Obama pushes economic plan

Obama, in his second weekly radio address since taking office, pledged to help lower Americans' mortgage costs under a new plan to be unveiled soon to help revive the financial system and "get credit flowing again."

An administration official said the roll-out of the plan was on track in response to a CNN report saying the plan's announcement is being pushed back due to its complex nature.

Obama's finance team is working on a plan to stem huge losses at banks caused by so-called toxic assets, mostly mortgage-backed loans that plunged in value as the housing market crashed.

Options under consideration include creating a "bad bank" that could take toxic assets off the balance sheets of banks in the hope of reviving lending; government insurance on troubled assets to help shield banks from future losses; and further capital injections by the government into banks, a source familiar with the administration's thinking said last week.

So far, about half the $700 billion of the Treasury Department's Troubled Asset Relief Program has been used up since it was rushed out late last year to tackle the crisis, and economists have said a lot more money may be needed to fund the next phase of the rescue.

Even as he moved to confront the economic crisis, Obama was facing a new political distraction -- the disclosure that Tom Daschle, picked to spearhead U.S. healthcare reform, failed to pay more than $128,000 in taxes.

It was the latest glitch in Obama's effort to complete his Cabinet and focus on top priorities, including a mid-February target for Congress to pass an economic stimulus bill with more than $800 billion in tax cuts and spending.

Treasury Secretary Timothy Geithner's nomination was held up earlier by criticism over late payment of $34,000 in taxes.

The White House said Obama expected Daschle, a former Senate Democratic majority leader and one of his key early supporters, to be confirmed by the Senate as secretary of health and human services.

"The president has confidence that Senator Daschle is the right person to lead the fight for health care reform," Obama's press secretary, Robert Gibbs, said when the news broke. The White House reiterated that position on Saturday.

Obama has made accountability a key thrust of his approach since his election on a platform vowing sweeping change in the way Washington operates.

Daschle recently filed amended tax returns to pay back taxes, interest and penalties involving unreported consulting income, charitable contributions and use of a car service provided by a prominent businessman and Democratic donor.

Republicans could use Daschle's tax troubles to try to slow his confirmation, given that filling the job to reform healthcare is not considered as urgent as was getting a new Treasury chief in place to lead economic policymaking.

ECONOMIC STIMULUS

With the recession and financial crisis topping his agenda, Obama urged the Senate to approve the stimulus bill that the House of Representatives passed this week.

But as conditions worsen, the president said new strategies were in the works.

"Soon my treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama said.

"We'll help lower mortgage costs and extend loans to small businesses so they can create jobs."

Obama did not give specifics about the plan but said he would work with both parties to ensure a strong stimulus bill.

Republicans say they oppose the package largely because of spending priorities. Senate Republican leader Mitch McConnell said the bill passed along party lines in the Democratic-led House "looks more like a $1 trillion Christmas list."

Republican Senator Judd Gregg to Gregg, a fiscal conservative from New Hampshire, emerged on Saturday as the top candidate for commerce secretary, with an administration official saying a decision could come as early as Monday.

New Hampshire's Democratic governor, John Lynch, could then name a Democrat to replace Gregg, giving Democrats the 60 seats needed in the 100-seat Senate to overcome Republican procedural hurdles and allow Obama a clearer path for key legislation.

Daschle's tax woes are expected to cast a shadow next week. A Senate Finance Committee meeting has been called for Monday to discuss pending nominations, an aide said.