Barack Obama on Sunday was dealt his first serious setback since the election when his choice for commerce secretary withdrew from nomination, as congressional leaders warned that an emergency $775bn fiscal stimulus package was unlikely to be passed before the presidential inauguration.
Bill Richardson, the governor of New Mexico and the only new member of Mr Obama’s cabinet with previous cabinet experience, said he was stepping aside because of a pending investigation of a company that had done business with in New Mexico.
“Let me say unequivocally that I and my administration have acted properly in all matters and that this investigation will bear out that fact,” said Mr Richardson. “But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process,” he said, in a statement released on Sunday by the Obama transition team.
US secretaries of commerce oversee trade and industrial policy, although important parts of economic policy are the responsibility of the Treasury and Labor secretaries and the US trade representative.
Mr Richardson’s withdrawal came as leaders from both parties warned that a planned stimulus bill, to revive the contracting US economy and whose cost could climb as high as $1,000bn, would be unlikely to reach Mr Obama’s desk before early February.
Steny Hoyer, the Democratic majority leader in the House of Representatives, told Fox News that it would probably only reach Mr Obama by the President’s Day recess in early February. Mitch McConnell, the Republican minority leader in the Senate, told ABC News that “to have it on his desk by January 20 – that’s just not a practical thing”. On NBC’s Meet the Press, Harry Reid, the Democratic Senate majority leader, refused to give a deadline for enactment of the bill and said it was more important to “do it right the first time”.
Mr Obama, who on Saturday urged Congress to act “swiftly and boldly” on the plan, is due to meet Democratic and Republican leaders on Capitol Hill on Monday to push the fiscal stimulus ahead.
The warnings from Congress come as the Federal Reserve pushes ever deeper into unconventional territory to fight the crisis. Ben Bernanke, Fed chairman, told the Financial Times that the danger to the economy lay in sticking too rigidly to orthodox policies. “In a severe crisis, orthodoxy can prove to be a very bad strategy,” he said.
Sunday’s apparent backtracking on the bill partly reflects fears among centrist Democrats and Republicans that the record-breaking sums are not sufficiently hedged with measures to bring down the exploding budget deficit.
Additional reporting by Krishna Guha