence to
a stock market that sold off on Dodd’s comments.

House Financial Services Committee Chairman Barney Frank
(D-Mass.) argued that nationalization was unnecessary if Geithner’s plan works.

“If that works, then we don’t have to go beyond it,”
Frank told Bloomberg News.

“I think nationalizing the banks is exactly the wrong
thing to do, and we certainly shouldn’t go in that direction,” Senate Minority
Leader Mitch McConnell (R-Ky.) said on CNN Sunday.

Geithner and the administration will also have to deal
with the aftermath of the now-famous showdown with a CNBC personality over a
proposal to provide relief to homeowners facing foreclosure.

An on-air rant by the network’s Rick Santelli gave voice
to concerns that the administration’s proposal was fiscally irresponsible,
leading to a pushback by the White House over the weekend.

“We don’t think that bankruptcy court is an answer to the
problem,” Housing and Urban Development Secretary Shaun Donovan said Sunday
during an appearance on CBS’s “Face the Nation.”

Donovan argued that the plan employ strict rules to judge
which homeowners qualify for assistance, and would help 4 to 5 million
homeowners refinance their mortgages.