Dear Mr. President

Third, now is the time for health-care reform. Some people say that the health-care issue should wait, but I disagree. The economic crisis has driven home the insecurity created by our current system, under which the misery of Americans who lose their jobs is often compounded by the loss of health insurance, as well. If elected, Obama should try to emulate LBJ, who signed Medicare into law less than 10 months after his 1964 victory.

Is this a wildly ambitious agenda? Yes—but these are wild times, and the country is ready for change. I'll give Obama a bit more than a 100 days—say, six months—but he should move fast. Like the crisis of the 1930s, the current crisis offers an opportunity to reform our system in fundamental ways.

A. Michael Spence, a senior fellow at the Hoover Institution and professor emeritus at Stanford University's business school, was awarded the Nobel Prize in 2001 for his work on markets with asymmetric information. From 1991 to 1997, he was chairman of the National Research Council Board on Science, Technology and Economic Policy.
The next administration will have a full plate. It will need to continue to inject capital into the financial system and take measures to ensure the functioning of the payments system and short-term credit markets. It will also need to return to the mortgages and reset terms, avoid a flood of foreclosures, all of this for efficiency, equity and political reasons. It will then need to inject a fiscal stimulus while communicating a plan to return the budget deficit to more sustainable levels in the medium run. It will need to coordinate policies with other major economies to avoid unintended and unwanted volatility in capital flows searching for the safest haven. It will need to structure its ownership and substantial control of the financial sector in such a way as to make it possible for private capital to reenter as the [industry's] damaged balance sheets get better and the visibility/transparency improves. Postcrisis it will need to thoroughly examine the systemic failures with a view to redesigning the regulatory oversight of the sector.

Priorities will have to be set on the fly as conditions shift, often rapidly as we have seen, in the economy and the financial sector. The overriding priority should be to have a top-flight team in Treasury, led by a secretary who, like Secretary Henry Paulson, has experience and stature in the financial sector.

Joseph E. Stiglitz, a professor at Columbia University, was also awarded the Nobel Prize in 2001 for his work on the economics of information. He was chief economist of the World Bank and chair of President Clinton ' s Council of Economic Advisers.
The next president takes office at a challenging time (to put it mildly) for the economy. He will inherit an economy in recession, a country facing a growing divide between rich and poor, a health-care system in which we spend more money to get poorer results than any other advanced economy and a society with an oil addiction that has only grown worse over time. The massive debt and deficit he will inherit will mean that the resources to attack these problems will be very limited.

We will almost surely be going into a deep recession—the longest since the Great Depression. The immediate focus will be how to prevent it from getting worse. Inevitably, unemployment will grow, but more and more will find their benefits expire before they find another job—some 700,000 or so are likely to be in this position in the next few weeks. Pumping money into the banks was critical, but trickle-down economics doesn't work; by itself it's not enough. States are facing massive shortfall in revenues, and without aid, they have to start laying off workers. Foreclosures are likely to continue apace, as house prices continue to fall as a result of the bursting of the bubble.