Timothy Geithner at his swearing-in on Monday. The new Treasury secretary took steps Tuesday to block lobbying on the bailout program by its beneficiaries.

Mr. Geithner, who was confirmed on Monday, also said he would set new limits intended to prevent political interference with decisions about which companies received bailout money.

Among other steps, the Treasury department said it would make public a log of all contacts by public officials and bank officials regarding specific financial institutions.

The log will be posted on the department’s Web site and updated weekly, it said.

The announcement followed several recent news reports about attempts by corporate lobbyists and members of Congress to influence the bailout program, including decisions about which banks should receive taxpayer funds.

“American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system,” Mr. Geithner said in a statement. “Today’s actions reaffirm our commitment toward that goal.”

The details of the new rules, whose text has not been completed, were not released. But in a press release, the Treasury Department outlined the Obama administration’s intent to restrict corporate and political lobbying to influence the bailout program.

Among the changes will be rules to “combat lobbyist influence” over the bailout program, including by “restricting contacts with lobbyists in connection with applications for, or disbursements of” bailout funds, the department said.

A Treasury spokeswoman said the department’s lawyers were developing rules to adopt such a restriction to the extent allowed by law and would make the procedures public. The changes will not require legislation by Congress or regulations, she said.

Eugene Volokh, a constitutional law professor at the University of California, Los Angeles, said there was no legal impediment to barring Treasury officials from talking about specific matters with lobbyists, although the First Amendment would not permit the government to forbid people from trying to lobby it.

The New York Times reported on Jan. 24 that at least a dozen companies that received taxpayer funds from the bailout program lobbied the government about the program in the final months of 2008, according to their lobbying disclosure forms.

The new rules will also “ensure that political influence does not interfere” with bailout “decision making, using as a model for these protections the limits on political influence over tax matters,” the Treasury said.

The tax investigation safeguards include rules to keep executive branch officials, including those at the White House, from ordering the Internal Revenue Service to conduct or terminate an audit of a particular taxpayer. If copied for the bailout program, the rule would prevent such officials from intervening in particular decisions about which banks get which funds.

The Treasury spokeswoman also said the department would disclose communications with members of Congress, along with bank executives, as part of its plan to make public all contacts about the bailout program.

The Wall Street Journal reported on Jan. 22 that several members of Congress, including lawmakers from Ohio and Alabama, had tried to ensure that regulators would steer bailout funds to banks in their states.

The article focused in particular on efforts by the chairman of the House Financial Services Committee, Barney Frank of Massachusetts, to help a troubled minority-owned bank in Boston. It later received $12 million in bailout money.

In a phone interview, Mr. Frank said he had no problem with Treasury posting a log of communications with members of Congress. He said he had been very public about his support for the Boston bank, and said lawmakers wanted their constituents to know of such efforts.

The Treasury said letters and calls from Congress played no role in its decisions about which banks received money. Mr. Geithner also declared that the Office of Financial Stability at Treasury, in making reports to Congress about how it was disbursing the bailout funds, would certify that each decision was based only on “investment criteria and the facts of the case.”

The department said it would soon publish a detailed description of its investment review process. And it said that only banks recommended by their primary bank regulator would be eligible for bailout funds.

The announcement on Tuesday represented the latest step by the Obama administration to make the bailout program more open and accountable as it moved to disburse the second $350 billion, following criticism of the Bush administration’s handling of the first $350 billion of the program.

Another set of rules on lobbyists imposed by President Obama will affect Mr. Geithner’s chief of staff, Mark Patterson, who lobbied for Goldman Sachs as recently as last April. Under the new rules, Mr. Patterson cannot be involved in dealing with any issues involving Goldman or other issues on which he lobbied.

The Obama administration has already said it will step up monitoring of lending patterns by financial institutions that have received bailout money. It also said it would seek to limit executive pay at banks that received taxpayer help in the future.

During his confirmation hearings, Mr. Geithner said the bailout needed “serious reform” and pledged that the administration would impose “tough conditions” to protect taxpayers.

The proposed emergency expenditures on nearly every realm of education, including school renovation, special education, Head Start and grants to needy college students, would amount to the largest increase in federal aid since Washington began to spend significantly on education after World War II.

Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government.

Responding in part to a plea from Democratic governors earlier this month, Congress allocated $79 billion to help states facing large fiscal shortfalls maintain government services, and especially to avoid cuts to education programs, from pre-kindergarten through higher education.

Obama administration officials, teachers unions and associations representing school boards, colleges and other institutions in American education said the aid would bring crucial financial relief to the nation’s 15,000 school districts and to thousands of campuses otherwise threatened with severe cutbacks.

“This is going to avert literally hundreds of thousands of teacher layoffs,” Education Secretary Arne Duncan said Tuesday.

Representative George Miller, Democrat of California and chairman of the House education committee, said, “We cannot let education collapse; we have to provide this level of support to schools.”

But Republicans strongly criticized some of the proposals as wasteful spending and an ill-considered expansion of the federal government’s role, traditionally centered on aid to needy students, into new realms like local school construction.

And they were joined by some education experts from across the political spectrum in wondering how school districts could spend so many new billions so fast, whether such an outpouring of dollars would lead to higher student achievement, and what might happen in two years when the stimulus money ends.

Analysts were also turning up surprises in the fine print.

One provision, which was sought by the student lending industry and went unmentioned in early Congressional summaries of the stimulus package, would temporarily increase subsidies to banks in the guaranteed student loan program by tying them to a new index, partly because recent federal intervention in the credit markets has invalidated the previous index. A spokesman for Sallie Mae, one of the largest student lenders, said the change was needed to keep student loan markets fluid. Critics said it represented a potential new windfall for lenders.

“This just continues the well-established tradition of welfare for the student loan industry,” said Barmak Nassirian, an expert in student lending.

The formulas by which the stimulus money for public schools would be allocated to states and local districts are complex, but take into consideration numbers of school-age children in poor families. The level received per student would vary considerably by state, according to an analysis by the New America Foundation, a research group that monitors education spending. New York would be among the biggest beneficiaries, at $760 per student, while New Jersey and Connecticut would fall near the bottom, with $427 and $409 per student, respectively. The District of Columbia would get the most per student, $1,289, according to the foundation’s analysis.

The foundation contends, however, that the formula does not effectively allocate the most money to states with the greatest need.

In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly.

The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending.

“This really marks a new era in federal education spending,” said Edward Kealy, executive director of the Committee for Education Funding, a coalition of 90 education groups.

The bill would increase 2009 fiscal year spending on Title I, a program of specialized classroom efforts to help educate poor children, to $20 billion from about $14.5 billion, and raise spending on education for disabled children to $17 billion from $11 billion.

Those increases respond to longtime demands by teachers unions, school boards and others that Washington fully finance the mandates laid out for states and districts in the Bush-era No Child Left Behind law, and in the main federal law regulating special education.

“We’ve been arguing that the federal government hasn’t been living up to its commitments, but these increases go a substantial way toward meeting them,” said Joel Packer, a lobbyist for the National Education Association, the nation’s largest teachers union.

Frederick Hess, an education policy analyst at the American Enterprise Institute, criticized the bill as failing to include mechanisms to encourage districts to bring school budgets in line with property tax revenues, which have plunged with the bursting of the real estate bubble.

“It’s like an alcoholic at the end of the night when the bars close, and the solution is to open the bar for another hour,” Mr. Hess said.

The bill would, for the first time, involve the federal government in a significant fashion in the building and renovation of schools, which has been the responsibility of states and districts. It includes $20 billion for school renovation and modernization, with $14 billion for elementary and secondary schools and $6 billion for higher education. It also includes tax provisions under which the federal government would pay the interest on construction bonds issued by school districts.

Mr. Duncan said the bill’s school renovation provisions would create a “huge number of construction jobs,” because so many school buildings need repairs.

But Representative Howard P. McKeon, Republican of California and the ranking minority member of the House education committee, said, “By putting the federal government in the business of building schools, Democrats may be irrevocably changing the federal government’s role in education in this country.”

In higher education, the bill would increase spending on Pell Grants, the most important federal student aid program, to $27 billion from about $19 billion this year.

“It’s a very good idea to increase Pell Grants in the stimulus,” said Terry Hartle, a senior vice president for public affairs at the American Council on Education, which represents colleges and universities.

But Mr. Hartle said that even he was having difficulty tracking all the new spending.

GETTING TO KNOW YOU Barack Obama and his wife, Michelle, with Jedi Scott, 10 months, of Brooklyn on Monday in Washington.

Cara Fuller, a shelter worker, asked if he was sweating.

“Nah, I don’t sweat,” he told her. “You ever see me sweat?”

Not yet. But then again, it is still early.

Mr. Obama arrives at the presidency Tuesday after a transition that betrayed little if any perspiration and no hint of nervousness. Throughout the 77 days since his election, he has been a font of cool confidence, never too hot, never too cold, seemingly undaunted by the magnitude of troubles awaiting him and unbothered by the few setbacks that have tripped him up.

He remains hard to read or label — centrist in his appointments and bipartisan in his style, yet also pushing the broadest expansion of government in generations. He has reached across old boundaries to build the foundation of an administration that will be charged with hauling the country out of crisis, but for all the outreach he has made it clear he is centralizing policy making in the White House.

He will eventually have to choose between competing advice and priorities, risking the disappointment or anger of constituencies that for the moment can still see in him what they hope to see.

What the country has seen of his leadership style so far evokes the discipline of George W. Bush and the curiosity of Bill Clinton. Mr. Obama is not shy about making decisions and making them expeditiously — he assembled his team in record time — but he has also sought to tap into the nation’s intellectual dialogue at a time of great ferment.

He has set out ideas for governance even before taking office, but he has also adapted the details as conditions changed.

More than any president since he was an infant, Mr. Obama has taken a place in society that extends beyond political leadership. He is as much symbol as substance, an icon for the young and a sign of deliverance for an older generation that never believed a man with his skin color would ascend those steps to vow to preserve, protect and defend a Constitution that originally counted a black man as three-fifths of a person.

He is a celebrity president in a celebrity culture, cooed over for his shirtless physique on the beach and splashed on the cover of every magazine from Foreign Policy to People. What his political opponents sought to portray in the campaign as arrogance is now presented by his aides as comfort with power and the responsibilities that go along with it.

“He sort of lives in a grudge-free zone,” said John D. Podesta, a co-chairman of his transition team. “He’s capable of taking on board a lot of information and making good decisions. He knows he’s going to make mistakes. But he also knows that you’ve got to do the best you can, make tough decisions and move on.”

Some of those mistakes may owe in part to that signature confidence. Mr. Obama knew and liked Gov. Bill Richardson of New Mexico, initially overlooking an investigation into state contracts that later sank his nomination for commerce secretary. Likewise, Mr. Obama forged a personal connection with Timothy F. Geithner and picked him for Treasury secretary, choosing to disregard Mr. Geithner’s past failure to pay some of his taxes.

Little has emerged about the process behind those episodes, but aides described Mr. Obama’s decision making as crisp and efficient. When he sits down for meetings, they said, he starts by framing questions he wants answered, then gives each person a chance to talk, while also engaging them. At the end, he typically sums up what he has learned and where he is leaning. A late-night person, he often follows up with calls to aides at 10 p.m. or later, after he has put his daughters to bed.

Mr. Podesta would not describe how the decision had been made to pull Mr. Richardson’s nomination but said it had played out over just nine hours rather than days, which limited the damage. “We saw the problem, understood it, Bill understood it wasn’t viable, and we stopped it,” Mr. Podesta said.

That contrasts with Mr. Clinton, who liked free-ranging discussion and took time making decisions. Mr. Podesta, Mr. Clinton’s last White House chief of staff, described the former president as brilliant at “thinking laterally” across subject areas. “One thing that seemed not to have taken on Bill Clinton is law school,” he said. “I tend to think of the president-elect as approaching a problem in a more logical, more drill-down sort of way.” Mr. Obama opted not to play it safe during the transition. He brought his Democratic rival, Hillary Rodham Clinton, into the cabinet, and angered gay and liberal supporters by inviting the Rev. Rick Warren, an opponent of abortion and same-sex marriage, to give the inaugural invocation. Although Mr. Obama deferred foreign affairs with his “one president at a time” rule, that did not apply to domestic policy, where he lobbied Congress to release $350 billion in financial bailout money and set about negotiating roughly $800 billion in spending programs and tax breaks.

“He’s got the political courage to look at things and be bold,” said Gov. Edward G. Rendell of Pennsylvania, a supporter of Mrs. Clinton’s who has spent time with Mr. Obama since the election. “The political wisdom is go slow, take the easy way first and build up some victories.”

Mr. Rendell said Mr. Obama did not mind taking risks. “He’s goal-oriented, not process-oriented,” he said. “If he does some things that are unorthodox or tick off his friends to achieve a goal, he’ll do that.”

But Mr. Obama made a point of engaging adversaries, dining with conservative columnists and talking with Republican congressmen. “He and his transition team have reached out to the Hill more than any transition team I’ve seen,” said Representative John A. Boehner of Ohio, the House Republican leader. “So far, so good. But running a campaign and running a transition are going to be different than governing, because governing is about making choices.”

Mr. Boehner noted that Mr. Obama had originally reserved 40 percent of his economic package for tax cuts but now seemed to be heeding Democrats pushing for more spending. “At some point he’s going to have to tell people what he’s for,” Mr. Boehner said, “and then we’ll see whether he really wants to govern from the middle or cave into the liberals in his party.”

Mr. Obama’s outreach to Republicans has paid dividends. He wooed enough Republican senators to release the bailout money. Even some he did not convince muted their opposition. For instance, he called Senator Tom Coburn, an Oklahoma Republican, who opposed more bailout money without a commitment that it be used only for the financial sector, not other industries.

“They didn’t want to shut the door, and if I were them maybe I wouldn’t either,” Mr. Coburn said. “But I wanted the door shut.” After Mr. Obama’s call, he said, “I was quiet as I voted against it.”

Mr. Obama has built a broader base of public support than many incoming presidents. Representative Artur Davis, Democrat of Alabama, said 53 percent of white voters in his conservative state now had favorable views of Mr. Obama, compared with 17 percent before the election. “He has been pragmatic,” Mr. Davis said, “and even many voters who voted against him see him as prepared to govern in a pragmatic, nonideological way.”

But Mr. Obama has been harder to peg than that, and the next few months should flesh out his governing philosophy.

“I don’t think it maps into traditional right-left, but nor is it Bill Clinton-like triangulation,” said Robert B. Reich, Mr. Clinton’s labor secretary and an economic adviser to Mr. Obama. “My sense is he genuinely believes that people can come to a rough consensus about big problems and work together effectively. I don’t really get a sense of ideological position. He’s obviously a man of strong convictions, but they don’t fall into the standard boxes.”

President-elect Barack Obama on Friday in Washington. Mr. Obama’s stimulus package is being shaped by political as well as economic imperatives.

With the Federal Reserve having just about reached the limit of how much it can help the economy with cuts in the interest rate, Washington’s ability to end or at least limit the recession depends in large part on the effectiveness of the big package of additional spending and tax cuts that Mr. Obama has made the centerpiece of his agenda.

And with the economy facing what now seems sure to be the sharpest downturn since the 1930s, the financial system balky and the government facing towering budget deficits, economists and policy makers acknowledge that there is no playbook.

“We have very few good examples to guide us,” said William G. Gale, a senior fellow at the Brookings Institution, the liberal-leaning research organization. “I don’t know of any convincing evidence that what has been proposed is going to be enough.”

In part because Mr. Obama wants and needs bipartisan support, the package is being shaped by political as well as economic imperatives, complicating the process by putting competing ideological approaches into the mix.

It includes $300 billion in temporary tax cuts for individuals and businesses, in part to attract Republican support. It includes a big expansion of safety-net programs like unemployment insurance, which Democrats say makes both economic and social sense. It includes more money for highways, schools and other public infrastructure; more money for “green” energy projects; and more money to help state governments pay for health care and education.

Republicans, as always, are advocating for more and broader tax cuts. But the evidence is ambiguous about whether tax cuts will really spur economic activity at a time when consumers and businesses alike are frozen in fear and reluctant to let go of their money.

The risk is that Mr. Obama and the Congress will weigh down their effort with measures that cost many billions of dollars but may not have much impact on economic activity.

Tax breaks, for example, usually produce less than $1 of stimulus for every dollar they cost, economists say. Spending on public construction projects, like highways and bridges, produces the most economic activity — but there is a limit to how many projects are “shovel-ready,” and even those take time to generate jobs and ripple through the economy.

Christina Romer, whom Mr. Obama has designated to be his chief economist, concluded in research she helped write in 1994 that interest-rate policy is the most powerful force in economic recoveries and that fiscal stimulus generally acts too slowly to be of much help in pulling the economy out of recessions, though associates said she now supports a big stimulus package if policy makers roll it out early enough in the recession.

The goal behind all those ideas is to jump-start economic activity by getting as much money as possible as quickly as possible into the hands of consumers and businesses, trying to make up for the falling demand in the private sector that is leading to higher unemployment. And although the package includes a big dose of tax cuts, it represents a big departure from President Bush’s playbook by relying heavily on direct government spending.

“This is not an intellectual exercise, and there’s no pride of authorship,” Mr. Obama told a news conference in Washington on Friday. “If members of Congress have good ideas, if they can identify a project for me that will create jobs in an efficient way — that does not hamper our ability to, over the long term, get control of our deficit; that is good for the economy — then I’m going to accept it.”

Mr. Obama’s aides said he did not intend to unveil a detailed formal proposal but rather to allow Congress to fill in the outline that he has proposed.

Given the recent scale of the downturn — the nation lost 1.5 million jobs in the last three months of 2008, and economic output during those months shrank by 6 percent compared with same period in 2007 — economists were highly uncertain about whether the economic plan would provide enough firepower. Adam Posen, the deputy director of the Peterson Institute for International Economics in Washington, said Mr. Obama’s plan could provide just the right boost — if it was carried out properly.

But as the Federal Reserve has been learning for months now, the biggest obstacle to economic activity right now is not a shortage of money. The real obstacle is pervasive fear, which has made banks reluctant to lend and companies reluctant to invest in expansion.

Alan J. Auerbach, an economist at the University of California, Berkeley, said the overall scale of the program looked “reasonable” at $800 billion over two years.

“It’s much bigger than anything that’s been tried in my lifetime, but this is scarier than anything we’ve seen in my lifetime,” Professor Auerbach said.

Left to their own devices, many Congressional Democrats would prefer to focus almost entirely on spending projects and avoid tax incentives.

“One thing we learned from the Depression is marginal, incentive changes don’t work very well when the economy is falling away from you very rapidly,” said Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee. “And that’s what’s occurring here.”

But Republicans have been adamant about the need for tax breaks, and Mr. Obama has made it clear he would like to bring as many members on board as possible.

Representative Paul D. Ryan, Republican of Wisconsin, said in an interview, “I really do believe that if you combine the evidence of history along with the psychological concerns about making investments in the economy today, the better bang for your buck is lower taxes that are certain and permanent and lasting.”

The Democratic plan would direct much of the stimulus money to low-income and middle-income families. That reflects both traditional Democratic concerns about helping lower-income households, as well as the view of economists who say that people with lower incomes are more likely to spend rather than save any money they receive from the government.

Mark M. Zandi, chief economist at Moody’s Economy.com, a forecasting firm, told a forum of House Democrats this week that the “bang for the buck” — the additional economic activity generated by each dollar of fiscal stimulus — was highest for increases in food and unemployment benefits. Each dollar of additional money for food stamps yields $1.73 in additional economic activity, Mr. Zandi estimated, and each extra dollar in unemployment benefits yields about $1.63.

By contrast, Mr. Zandi estimated, most tax cuts produce less than a dollar for each dollar of stimulus, especially if the tax cuts are temporary, because people save at least some of their extra money.

One of the few tax cuts that economists say can generate a positive bang for the buck is a reduction in payroll taxes for Social Security and Medicare.

Mr. Obama wants to offer a tax credit of $500 for individuals, and up to $1,000 for families, which they would receive through a temporary reduction in payroll tax withholdings. The idea, known as the Making Work Pay credit, was part of Mr. Obama’s economic platform during the presidential campaign. As originally envisioned, it would have been available to households with annual incomes as high as $200,000.

But economists said the tax credit could have drawbacks as an economic stimulus measure, mainly because people usually save part of the money or use it to pay down debt. That makes good sense from an individual’s standpoint but does nothing to increase economic activity.

Joel Slemrod, a professor of tax policy at the University of Michigan, said, “The research I’ve done on the 2001 and 2008 tax rebates suggests that the proportion of the rebates that went to spending was rather small, about one-third.”

After Congress approved Mr. Bush’s tax rebate to individuals and families last spring, economic activity jumped fleetingly during the summer, and then stalled out again in the fall.

Some Democratic officials were also skeptical.

“It’s not that rebates don’t work under normal conditions,” said one senior Democratic aide in the Senate. “It’s that current conditions are not normal and are not favorable to rebates or broad tax relief.”

President-elect Barack Obama, top, at George Mason University and his financial advisers, above from the left, Christina D. Romer, Timothy F. Geithner and Lawrence H. Summers.

Senate Democrats complained that major components of his plan were not bold enough and urged more focus on creating jobs and rebuilding the nation’s energy infrastructure rather than cutting taxes.

Just hours earlier, Mr. Obama called for speedy passage of the stimulus measure, warning that the recession “could linger for years” if Congress did not pass his plan within weeks.

Further complicating the picture, Democratic senators said Thursday that they would try to attach legislation to the package that would allow bankruptcy courts to modify home loans, a move Republicans have opposed.

Parallel to its work on the stimulus plan, the Obama team has also been considering how to use the second $350 billion of the bailout program approved by Congress. A transition team official said Thursday night that the new approach would give government officials broader range to provide relief on consumer loans for homes, automobiles and education, while also doing more to address foreclosures and the problems of municipalities and small businesses.

For his recovery plan, meanwhile, Mr. Obama has been assembling a package worth as much as $775 billion over two years to revive the sagging economy, using the plan to define his presidency even before it begins and to foreshadow his broader approach to governing.

While relying on traditionally liberal notions of using government spending to spur growth, he has also tried to adapt it for a new era with investment in clean energy and technology. And he is trying to balance all of that with tax breaks that appeal to Republicans.

But the broad support he has enjoyed so far for the basic concept is now being tested as the specifics become clearer. While conservatives criticize the high spending, and moderate Democrats express concern about the swelling deficit, liberals are pushing for even more money devoted to social programs, alternative-energy development and road, bridge and school construction.

David Axelrod, Mr. Obama’s senior adviser, said the president-elect’s team was not concerned by the emerging pockets of criticism of his plan.

“Obviously, it’s a big answer to a big problem and there are a lot of component parts to it,” Mr. Axelrod said in an interview after meeting with balky Senate Democrats. “These folks are not potted plants. They’re elected officials, and they’re doing their jobs.”

He added, “It’s a collective process, and we’re willing to listen to people’s ideas.”

Asked if they were willing to adopt people’s ideas, Mr. Axelrod said: “We’ll see. It depends on the idea.”

Mr. Axelrod’s comments came after a spirited meeting at the Capitol where he and two other Obama aides, Lawrence H. Summers, the incoming national economic adviser, and Philip Schiliro, tapped to be the chief White House lobbyist, heard lots of frustration from Democratic senators.

“There is only one thing we have got to do in the stimulus, and that is how can we create jobs,” said Senator Tom Harkin, Democrat of Iowa, as he left the meeting. “I am a little concerned by the way that Mr. Summers and others are going at this in that, to me, it still looks like a little more of this trickle-down, if we just put it in at the top, it’s going to trickle down. A number of people in there said, ‘Look, we have got to have programs that actually create jobs and put people to work.’ ”

Senator Kent Conrad, Democrat of North Dakota and chairman of the Budget Committee, said lawmakers and the incoming administration had differences over how to focus the huge federal spending in a recovery bill. “Investment, investment, investment has got to be the central focus: energy, roads, bridges, waterways, housing,” he said. “Job creation is Job One.”

Mr. Conrad, who described the meeting as extremely positive, said Mr. Summers ended it by telling the senators, “Message received, loud and clear.”

Several Democrats on the Finance Committee earlier in the day questioned the proposal to give tax credits worth $500 to individuals and $1,000 to married couples. Several senators said that initiative would provide a token sum of money, which taxpayers were likely to save, not spend.

Senator John F. Kerry, Democrat of Massachusetts, and others also criticized a proposal to give businesses a $3,000 tax credit for each new employee they hire, saying it was unlikely to influence business decisions. After meeting with Mr. Summers, Mr. Kerry said he expected adjustments to be made. “We are in a good dialogue,” he said. “I am very confident about some adjustments being made.”

The Democratic demands clash with those of Republicans who want more tax cuts and express doubts that heavy infrastructure spending would be the best way to stimulate the economy. “It’s very important as we go ahead that we find the right balance,” said Representative John A. Boehner of Ohio, the House Republican leader. “Yes, our economy needs help. But at the end of the day, how much debt are we going to pile on future generations?”

With the cascade of conflicting opinions, Mr. Obama’s allies pushed for quick passage. Representative Nancy Pelosi of California, the House speaker, said she would cancel the President’s Day recess in mid-February if lawmakers had not passed an economic plan by then. “If we don’t have a bill before the president’s recess, there will be no president’s recess,” she told reporters.

Mr. Obama reinforced that urgency in a speech at George Mason University in the Virginia suburbs of Washington. “For every day we wait or point fingers or drag our feet,” he said, “more Americans will lose their jobs, more families will lose their savings, more dreams will be deferred, and our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

The speech was his first since the election and indicated how fully he is stepping into the role of president when it comes to domestic issues even before his inauguration. His advisers have calculated that he cannot wait to begin a campaign to build public support and have mapped out a series of events to explain his economic approach, including booking him on the ABC program “This Week” on Sunday.

For the moment, the public remains strongly in Mr. Obama’s corner. The latest Gallup tracking poll this week showed that 65 percent express confidence in his leadership.

But Geoffrey Garin, a Democratic political strategist, said the Obama plan’s price tag is “an awfully big number that follows a financial bailout that’s strikingly unpopular with the public. Both of these things create a challenge to overcome, some nervousness on the Hill and among the public.”

Mr. Obama addressed that nervousness in his speech. “I understand that some might be skeptical of this plan,” he said. “Our government has already spent a good deal of money but we haven’t yet seen that translate into more jobs or higher incomes or renewed confidence in our economy.” But he said his plan “won’t just throw money at our problems. We’ll invest in what works.”

Known on the campaign trail for inspirational addresses, Mr. Obama on Thursday was sober and ominous, summoning the nation to meet a daunting task.

“Now, I don’t believe it’s too late to change course,” he said, “but it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years.”

Some Democrats said they were not sure that Congress and the Obama administration would ultimately see eye to eye. Mr. Harkin pointed to Mr. Obama’s speech earlier in the day to promote the economic recovery package and said the rhetoric did not match the dollars in the plan.

“Obama said today that he wanted to double renewable energy in three years, well we can do it,” Mr. Harkin said, but he added that spending to jump-start that initiative would have to be included in the stimulus.

“I just want to thank the president for hosting us,” the president-elect said, flanked by former President George H.W. Bush on one side and his son on the other.

Presidents Bill Clinton and Jimmy Carter, both smiling broadly, stood with them. “All the gentlemen here understand both the pressures and possibilities of this office,” Obama said. “For me to have the opportunity to get advice, good counsel and fellowship with these individuals is extraordinary.”

In a swift photo opportunity, the current president wished Obama well before all five men headed to a private lunch that lasted about 90 minutes.

“I want to thank the president-elect for joining the ex-presidents for lunch,” Bush said, even though he’s not quite a member of that club yet.

“One message that I have and I think we all share is that we want you to succeed. Whether we’re Democrat or Republican we care deeply about this country,” Bush said. “All of us who have served in this office understand that the office itself transcends the individual.”

He added: “We wish you all the very best, and so does the country.”

Bush and Obama also met privately for roughly 30 minutes. That one-on-one meeting, coming just 13 days before Obama’s inauguration, likely focused on grim current events, with war in the Gaza Strip and the economy in a recession.

It had been an entire generation since the nation last saw the tableau of every U.S. president together at the White House. The presidents have gathered at other locations over the years, most recently for the funeral of President Gerald Ford in Washington.

Obama suggested holding the gathering when he met Bush at the White House in November.

All parties seemed determined to keep details of what was discussed confidential.

Describing the lunch only in broad terms after it ended, Obama press secretary Robert Gibbs said: “The president and the former presidents had helpful advice on managing the office, as well as thoughts on the critical issues facing the country right now. The president-elect is anxious to stay in touch with all of them in the coming years.”

Obama has sought to strike a balance as the power curve bends his way. Before taking office, he is publicly rallying Congress behind a massive economic stimulus plan. But he remains deferential to Bush on foreign affairs and will not comment on Israel’s deadly conflict with Hamas on grounds that doing so would be dangerous for the United States.

“You can’t have two administrations running foreign policy at the same time,” Obama said at a news conference earlier in the day.

Vice President-elect Joe Biden also held a private meeting with former President Bush at the White House on Wednesday.

‘We’ll just share war stories’
Considering the bond they hold in history, U.S. presidents get together infrequently, particularly at the White House. And when they are in the same room, it is usually for a milestone or somber moment — a funeral of a world leader, an opening of a presidential library, a commemoration of history.

Not this time.

“It’s going to be an interesting lunch,” Bush told an interviewer recently. When asked what the five men would talk about, Bush said: “I don’t know. I’m sure (Obama’s) going to ask us all questions, I would guess. If not, we’ll just share war stories.”

They have plenty of those, political and otherwise. Their paths to power have long been entwined.

Carter lost the presidency to Ronald Reagan, whose running mate was George H.W. Bush. Bush later won election but lost after one term to Clinton. Then Bush’s son, the current president, defeated Clinton’s vice president, Al Gore. And this year Obama won after long linking his opponent, John McCain, to Bush.

Campaign rivalries
Those campaign rivalries tend to soften over time as presidents leave the White House and try to adopt the role of statesmen — although Carter, even as an ex-president, has had some critical public words for the current president’s foreign policy.

All five men were to pose for a group photo in the Rose Garden, but a January rainstorm scrapped that plan. So the noontime photo opportunity — the media’s only glimpse of them — was moved indoors to the Oval Office.

The presidents and Obama were having lunch in a private dining room off the Oval Office, where no one else was expected to join them.

“All of us would love to be flies on the wall and listening to that conversation,” White House press secretary Dana Perino said.  The rare presidential joint appearance also offered Bush, who ends his two terms deeply unpopular, to again show he is rising above the fray.

The last White House event to draw the former presidents was a November 2000 celebration in honor of the White House’s 200th anniversary. But one of the former presidents, Ronald Reagan, who was afflicted with Alzheimer’s, was unable to attend.

All the presidents were last at the White House in 1981: Richard Nixon, Ford, Carter and Reagan, who was president then. The three former presidents were there before leaving as part of the U.S. delegation to the funeral of Egypt’s Anwar Sadat, who had been assassinated.

President-elect Barack Obama met with his top economic advisers for a second straight day in Washington.

Mr. Obama sought to distinguish between the need to run what is likely to be record-setting deficits for several years and the necessity to begin bringing them down markedly in subsequent years. Even as he prepares a stimulus plan that is expected to total nearly $800 billion in new spending and tax cuts over the next two years, he said he would make sure the money was wisely spent, and he pledged to work with Congress to enact spending controls and efficiency measures throughout the federal budget.

“We’re not going to be able to expect the American people to support this critical effort unless we take extraordinary steps to ensure that the investments are made wisely and managed well,” Mr. Obama said, speaking about the dire fiscal outlook after meeting with his economic team for a second straight day.

In his most explicit language on the subject since winning the election, Mr. Obama sought to reassure lawmakers and the financial markets that he was aware of the long-term dangers of running huge deficits and would take steps to limit and eventually reduce them.

Big deficits force the government to borrow more money, saddling future generations with large financial burdens and leaving the nation reliant on foreign governments and other big investors to lend cash. The problem is even more acute now because credit markets, which in recent months have made it much harder and more expensive for businesses and individuals to borrow, could be further strained by financing a huge government deficit.

On Wednesday, Mr. Obama plans to name a chief performance officer with the task of finding government efficiencies. He has chosen Nancy Killefer, who is director of McKinsey & Company, a management consulting firm, and was an assistant secretary of the Treasury in the Clinton administration. The Congressional Budget Office will also release its latest budget estimates, providing the first official predictions of the shortfalls tied to the economic slowdown and the fallen financial markets.

Mr. Obama has made the economy virtually the sole public focus of his first full week in Washington since winning the election. He called on Tuesday for the creation of an economic recovery oversight board that would include outside advisers to monitor spending — and find abuses — of the economic stimulus plan. He also said earmarks for lawmakers’ special projects would be banned from the bill.

“When the American people spoke last November, they were demanding change — change in policies that helped deliver the worst economic crisis that we’ve see since the Great Depression,” Mr. Obama told reporters at his transition offices. He added, “They were demanding that we restore a sense of responsibility and prudence to how we run our government.”

But Republicans and some fiscally conservative Democrats have expressed concern that the need for a substantial economic stimulus plan could sweep away for years any serious effort to bring government spending into line with its revenues.

While economists almost universally support running large deficits to combat the kind of steep recession the country is grappling with now, they are increasingly expressing alarm at the prospect of sustained fiscal imbalances heading into a period in which the aging of the population will create huge budgetary strains because of the growing costs of the Medicare and Social Security programs.

Still, the deficit now seems likely to be so large that it will inevitably constrain Mr. Obama’s administration to some degree. At a minimum, it seems sure to force him to walk a line between maintaining the confidence of the financial markets, which could drive interest rates up sharply if they doubt his will or ability to improve the government’s financial condition in the long run, and various constituencies that will be pressing him to make good on his campaign promises.

Mr. Obama has so far not backed away from any of the big initiatives he ran on, including his plan to expand health insurance. On that issue, as on others, he has begun making a case that the economically prudent course is to invest now in addressing the nation’s big challenges rather than avoiding them in the name of saving money in the short run.

Mr. Obama was not specific about the size of the deficit he expects, beyond his reference to “a trillion-dollar deficit or close to a trillion-dollar deficit” for the fiscal year that ends Sept. 30. Aides said later that the estimate — in line with what economists have been anticipating given the economy’s rapid deterioration — did not include the costs of the proposed stimulus package, which could add hundreds of billions of dollars more to the red ink.

At $1 trillion, the deficit would not only shatter the largest previous shortfall in dollar terms — $455 billion last year — but it could also exceed the post-World War II-era record by the measure more meaningful in economic terms, the deficit as a percentage of total economic activity.

Diane Rogers, chief economist at the Concord Coalition, a nonpartisan organization that supports fiscal discipline, estimated that the deficit this year would hit 7 percent of the gross domestic product. The largest previous record in those terms was in 1983, when it hit 6 percent. Mr. Obama declined to say on Tuesday whether the budget that his administration submits to Congress in February would be larger than the $3.1 trillion budget that President Bush submitted for the current fiscal year. He also did not offer any specific examples of how spending could be controlled, saying only that his advisers had been scouring the budget looking for programs that could be eliminated.

“I’m going to be willing to make some very difficult choices in how we get a handle on his deficit,” Mr. Obama said. “That’s what the American people are looking for and, you know, what we intended to do this year.”

But the short-term budget shortfalls are big enough to pose serious headaches in themselves, especially if bond investors start demanding higher interest rates.

In just the first three months of the 2009 fiscal year, which began on Oct. 1, the government spent $408 billion more than it took in. About one-third of that shortfall stemmed from the Treasury Department’s rescue program of injecting capital into banks, which the government will book as an “investment” rather than “spending.”

The recession itself will add hundreds of billions of dollars to the deficit. Even before Congress adds any new stimulus measures, higher outlays will climb for existing unemployment benefits, food stamps and other social programs. Tax revenues will fall because of rising unemployment, falling corporate profits and huge investment losses in the stock and bond markets. Mr. Obama’s stimulus program could add another $400 billion in each of the next two years.

“One thing investors have to be thinking is, what’s the exit strategy? How do we unwind this stuff?” said Robert Bixby, director of the Concord Coalition. “I would analogize it to what the government is doing with the auto companies. Congress said, we’ll give you the money but you have to show us a plan for sustainability.”

Mr. Bixby added, “Now the government is in the same position of the auto companies, but they haven’t come up with any plan for sustainability.”

As the latest budget estimates are released on Wednesday, the good news, at least for the moment, is that the Treasury’s borrowing costs are as almost as low as they have ever been. Short-term Treasury rates are hovering just above zero, but the rates on 10-year Treasury bonds are about 2.5 percent.

The job was the last unfilled major post for Mr. Obama, who has criticized the agency for using interrogation methods he characterized as torture. Democratic officials said Mr. Obama had selected Mr. Panetta for his managerial skills, his bipartisan standing, and the foreign policy and budget experience he gained under President Bill Clinton.

Mr. Panetta has himself been a sharp critic of the agency’s interrogation practices. Some Democrats expressed strong support for the choice, with Harry Reid of Nevada, the Senate majority leader, describing him as “one of the finest public servants I have ever served with and dealt with since he left the White House.”

But Mr. Panetta, 70, was also widely described as a surprising and unusual choice to head the C.I.A., an agency that has been notoriously unwelcoming to previous directors perceived as outsiders.

News of the decision was disclosed by Democratic officials who insisted on anonymity, and neither Mr. Obama nor his transition office has commented publicly about it.

Among the lawmakers who expressed skepticism about the choice was Senator Dianne Feinstein, Democrat of California and the new chairwoman of the Senate Intelligence Committee. Ms. Feinstein, who would oversee any confirmation hearing for Mr. Panetta, issued a statement that signaled clear disapproval and said she had not been notified about the choice.

“My position has consistently been that I believe the agency is best served by having an intelligence professional in charge at this time,” she said.

A second top Democrat, Senator John D. Rockefeller IV of West Virginia, the departing chairman of the Intelligence Committee, shares Ms. Feinstein’s concerns, Democratic Congressional aides said.

Ms. Feinstein’s Republican counterpart on the Intelligence Committee, Senator Christopher S. Bond of Missouri, said he would be “looking hard at Panetta’s intelligence expertise and qualifications.”

It was not clear whether the skepticism would become an obstacle to the nomination of Mr. Panetta, who would succeed Michael V. Hayden, a retired Air Force general with decades of intelligence experience.

Senator Ron Wyden, an Oregon Democrat who is a member of the intelligence committee, called Mr. Panetta a “strong choice” who “has the skills to usher in a new era of accountability at the nation’s premier intelligence agency.”

The choice of Mr. Panetta comes nearly two weeks after Mr. Obama had otherwise wrapped up his major personnel moves. It appears to reflect the difficulty Mr. Obama has encountered in finding a candidate who is capable of taking charge of the troubled agency but not tainted by links to the interrogation and detention program run by the C.I.A. under President Bush.

Aides have said that Mr. Obama had originally hoped to select a C.I.A. head with extensive field experience, especially in combating terrorist networks. But his first choice for the job, John O. Brennan, had to withdraw his name amid criticism over his alleged role in the formation of the agency’s detention and interrogation program after the Sept. 11 attacks.

As President Clinton’s chief of staff for two and a half years, Mr. Panetta regularly attended daily intelligence briefings in the Oval Office, and he has a reputation in Washington as a skilled manager and power broker with a strong background in budget issues. But he has little direct intelligence experience, and did not serve on the House Intelligence Committee during his 16 years in Congress.

In disclosing the selection, Democratic officials said that Mr. Panetta’s gravitas and ties to Mr. Obama would give the C.I.A. a powerful voice within the administration, particularly in bureaucratic jockeying with the Pentagon, which has a much bigger budget and more bureaucratic clout.

If confirmed by the Senate, Mr. Panetta would take control of the agency most directly responsible for hunting senior leaders of Al Qaeda around the word. He would also become the oldest director in the agency’s history, as well as the second politician and former lawmaker in recent years to take it over. Porter J. Goss, the former Florida congressman, ran the C.I.A between 2004 and 2006, though Mr. Goss was himself a former C.I.A. operative and the longtime chairman of the House intelligence committee.

Among the outsiders who ran into trouble in the past after being installed as C.I.A. director were Stansfield M. Turner, a retired Navy admiral selected by President Jimmy Carter, and John M. Deutch, a physicist and former deputy defense secretary who was chosen by Mr. Clinton.

Mr. Deutch, now a professor at the Massachusetts Institute of Technology, said there would have been good reasons for Mr. Obama to select a C.I.A. veteran to lead the agency. But Mr. Deutch also cited the examples of John McCone in the Kennedy administration and George Bush in the Nixon administration as cases in which outsiders became “two of the agency’s most successful directors.”

Mr. Deutch said that Mr. Panetta and Dennis Blair, a retired admiral who has been selected by Mr. Obama to become director of national intelligence, were an “absolutely brilliant team.” He called Mr. Panetta a “talented and experienced manager of government and a widely respected person with Congress.”

An early test in Mr. Panetta’s tenure at the C.I.A. would be to determine the future of the agency’s detention and interrogation program.

“Those who support torture may believe that we can abuse captives in certain select circumstances and still be true to our values,” he wrote in The Washington Monthly earlier this year. “But that is a false compromise.” He also wrote: “We cannot and we must not use torture under any circumstances. We are better than that.”  Some human rights groups praised the choice. Elisa Massimino, executive director of Human Rights First, said it was important that the new C.I.A. director be someone “who recognizes that torture is illegal, immoral, dangerous and counterproductive.”

But some intelligence experts called the selection underwhelming, given the important role the C.I.A. plays in disrupting terrorist attacks against the United States.

“It’s a puzzling choice and a high-risk choice,” said Amy Zegart, a professor at the University of California, Los Angeles, who has written extensively on intelligence matters.

“The best way to change intelligence policies from the Bush administration responsibly is to pick someone intimately familiar with them,” Ms. Zegart said. “This is intelligence, not tax or transportation policy. You can’t hit the ground running by reading briefing books and asking smart questions.”

As C.I.A. director, Mr. Panetta would report to Mr. Blair. Neither choice has yet been publicly announced.

The C.I.A. has settled down from years of turmoil after the Sept. 11 attacks and fallout from flawed intelligence assessments about Iraq’s weapons of mass destruction programs. But the agency’s role among the constellation of spy agencies operating under the director of national intelligence remains ill-defined.

Mr. Panetta, a native of Monterey, Calif., served eight terms in the House before becoming the chief budget adviser to Mr. Clinton in 1993 and taking over as Mr. Clinton’s chief of staff from July 1994 to January 1997.

Lee H. Hamilton, the former chairman of the House Intelligence Committee and a co-chairman of the Iraq Study Group, of which Mr. Panetta was a member, said Mr. Panetta’s good relationship with Mr. Obama could translate into influence within the broader intelligence community.

Mr. Hamilton said Mr. Panetta could make up for a lack of direct intelligence experience by picking a strong group of aides at the agency.

“You have to look at the team,” he said. “You clearly will want intelligence professionals at the highest levels of the C.I.A.”

The new administration’s brief, which is due Feb. 20, has the potential to hearten or infuriate Mr. Obama’s supporters, many of whom are looking to him for stark disavowals of the Bush administration’s legal positions on the detention and interrogation of so-called enemy combatants held at Navy facilities on the American mainland or at Guantánamo Bay, Cuba.

During the campaign, Mr. Obama made broad statements criticizing the Bush administration’s assertions of executive power. But now he must address a specific case, that of Ali al-Marri, a Qatari student who was arrested in Peoria, Ill., in December 2001. The Bush administration says Mr. Marri is a sleeper agent for Al Qaeda, and it is holding him without charges at the Navy brig in Charleston, S.C. He is the only person currently held as an enemy combatant on the mainland, but the legal principles established in his case are likely to affect the roughly 250 prisoners at Guantánamo.

Many legal experts say that all of the new administration’s options in Mr. Marri’s case are perilous. Intelligence officials say he is exceptionally dangerous, making deportation problematic.

Trying him on criminal charges could be difficult, too, in part because some of the evidence against him may have been obtained through torture and would not be admissible.

And staying the course in the Marri case would outrage civil libertarians.

“If they adopt the Bush administration position, or some version of it,” said Brandt Goldstein, a professor at New York Law School, “it is going to be a moment of profound disappointment for everyone in the legal community and Americans generally who believe that the Bush administration has tried to turn the presidency into a monarchy.”

In a statement, a spokeswoman for Mr. Obama, Brooke Anderson, said he “will make decisions about how to handle detainees as president when his full national security and legal teams are in place.”

There are other significant cases on the Supreme Court’s docket — including ones concerning indecency on the airwaves, religious displays, voting rights and the possible pre-emption of state injury suits by federal law — but specialists say a midcourse correction is most likely in the enemy combatant case, Al-Marri v. Pucciarelli, No. 08-368.

Charles Fried, who was solicitor general in the Reagan administration, said such changes should be undertaken “reluctantly and rarely” and only “for sufficient reason in a sufficiently urgent case.”

From the new administration’s perspective, Mr. Marri’s case may meet that standard.

A year ago, Mr. Obama answered a detailed questionnaire concerning his views on presidential power from The Boston Globe. “I reject the Bush administration’s claim,” Mr. Obama said, “that the president has plenary authority under the Constitution to detain U.S. citizens without charges as unlawful enemy combatants.”

That sounds vigorous and categorical. But applying this view to Mr. Marri’s case is not that simple. Although he was in the United States legally, he was not an American citizen. In addition, a 2001 Congressional authorization to use military force arguably gave the president the authority that Mr. Obama has said is not conferred by the Constitution alone.

Still, Andrew C. McCarthy, a former federal prosecutor who has generally supported the Bush administration’s approach to fighting terrorism, said Mr. Obama’s hands are tied. He cannot, Mr. McCarthy said, continue to maintain that Mr. Marri’s detention is lawful.

“I don’t think politically for him that’s a viable option,” Mr. McCarthy said. “Legally, it’s perfectly viable.”

There is precedent for reversing course between campaign and courthouse. When Bill Clinton was running for president in 1992, he was vehement in his opposition to the first Bush administration’s policy of intercepting Haitian refugees at sea and returning them without asylum hearings.

By the time he took office, though, Mr. Clinton had changed his mind, instructing the Justice Department to defend the policy in the Supreme Court, which upheld it in 1993.

Mr. Obama’s supporters are hoping for a different approach, one that will ensure that the precedents set during the Bush administration do not take root.

“The agenda for the Obama administration in dealing with the Bush administration’s assault on the rule of law,” said Eric M. Freedman, a law professor at Hofstra University and a member of the Marri legal team, “should be to plow the site with both intellectual and political salt.”

In 1993, Mr. Clinton said that practical reality trumped legal theory. In the Marri case, too, the practical alternatives to military detention may strike the Obama administration as unpalatable.

One possibility is to deport Mr. Marri to Qatar, but Bush administration officials say that would be an enormous mistake.

“Al-Marri must be detained,” Jeffrey N. Rapp, a defense intelligence official wrote in a court filing in 2004, “to prevent him from aiding Al Qaeda in its efforts to attack the United States, its armed forces, other governmental personnel, or citizens.”

Mr. Marri’s lawyers would be delighted to see their client freed, but they are also eager to vacate a decision of the federal appeals court in Richmond, Va., in July upholding the president’s authority to detain Mr. Marri subject to a court hearing on whether he was properly designated an enemy combatant.

Jonathan Hafetz, a lawyer with the American Civil Liberties Union who represents Mr. Marri, emphasized both points.

“If, as President-elect Obama has pledged, the rule of law in America is to be restored,” Mr. Hafetz said, “then Mr. al-Marri’s military detention must cease and the lower court’s ruling upholding the president’s power to order the military to seize legal residents and American citizens from their homes and imprison them without charge, must be overturned.”

Another alternative for the new administration is to prosecute Mr. Marri as a criminal. But it is not clear that there is admissible evidence against him.

When Mr. Marri was arrested, in December 2001, he was charged with garden-variety crimes: credit card fraud and, later, lying to federal agents and financial institutions, and identity theft. But when Mr. Bush moved Mr. Marri from the criminal system to military detention in June 2003, the government agreed to dismiss those charges with prejudice, meaning they cannot be refiled.

The more serious accusations recounted in Mr. Rapp’s statement are attributed partly to Khalid Shaikh Mohammed, who is believed to be the chief architect of the Sept. 11 attacks and who was captured in early 2003. The Central Intelligence Agency has said Mr. Mohammed was subjected to waterboarding, and information obtained from him may therefore not be admissible in court. Mr. McCarthy, the former prosecutor, said he hoped the new administration is sifting through its options with exceptional care.

“If they can’t try him in federal court and assuming he poses the severe risk the Bush administration suggests he poses, is there some room to detain him under the immigration system?” Mr. McCarthy asked. “If there is not a Plan B, we have a disaster that transcends al-Marri,” he added, referring to the larger question of what to do with the prisoners at Guantánamo Bay.

A second case concerning detainees is moving even faster than Mr. Marri’s. Last month, the Supreme Court ordered a federal appeals court to take a fresh look at a case brought by four former prisoners at Guantánamo Bay who say they were tortured. Acting fast, the appeals court initially ordered briefing to be completed by the Friday before Inauguration Day.

Depending on how you look at it, the appeals court was being exceptionally efficient, uninterested in the new administration’s views or doing it a favor by not forcing it to take an immediate position on whether provisions of the Bill of Rights and a federal law guaranteeing religious freedom apply to detainees held at Guantánamo Bay.

Eric L. Lewis, a lawyer for the former prisoners, asked the court to slow things down, a request the Bush Justice Department opposed. But the appeals court granted Mr. Lewis’s request on Friday, and the first filings are now due on Jan. 26 — the Monday after Inauguration Day.

WASHINGTON — In March 2005, a low-key Princeton economist who had become a Federal Reserve governor coined a novel theory to explain the growing tendency of Americans to borrow from foreigners, particularly the Chinese, to finance their heavy spending.

American trade and budget deficits have grown worse and Treasury Secretary Henry Paulson Jr., with President Hu Jintao of China, has not been able to allay the problem.

The problem, he said, was not that Americans spend too much, but that foreigners save too much. The Chinese have piled up so much excess savings that they lend money to the United States at low rates, underwriting American consumption.

This colossal credit cycle could not last forever, he said. But in a global economy, the transfer of Chinese money to America was a market phenomenon that would take years, even a decade, to work itself out. For now, he said, “we probably have little choice except to be patient.”

Today, the dependence of the United States on Chinese money looks less benign. And the economist who proposed the theory, Ben S. Bernanke, is dealing with the consequences, having been promoted to chairman of the Fed in 2006, as these cross-border money flows were reaching stratospheric levels.

In the past decade, China has invested upward of $1 trillion, mostly earnings from manufacturing exports, into American government bonds and government-backed mortgage debt. That has lowered interest rates and helped fuel a historic consumption binge and housing bubble in the United States.

China, some economists say, lulled American consumers, and their leaders, into complacency about their spendthrift ways.

“This was a blinking red light,” said Kenneth S. Rogoff, a professor of economics at Harvard and a former chief economist at the International Monetary Fund. “We should have reacted to it.”

In hindsight, many economists say, the United States should have recognized that borrowing from abroad for consumption and deficit spending at home was not a formula for economic success. Even as that weakness is becoming more widely recognized, however, the United States is likely to be more addicted than ever to foreign creditors to finance record government spending to revive the broken economy.

To be sure, there were few ready remedies. Some critics argue that the United States could have pushed Beijing harder to abandon its policy of keeping the value of its currency weak — a policy that made its exports less expensive and helped turn it into the world’s leading manufacturing power. If China had allowed its currency to float according to market demand in the past decade, its export growth probably would have moderated. And it would not have acquired the same vast hoard of dollars to invest abroad.

Others say the Federal Reserve and the Treasury Department should have seen the Chinese lending for what it was: a giant stimulus to the American economy, not unlike interest rate cuts by the Fed. These critics say the Fed under Alan Greenspan contributed to the creation of the housing bubble by leaving interest rates too low for too long, even as Chinese investment further stoked an easy-money economy. The Fed should have cut interest rates less in the middle of this decade, they say, and started raising them sooner, to help reduce speculation in real estate.

Today, with the wreckage around him, Mr. Bernanke said he regretted that more was not done to regulate financial institutions and mortgage providers, which might have prevented the flood of investment, including that from China, from being so badly used. But the Fed’s role in regulation is limited to banks. And stricter regulation by itself would not have been enough, he insisted.

“Achieving a better balance of international capital flows early on could have significantly reduced the risks to the financial system,” Mr. Bernanke said in an interview in his office overlooking the Washington Mall.

“However,” he continued, “this could only have been done through international cooperation, not by the United States alone. The problem was recognized, but sufficient international cooperation was not forthcoming.”

The inaction was because of a range of factors, political and economic. By the yardsticks that appeared to matter most — prosperity and growth — the relationship between China and the United States also seemed to be paying off for both countries. Neither had a strong incentive to break an addiction: China to strong export growth and financial stability; the United States to cheap imports and low-cost foreign loans.

In Washington, China was treated as a threat by some people, but mostly because it lured away manufacturing jobs. Others argued that China’s heavy lending to this country was risky because Chinese leaders could decide to withdraw money at a moment’s notice, creating a panicky run on the dollar.

Mr. Bernanke viewed such international investment flows through a different lens. He argued that Chinese invested savings abroad because consumers in China did not have enough confidence to spend. Changing that situation would take years, and did not amount to a pressing problem for the Americans.  “The global savings glut story did us a collective disservice,” said Edwin M. Truman, a former Fed and Treasury official. “It created the idea that the world was doing it to us and we couldn’t do anything about it.”

But Mr. Bernanke’s theory fit the prevailing hands-off, pro-market ideology of recent years. Mr. Greenspan and the Bush administration treated the record American trade deficit and heavy foreign borrowing as an abstract threat, not an urgent problem.

Mr. Bernanke, after he took charge of the Fed, warned that the imbalances between the countries were growing more serious. By then, however, it was too late to do much about them. And the White House still regarded imbalances as an arcane subject best left to economists.

By itself, money from China is not a bad thing. As American officials like to note, it speaks to the attractiveness of the United States as a destination for foreign investment. In the 19th century, the United States built its railroads with capital borrowed from the British.

In the past decade, China arguably enabled an American boom. Low-cost Chinese goods helped keep a lid on inflation, while the flood of Chinese investment helped the government finance mortgages and a public debt of close to $11 trillion.

But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.

“Nobody wanted to get off this drug,” said Senator Lindsey Graham, the South Carolina Republican who pushed legislation to punish China by imposing stiff tariffs. “Their drug was an endless line of customers for made-in-China products. Our drug was the Chinese products and cash.”

Mr. Graham said he understood the addiction: he was speaking by phone from a Wal-Mart store in Anderson, S.C., where he was Christmas shopping in aisles lined with items from China.

A New Economic Dance

The United States has been here before. In the 1980s, it ran heavy trade deficits with Japan, which recycled some of its trading profits into American government bonds.

At that time, the deficits were viewed as a grave threat to America’s economic might. Action took the form of a 1985 agreement known as the Plaza Accord. The world’s major economies intervened in currency markets to drive down the value of the dollar and drive up the Japanese yen.

The arrangement did slow the growth of the trade deficit for a time. But economists blamed the sharp revaluation of the Japanese yen for halting Japan’s rapid growth. The lesson of the Plaza Accord was not lost on China, which at that time was just emerging as an export power.

China tied itself even more tightly to the United States than did Japan. In 1995, it devalued its currency and set a firm exchange rate of roughly 8.3 to the dollar, a level that remained fixed for a decade.

During the Asian financial crisis of 1997-98, China clung firmly to its currency policy, earning praise from the Clinton administration for helping check the spiral of devaluation sweeping Asia. Its low wages attracted hundreds of billions of dollars in foreign investment.

By the early part of this decade, the United States was importing huge amounts of Chinese-made goods — toys, shoes, flat-screen televisions and auto parts — while selling much less to China in return.

“For consumers, this was a net benefit because of the availability of cheaper goods,” said Laurence H. Meyer, a former Fed governor. “There’s no question that China put downward pressure on inflation rates.”

But in classical economics, that trade gap could not have persisted for long without bankrupting the American economy. Except that China recycled its trade profits right back into the United States.

It did so to protect its own interests. China kept its banks under tight state control and its currency on a short leash to ensure financial stability. It required companies and individuals to save in the state-run banking system most foreign currency — primarily dollars — that they earned from foreign trade and investment.

As foreign trade surged, this hoard of dollars became enormous. In 2000, the reserves were less than $200 billion; today they are about $2 trillion.

Chinese leaders chose to park the bulk of that in safe securities backed by the American government, including Treasury bonds and the debt of Fannie Mae and Freddie Mac, which had implicit government backing.  This not only allowed the United States to continue to finance its trade deficit, but, by creating greater demand for United States securities, it also helped push interest rates below where they would otherwise have been. For years, China’s government was eager to buy American debt at yields many in the private sector felt were too low.

This financial and trade embrace between the United States and China grew so tight that Niall Ferguson, a financial historian, has dubbed the two countries Chimerica.

‘Tiptoeing’ Around a Partner

Being attached at the hip was not entirely comfortable for either side, though for widely differing reasons.

In the United States, more people worried about cheap Chinese goods than cheap Chinese loans. By 2003, China’s trade surplus with the United States was ballooning, and lawmakers in Congress were restive. Senator Graham and Senator Charles E. Schumer, Democrat of New York, introduced a bill threatening to impose a 27 percent duty on Chinese goods.

“We had a moment where we caught everyone’s attention: the White House and China,” Mr. Graham recalled.

At the People’s Bank of China, the central bank, a consensus was also emerging in late 2004: China should break its tight link to the dollar, which would make its exports more expensive. Yu Yongding, a leading economic adviser, pressed the case. The American trade and budget deficits were not sustainable, he warned. China was wrong to keep its currency artificially depressed and depend too much on selling cheap goods.

Proponents of revaluation in China argued that the country’s currency policies denied the fruits of prosperity to Chinese consumers. Beijing was investing their savings in low-yielding American government securities. And with a weak currency, they said, Chinese could not afford many imported goods.

The central bank’s English-speaking governor, Zhou Xiaochuan, was among those who favored a sizable revaluation.

But when Beijing acted to amend its currency policy in 2005, under heavy pressure from Congress and the White House, it moved cautiously. The renminbi was allowed to climb only 2 percent. The Communist Party opted for only incremental adjustments to its economic model after a decade of fast growth. Little changed: China’s exports kept soaring and investment poured into steel mills and garment factories.

But American officials eased the pressure. They decided to put more emphasis on urging Chinese consumers to spend more of their savings, which they hoped would eventually bring the two economies into better balance. On a tour of China, John W. Snow, the Treasury secretary at the time, even urged the Chinese to start using credit cards.

China kicked off its own campaign to encourage domestic consumption, which it hoped would provide a new source. But Chinese save with the same zeal that, until recently, Americans spent. Shorn of the social safety net of the old Communist state, they squirrel away money to pay for hospital visits, housing or retirement. This accounts for the savings glut identified by Mr. Bernanke.

Privately, Chinese officials confided to visiting Americans that the effort was not achieving much.

“It is sometimes hard to change successful models,” said Robert B. Zoellick, who negotiated with the Chinese as a deputy secretary of state. “It is prototypically American to say, ‘This worked well, but now you’ve got to change it.’ ”

In Washington, some critics say too little was done. A former Treasury official, Timothy D. Adams, tried to get the I.M.F. to act as a watchdog for currency manipulation by China, which would have subjected Beijing to more global pressure.

Yet when Mr. Snow was succeeded as Treasury secretary by Henry M. Paulson Jr. in 2006, the I.M.F. was sidelined, according to several officials, and Mr. Paulson took command of China policy.

He was not shy about his credentials. As an investment banker with Goldman Sachs, Mr. Paulson made 70 trips to China. In his office hangs a watercolor depicting the hometown of Zhu Rongji, a forceful former prime minister.

“I pushed very hard on currency because I believed it was important for China to get to a market-determined currency,” Mr. Paulson said in an interview. But he conceded he did not get what he wanted.

In late 2006, Mr. Paulson invited Mr. Bernanke to accompany him to Beijing. Mr. Bernanke used the occasion to deliver a blunt speech to the Chinese Academy of Social Sciences, in which he advised the Chinese to reorient their economy and revalue their currency.

At the last minute, however, Mr. Bernanke deleted a reference to the exchange rate being an “effective subsidy” for Chinese exports, out of fear that it could be used as a pretext for a trade lawsuit against China.

Critics detected a pattern. They noted that in its twice-yearly reports to Congress about trading partners, the Treasury Department had never branded China a currency manipulator.

“We’re tiptoeing around, desperately trying not to irritate or offend the Chinese,” said Thea M. Lee, public policy director of the A.F.L.-C.I.O. “But to get concrete results, you have to be confrontational.”

An Embrace That Won’t Let Go

For China, too, this crisis has been a time of reckoning. Americans are buying fewer Chinese DVD players and microwave ovens. Trade is collapsing, and thousands of workers are losing their jobs. Chinese leaders are terrified of social unrest.

Having allowed the renminbi to rise a little after 2005, the Chinese government is now under intense pressure domestically to reverse course and depreciate it. China’s fortunes remain tethered to those of the United States. And the reverse is equally true.

In a glassed-in room in a nondescript office building in Washington, the Treasury conducts nearly daily auctions of billions of dollars’ worth of government bonds. An old Army helmet sits on a shelf: as a lark, Treasury officials have been known to strap it on while they monitor incoming bids.

For the past five years, China has been one of the most prolific bidders. It holds $652 billion in Treasury debt, up from $459 billion a year ago. Add in its Fannie Mae bonds and other holdings, and analysts figure China owns $1 of every $10 of America’s public debt.

The Treasury is conducting more auctions than ever to finance its $700 billion bailout of the banks. Still more will be needed to pay for the incoming Obama administration’s stimulus package. The United States, economists say, will depend on the Chinese to keep buying that debt, perpetuating the American habit.

Even so, Mr. Paulson said he viewed the debate over global imbalances as hopelessly academic. He expressed doubt that Mr. Bernanke or anyone else could have solved the problem as it was germinating.

“One lesson that I have clearly learned,” said Mr. Paulson, sitting beneath his Chinese watercolor. “You don’t get dramatic change, or reform, or action unless there is a crisis.”

U.S. officials describe the proposal as a “community-based” security effort.

U.S. soldiers patrol near Bagram Air Base in Afghanistan on Wednesday.

The main job of the local units is to be an “early warning system” and be armed mainly for defensive operations, a U.S. military official said.

Participants will get uniforms so they can be readily identified, officials said.

The first phase of the program is expected to begin next year in Wardak province, where the Taliban have overrun many local government institutions.

For the United States, the most sensitive part of the proposal will be the use of American military funds to purchase small arms, most likely AK-47 rifles, that will be given to local Afghans, according to a U.S. military official.

U.S. commanders acknowledge concerns that arming local groups is risky, as it could lead to new armed conflicts between tribes, putting American troops in the middle of unexpected firefights.

The Afghan government will select men for the new security program. It will train them and technically arm them, although the funds will come from the U.S. military.

The Afghans will be responsible for ensuring the loyalty of people in the program, but the United States will oversee the effort and collect biometric information, such as eyeprints and fingerprints, on all participants, according to the U.S. military official.

U.S. officials are emphasizing that because of tribal diversity, the Afghan program differs from the Awakening Councils in Iraq, which include tens of thousands of Sunni gunmen and was credited with helping reduce violence there.

In recent interviews, President Bush and Vice President Dick Cheney have expressed divergent views, especially on foreign policy.

Mr. Bush defends his decisions as necessary to keep the nation safe, yet sounds reflective, even chastened. He has expressed regrets about not achieving an overhaul of immigration laws and not changing the partisan tone in Washington. And the man who got tangled up in a question about whether he had made any mistakes — he could not come up with one in 2004 — recently told ABC News that he was “unprepared for war,” and that “the biggest regret of all the presidency has to have been the intelligence failure in Iraq.”

Mr. Cheney, by contrast, is unbowed, defiant to the end. He called the Supreme Court “wrong” for overturning Bush policies on detainees at Guantánamo Bay; criticized his successor, Vice President-elect Joseph R. Biden Jr.; and defended the harsh interrogation technique called waterboarding, considered by many legal authorities to be torture.

“I feel very good about what we did,” the vice president told The Washington Times, adding, “If I was faced with those circumstances again, I’d do exactly the same thing.”

The difference in tone, friends and advisers say, reflects a split over Mr. Bush’s second-term foreign policy, which Mr. Cheney resisted as too dovish. It also reveals their divergent approaches to post-White House life. Mr. Bush, who is planning a public policy center in Dallas, is trying to shape his legacy by offering historians a glimpse of his thinking, while Mr. Cheney, primarily concerned about the terrorist threat, is setting the stage for a role as a standard-bearer for conservatives on national security.

“The president’s interviews are about creating a basis for historians to evaluate the context of his decisions differently, with more input from him,” said Wayne Berman, who has advised Mr. Bush and is a longtime friend of Mr. Cheney. “Cheney is living in the moment of, ‘There’s a serious ongoing threat,’ and I believe he sees himself more in a Churchill-like role, as the sentinel issuing the call for vigilance.”

Mr. Bush and Mr. Cheney still have lunch together once a week, administration officials say, and the vice president remains the president’s staunchest defender. But while Mr. Cheney has been ”loyal to a fault,” said John R. Bolton, the former ambassador to the United Nations whose views often reflect those of the vice president, he is also “increasingly in a beleaguered position.”

In the first term, Mr. Cheney, backed by his close ally, Donald H. Rumsfeld, who was then the defense secretary, was ascendant, and his views about the aggressive use of executive authority and military might held great sway. But after Mr. Bush fired Mr. Rumsfeld in 2006 — the only presidential decision Mr. Cheney has publicly disagreed with — the vice president took a back seat to Secretary of State Condoleezza Rice, who pushed the president to pursue greater diplomacy with two countries he once called “rogue nations,” Iran and North Korea.

“Our ability to explain what we’ve been doing in the national security field for eight years has been wholly inadequate,” Mr. Bolton said, “and part of that is because too many high officials in the administration were embarrassed by the decisions. Cheney has never been embarrassed by it, and now, in the last months, he is freer to make the kind of forceful and emphatic case for it that others were unwilling to make.”

Mr. Bush and Mr. Cheney appear to be giving more interviews than their recent predecessors. Dan Quayle, the last vice president not to seek the presidency while in office, gave three exit interviews; Mr. Cheney has so far given four. President Ronald Reagan gave five interviews during his last two months in office; President Bill Clinton gave seven. Mr. Bush has already given 10, to outlets as varied as Real Clear Politics, the Pentagon Channel, an Arabic television channel and a sportswriter for The Washington Post; the White House says more are to come.

Historians say presidents, especially those who serve two terms, often grow reflective at the end of their tenure. “They tend to be exhausted, they’re worn out, they’re trying to make some sense of their administrations, and there’s a natural tendency for them to want to give their own perspective,” said Jay Winik, who got to know Mr. Bush and Mr. Cheney after they read his book, “April 1865,” an account of the last month of the Civil War.

Never the introspective type, Mr. Bush has been freely answering “how do you feel” queries, which he once routinely dismissed as “goo-goo questions,” said his first press secretary, Ari Fleischer. He has also used his interviews to reveal his softer side. He has spoken of “my relationship with the Good Lord,” joked about his wife’s cooking and spotlighted social programs he regards as achievements, like education reform and his global plan to fight AIDS.

If he has criticisms of President-elect Barack Obama, Mr. Bush has not shared them; rather, he has hewed to the Bush family credo of graciousness in departure or defeat. (“I think he’s discovered his inner Bush,” Mr. Berman, the adviser, said.) He also opened the door to a possible role for himself in the Obama presidency, citing his own decision to ask his father, the first President Bush, and Mr. Clinton to spearhead a fund-raising effort for tsunami victims.

“President-elect Obama, I am confident, will call upon presidents to take on a mission,” Mr. Bush told C-Span. “I will be happy to do it, particularly if I agree with the mission.”

Mr. Cheney has been less diplomatic. Like Mr. Bush, he has praised Mr. Obama for keeping Robert M. Gates as defense secretary. But on “Fox News Sunday” this week, Mr. Cheney shot back at Mr. Biden for calling him “the most dangerous vice president in history.” And asked by The Washington Times for his advice for Mr. Obama, Mr. Cheney talked of the importance of personnel decisions, then volunteered, “Senator Clinton as secretary of state — I would never pick her to be my secretary of state.”

Both men say they look forward to private life. For Mr. Cheney, who has served in four Republican administrations, transitions are nothing new. “It’s not my first time at the rodeo,” he told The Washington Times.

Mr. Bush, who became Texas governor 14 years ago, told ABC News that he was eager to “live life without the limelight.” Yet both will have more to say. Mr. Cheney is likely to write a book. Mr. Bush is contemplating a farewell address, and says he will definitely write a book, to give Americans, as he told The Washington Times, “one man’s point of view that happened to be in the center of it all.”

President-elect Barack Obama met with Senator John McCain, his Republican rival, after the election in November.

Two months after Barack Obama’s election, Republicans are struggling to figure out how — or even whether — to challenge or criticize him as he prepares to assume the presidency.

The president-elect is proving to be an elusive and frustrating target. He has defied attempts to be framed ideologically. His cabinet picks have won wide praise. An effort by the Republican National Committee to link Mr. Obama to the unfolding scandal involving Gov. Rod R. Blagojevich of Illinois and the accusations that he tried to sell Mr. Obama’s Senate seat was dismissed by no less a figure than Senator John McCain, the Republican whom Mr. Obama beat for the presidency.

The toughest criticism of Mr. Obama during this period — in fact, the real only criticism of Mr. Obama during this period — has come not from the right but from the left, primarily over his selection of Rick Warren, a leading opponent of gay marriage, to deliver the invocation on Inauguration Day.

There are plenty of battles ahead that may provide Republicans an opportunity to find their footing. They will no doubt find arguments to use against Mr. Obama when he starts to lay out the details of his economic stimulus plans, or signals how aggressively he wants to fulfill a pledge to labor to back a bill that would take away employers’ right to demand a secret ballot-election to determine if workers wanted to unionize. And Mr. Obama is the beneficiary of the kind of post-election honeymoon Washington hasn’t seen in 16 years. (Bill Clinton, considering his own rocky introduction to Washington in 1992, might argue it has in fact been even longer than that).

Still, this image of Republican uncertainty is a testimony to the political skills of the incoming president, and a reminder of just how difficult a situation the Republican Party is in. More than that, though, Republicans and Democrats say, it is evidence of the unusual place the country is in now: buoyed by prospect of an inauguration while at the same time deeply worried about the country’s future. It is going to be complicated making a case against Mr. Obama, many Republicans said, in an environment where people simply want him to succeed and may not have much of an appetite for partisan politics.

“I think at a time like this, at a time of crisis, a lot of people would like to see people try to work together, especially with Obama not even being sworn in yet,” said Saul Anuzis, the Michigan Republican chairman and a leading candidate in the fight to be the next Republican National Committee leader. “What you don’t want to be is the party that’s always attacking or being negative with no alternatives.”

And in his blog, Mr. Anuzis wrote: “Where necessary, we should stand for what is right and forcefully be the loyal opposition. But partisan politics in times like these for the sake of politics is not healthy. ”

The situation Republican leaders find themselves in is reminiscent of the frustration displayed by Senator McCain and Hillary Rodham Clinton in the presidential contest. First as a candidate and now as president-elect, Mr. Obama has proved deft at skirting ideological definitions; that has become even more clear as he has put together his cabinet and left open his options on issues like repealing tax cuts for the wealthy. The campaign clearly taught him how to avoid political mistakes and how to clean them up quickly; when at his first news conference he made an unkind remark about Nancy Reagan — a joke about her holding séances in the White House — he called her and apologized before the evening news.

Beyond that, the historic nature of his presidency — of being the first African-American president, and all the interest that has generated here and abroad — has complicated things even more for the opposition party.

The Republican National Committee, which is in the midst of an internal battle over who will be its next chairman, appears to be having particular trouble in finding the right tone. Since Election Day, it has continued with the daily patter of attacks on Mr. Obama that it offered right through the general election campaign, a strategy pushed by the chairman, Mike Duncan, but one that clearly does not have universal support.

Its attempt to link Mr. Obama to the ongoing corruption scandal in Illinois drew criticism not only from Mr. McCain but also Newt Gingrich, the former House speaker.

“I was saddened to learn that at a time of national trial, when a president-elect is preparing to take office in the midst of the worst financial crisis in over seventy years, that the Republican National Committee is engaged in the sort of negative, attack politics that the voters rejected in the 2006 and 2008 election cycles,” Mr. Gingrich wrote in a letter to Mr. Duncan.

For his part, Mr. Duncan, who is seeking re-election as chairman when Republicans gather here in January — a fight that is providing a backdrop to the party’s ongoing debate — said he thought there was a role for his party to act as “the loyal opposition: to ask questions, agree where you can, but ask questions all the time.”

Mr. Duncan acknowledged that this was not an easy task, particularly now, however, though he suggested it will get easier after Mr. Obama takes office and has to deal with the problems and fulfill his campaign promises.

“We’re in a honeymoon stage right now and everybody wants to se him succeed,” he said, though he quickly added that he was not frustrated.

“It’s too early,” Mr. Duncan said .”We’re still in this honeymoon phase and we will hold him accountable. We will work with him and try to make sure he keeps his promises.”

Katon Dawson, the South Carolina Republican chairman who is another candidate to lead the party, said that the task for Republicans was clear. “If I were the national chairman, I would hold the administration accountable for doing what it said it was going to do,” Mr. Dawson said.

How and when to do that, he said, was another matter. “It matters in the tenor and the tone and the substance,” Mr. Dawson said. “Right now there isn’t a public policy yet. So it’s probably premature.”

THE BLUEPRINTS In June 2002, President Bush spoke in Atlanta to unveil a plan to increase minority homeownership.

WASHINGTON — The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”

It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.

The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.

Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.

Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.

“How,” he wondered aloud, “did we get here?”

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.

“There is no question we did not recognize the severity of the problems,” said Al Hubbard, Mr. Bush’s former chief economics adviser, who left the White House in December 2007. “Had we, we would have attacked them.”

Looking back, Keith B. Hennessey, Mr. Bush’s current chief economics adviser, says he and his colleagues did the best they could “with the information we had at the time.” But Mr. Hennessey did say he regretted that the administration did not pay more heed to the dangers of easy lending practices. And both Mr. Paulson and his predecessor, John W. Snow, say the housing push went too far.

“The Bush administration took a lot of pride that homeownership had reached historic highs,” Mr. Snow said in an interview. “But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost.”

For much of the Bush presidency, the White House was preoccupied by terrorism and war; on the economic front, its pressing concerns were cutting taxes and privatizing Social Security. The housing market was a bright spot: ever-rising home values kept the economy humming, as owners drew down on their equity to buy consumer goods and pack their children off to college.

Lawrence B. Lindsay, Mr. Bush’s first chief economics adviser, said there was little impetus to raise alarms about the proliferation of easy credit that was helping Mr. Bush meet housing goals.

“No one wanted to stop that bubble,” Mr. Lindsay said. “It would have conflicted with the president’s own policies.” Today, millions of Americans are facing foreclosure, homeownership rates are virtually no higher than when Mr. Bush took office, Fannie and Freddie are in a government conservatorship, and the bailout cost to taxpayers could run in the trillions.

As the economy has shed jobs — 533,000 last month alone — and his party has been punished by irate voters, the weakened president has granted his Treasury secretary extraordinary leeway in managing the crisis.

Never once, Mr. Paulson said in a recent interview, has Mr. Bush overruled him. “I’ve got a boss,” he explained, who “understands that when you’re dealing with something as unprecedented and fast-moving as this we need to have a different operating style.”

Mr. Paulson and other senior advisers to Mr. Bush say the administration has responded well to the turmoil, demonstrating flexibility under difficult circumstances. “There is not any playbook,” Mr. Paulson said.

The president declined to be interviewed for this article. But in recent weeks Mr. Bush has shared his views of how the nation came to the brink of economic disaster. He cites corporate greed and market excesses fueled by a flood of foreign cash — “Wall Street got drunk,” he has said — and the policies of past administrations. He blames Congress for failing to reform Fannie and Freddie. Last week, Fox News asked Mr. Bush if he was worried about being the Herbert Hoover of the 21st century.

“No,” Mr. Bush replied. “I will be known as somebody who saw a problem and put the chips on the table to prevent the economy from collapsing.”

But in private moments, aides say, the president is looking inward. During a recent ride aboard Marine One, the presidential helicopter, Mr. Bush sounded a reflective note.

“We absolutely wanted to increase homeownership,” Tony Fratto, his deputy press secretary, recalled him saying. “But we never wanted lenders to make bad decisions.”

A Policy Gone Awry

Darrin West could not believe it. The president of the United States was standing in his living room.

It was June 17, 2002, a day Mr. West recalls as “the highlight of my life.” Mr. Bush, in Atlanta to unveil a plan to increase the number of minority homeowners by 5.5 million, was touring Park Place South, a development of starter homes in a neighborhood once marked by blight and crime.

Mr. West had patrolled there as a police officer, and now he was the proud owner of a $130,000 town house, bought with an adjustable-rate mortgage and a $20,000 government loan as his down payment — just the sort of creative public-private financing Mr. Bush was promoting.

“Part of economic security,” Mr. Bush declared that day, “is owning your own home.”

A lot has changed since then. Mr. West, beset by personal problems, left Atlanta. Unable to sell his home for what he owed, he said, he gave it back to the bank last year. Like other communities across America, Park Place South has been hit with a foreclosure crisis affecting at least 10 percent of its 232 homes, according to Masharn Wilson, a developer who led Mr. Bush’s tour.

“I just don’t think what he envisioned was actually carried out,” she said.

Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.

But for much of Mr. Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.

So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.  And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view.

The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”

And corporate America, eyeing a lucrative market, delivered in ways Mr. Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

Like Minds on Laissez-Faire

The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.

As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.

The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.”

The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.

In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month.

Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.

“Maybe I was asleep at the switch,” Mr. Card said in an interview.

Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.

In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.

It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.” The White House pursued a narrower plan offered by Mr. Montgomery that would have allowed the F.H.A. to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Mr. Rove said he shared.

Looking back at the episode, Mr. Montgomery broke down in tears. While he acknowledged that the bill did not get to the root of the problem, he said he would “go to my grave believing” that at least some homeowners might have been spared foreclosure.

Today, administration officials say it is fair to ask whether Mr. Bush’s ownership push backfired. Mr. Paulson said the administration, like others before it, “over-incented housing.” Mr. Hennessey put it this way: “I would not say too much emphasis on expanding homeownership. I would say not enough early focus on easy lending practices.”

‘We Told You So’

Armando Falcon Jr. was preparing to take on a couple of giants.

A soft-spoken Texan, Mr. Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble.

Created by Congress, Fannie and Freddie — called G.S.E.’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists.

Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “G.S.E.’s — We Told You So.”

But the back story is more complicated. To begin with, on the day Mr. Falcon issued his report, the White House tried to fire him.

At the time, Fannie and Freddie were allies in the president’s quest to drive up homeownership rates; Franklin D. Raines, then Fannie’s chief executive, has fond memories of visiting Mr. Bush in the Oval Office and flying aboard Air Force One to a housing event. “They loved us,” he said.

So when Mr. Falcon refused to deep-six his report, Mr. Raines took his complaints to top Treasury officials and the White House. “I’m going to do what I need to do to defend my company and my position,” Mr. Raines told Mr. Falcon.

Days later, as Mr. Falcon was in New York preparing to deliver a speech about his findings, his cellphone rang. It was the White House personnel office, he said, telling him he was about to be unemployed.

His warnings were buried in the next day’s news coverage, trumped by the White House announcement that Mr. Bush would replace Mr. Falcon, a Democrat appointed by Bill Clinton, with Mark C. Brickell, a leader in the derivatives industry that Mr. Falcon’s report had flagged.

It was not until 2003, when Freddie became embroiled in an accounting scandal, that the White House took on the companies in earnest. Mr. Bush decided to quit the long-standing practice of rewarding supporters with high-paying appointments to the companies’ boards — “political plums,” in Mr. Rove’s words. He also withdrew Mr. Brickell’s nomination and threw his support behind Mr. Falcon, beginning an intense effort to give his little regulatory agency more power.

Mr. Falcon lacked explicit authority to limit the size of the companies’ mammoth investment portfolios, or tell them how much capital they needed to guard against losses. White House officials wanted that to change. They also wanted the power to put the companies into receivership, hoping that would end what Mr. Card, the former chief of staff, called “the myth of government backing,” which gave the companies a competitive edge because investors assumed the government would not let them fail.

By the spring of 2005 a deal with Congress seemed within reach, Mr. Snow, the former Treasury secretary, said in an interview. Michael G. Oxley, an Ohio Republican and then-chairman of the House Financial Services Committee, had produced what Mr. Snow viewed as “a pretty darned good bill,” a watered-down version of what the president sought. But at the urging of Mr. Card and the White House economics team, the president decided to hold out for a tougher bill in the Senate.

Mr. Card said he feared that Mr. Snow was “more interested in the deal than the result.” When the bill passed the House, the president issued a statement opposing it, effectively killing any chance of compromise. Mr. Oxley was furious.

“The problem with those guys at the White House, they had all the answers and they didn’t think they had to listen to anyone, including the Treasury secretary,” Mr. Oxley said in a recent interview. “They were driving the ideological train. He was in the caboose, and they were in the engine room.”

Mr. Card and Mr. Hennessey said they had no regrets. They are convinced, Mr. Hennessey said, that the Oxley bill would have produced “the worst of all possible outcomes,” the illusion of reform without the substance.

Still, some former White House and Treasury officials continue to debate whether Mr. Bush’s all-or-nothing approach scuttled a measure that, while imperfect, might have given an aggressive regulator enough power to keep the companies from failing.

Mr. Snow, for one, calls Mr. Oxley “a hero,” adding, “He saw the need to move. It didn’t get done. And it’s too bad, because I think if it had, I think we could well have avoided a big contributor to the current crisis.”

Unheeded Warnings

Jason Thomas had a nagging feeling.

The New Century Financial Corporation, a huge subprime lender whose mortgages were bundled into securities sold around the world, was headed for bankruptcy in March 2007. Mr. Thomas, an economic analyst for President Bush, was responsible for determining whether it was a hint of things to come.

At 29, Mr. Thomas had followed a fast-track career path that took him from a Buffalo meatpacking plant, where he worked as a statistician, to the White House. He was seen as a whiz kid, “a brilliant guy,” his former boss, Mr. Hubbard, says.

As Mr. Thomas began digging into New Century’s failure that spring, he became fixated on a particular statistic, the rent-to-own ratio.

Typically, as home prices increase, rental costs rise proportionally. But Mr. Thomas sent charts to top White House and Treasury officials showing that the monthly cost of owning far outpaced the cost to rent. To Mr. Thomas, it was a sign that housing prices were wildly inflated and bound to plunge, a condition that could set off a foreclosure crisis as conventional and subprime borrowers with little equity found they owed more than their houses were worth.

It was not the Bush team’s first warning. The previous year, Mr. Lindsay, the former chief economics adviser, returned to the White House to tell his old colleagues that housing prices were headed for a crash. But housing values are hard to evaluate, and Mr. Lindsay had a reputation as a market pessimist, said Mr. Hubbard, adding, “I thought, ‘He’s always a bear.’ ”

In retrospect, Mr. Hubbard said, Mr. Lindsay was “absolutely right,” and Mr. Thomas’s charts “should have been a signal.”

Instead, the prevailing view at the White House was that the problems in the housing market were limited to subprime borrowers unable to make their payments as their adjustable mortgages reset to higher rates. That belief was shared by Mr. Bush’s new Treasury secretary, Mr. Paulson.

Mr. Paulson, a former chairman of the Wall Street firm Goldman Sachs, had been given unusual power; he had accepted the job only after the president guaranteed him that Treasury, not the White House, would have the dominant role in shaping economic policy. That shift merely continued an imbalance of power that stifled robust policy debate, several former Bush aides say. Throughout the spring of 2007, Mr. Paulson declared that “the housing market is at or near the bottom,” with the problem “largely contained.” That position underscored nearly every action the Bush administration took in the ensuing months as it offered one limited response after another.

By that August, the problems had spread beyond New Century. Credit was tightening, amid questions about how heavily banks were invested in securities linked to mortgages. Still, Mr. Bush predicted that the turmoil would resolve itself with a “soft landing.”

The plan Mr. Bush announced on Aug. 31 reflected that belief. Called “F.H.A. Secure,” it aimed to help about 80,000 homeowners refinance their loans. Mr. Montgomery, the housing commissioner, said that he knew the modest program was not enough — the White House later expanded the agency’s rescue role — and that he would be “flying the plane and fixing it at the same time.”

That fall, Representative Rahm Emanuel, a leading Democrat, former investment banker and now the incoming chief of staff to President-elect Barack Obama, warned the White House it was not doing enough. He said he told Joshua B. Bolten, Mr. Bush’s chief of staff, and Mr. Paulson in a series of phone calls that the credit crisis would get “deep and serious” and that the only answer was big, internationally coordinated government intervention.

“You got to strangle this thing and suffocate it,” he recalled saying.

Instead, Mr. Bush developed Hope Now, a voluntary public-private partnership to help struggling homeowners refinance loans. And he worked with Congress to pass a stimulus package that sent taxpayers $150 billion in tax rebates.

In a speech to the Economic Club of New York in March 2008, he cautioned against Washington’s temptation “to say that anything short of a massive government intervention in the housing market amounts to inaction,” adding that government action could make it harder for the markets to recover.

Dominoes Start to Fall

Within days, Bear Sterns collapsed, prompting the Federal Reserve to engineer a hasty sale. Some economic experts, including Timothy F. Geithner, the president of the New York Federal Reserve Bank (and Mr. Obama’s choice for Treasury secretary) feared that Fannie Mae and Freddie Mac could be the next to fall.

Mr. Bush was still leaning on Congress to revamp the tiny agency that oversaw the two companies, and had acceded to Mr. Paulson’s request for the negotiating room that he had denied Mr. Snow. Still, there was no deal.

Over the previous two years, the White House had effectively set the agency adrift. Mr. Falcon left in 2005 and was replaced by a temporary director, who was in turn replaced by James B. Lockhart, a friend of Mr. Bush from their days at Andover, and a former deputy commissioner of the Social Security Administration who had once run a software company.

On Mr. Lockhart’s watch, both Freddie and Fannie had plunged into the riskiest part of the market, gobbling up more than $400 billion in subprime and other alternative mortgages. With the companies on precarious footing, Mr. Geithner had been advocating that the administration seize them or take other steps to reassure the market that the government would back their debt, according to two people with direct knowledge of his views.

In an Oval Office meeting on March 17, however, Mr. Paulson barely mentioned the idea, according to several people present. He wanted to use the troubled companies to unlock the frozen credit market by allowing Fannie and Freddie to buy more mortgage-backed securities from overburdened banks. To that end, Mr. Lockhart’s office planned to lift restraints on the companies’ huge portfolios — a decision derided by former White House and Treasury officials who had worked so hard to limit them.

But Mr. Paulson told Mr. Bush the companies would shore themselves up later by raising more capital.

“Can they?” Mr. Bush asked.

“We’re hoping so,” the Treasury secretary replied.

That turned out to be incorrect, and did not surprise Mr. Thomas, the Bush economic adviser. Throughout that spring and summer, he warned the White House and Treasury that, in the stark words of one e-mail message, “Freddie Mac is in trouble.” And Mr. Lockhart, he charged, was allowing the company to cover up its insolvency with dubious accounting maneuvers.

But Mr. Lockhart continued to offer reassurances. In a July appearance on CNBC, he declared that the companies were well managed and “worsts were not coming to worst.” An infuriated Mr. Thomas sent a fresh round of e-mail messages accusing Mr. Lockhart of “pimping for the stock prices of the undercapitalized firms he regulates.”

Mr. Lockhart defended himself, insisting in an interview that he was aware of the companies’ vulnerabilities, but did not want to rattle markets.

“A regulator,” he said, “does not air dirty laundry in public.”

Soon afterward, the companies’ stocks lost half their value in a single day, prompting Congress to quickly give Mr. Paulson the power to spend $200 billion to prop them up and to finally pass Mr. Bush’s long-sought reform bill, but it was too late. In September, the government seized control of Freddie Mac and Fannie Mae.

In an interview, Mr. Paulson said the administration had no justification to take over the companies any sooner. But Mr. Falcon disagreed: “They absolutely could have if they had thought there was a real danger.”

By Sept. 18, when Mr. Bush and his team had their fateful meeting in the Roosevelt Room after the failure of Lehman Brothers and the emergency rescue of A.I.G., Mr. Paulson was warning of an economic calamity greater than the Great Depression. Suddenly, historic government intervention seemed the only option. When Mr. Paulson spelled out what would become a $700 billion plan to rescue the nation’s banking system, the president did not hesitate.

“Is that enough?” Mr. Bush asked.

“It’s a lot,” the Treasury secretary recalled replying. “It will make a difference.” And in any event, he told Mr. Bush, “I don’t think we can get more.”

As the meeting wrapped up, a handful of aides retreated to the White House Situation Room to call Vice President Dick Cheney in Florida, where he was attending a fund-raiser. Mr. Cheney had long played a leading role in economic policy, though housing was not a primary interest, and like Mr. Bush he had a deep aversion to government intervention in the market. Nonetheless, he backed the bailout, convinced that too many Americans would suffer if Washington did nothing.

Mr. Bush typically darts out of such meetings quickly. But this time, he lingered, patting people on the back and trying to soothe his downcast staff. “During times of adversity, he bucks everybody up,” Mr. Paulson said.

It was not the end of the failures or government interventions; the administration has since stepped in to rescue Citigroup and, just last week, the Detroit automakers. With 31 days left in office, Mr. Bush says he will leave it to historians to analyze “what went right and what went wrong,” as he put it in a speech last week to the American Enterprise Institute.

Mr. Bush said he was too focused on the present to do much looking back.

“It turns out,” he said, “this isn’t one of the presidencies where you ride off into the sunset, you know, kind of waving goodbye.”

The president’s plan gives carmakers until March 31 to restructure.

WASHINGTON — The emergency bailout of General Motors and Chrysler announced by President Bush on Friday gives the companies a few months to get their businesses in order, but hands off to President-elect Barack Obama the difficult political decision of ruling on their progress.

The plan pumps $13.4 billion by mid-January into the companies from the fund that Congress authorized to rescue the financial industry. But the two companies have until March 31 to produce a plan for long-term profitability, including concessions from unions, creditors, suppliers and dealers.

Another $4 billion will be available for G.M. if and when the rest of the $700 billion bailout package is released in February.

Even before the March 31 deadline, it might fall to the Obama administration to persuade Congress to release the second $350 billion of the Treasury Department’s huge financial system stabilization program — a request that the Bush administration is reluctant to make because it will face angry criticism by lawmakers.

The auto bailout plan sets “targets” rather than concrete requirements about what those concessions may be, meaning that Mr. Obama and his advisers have enormous latitude to decide how to define long-term viability.

While Mr. Obama has broadly insisted that the automakers radically increase the fuel efficiency of their fleets, reduce carbon emissions and save the maximum number of jobs possible, he will have just nine weeks after taking office to press for a detailed transformation of an industry whose problems have been building for three decades.

In Chicago, Mr. Obama embraced the plan but said he had not had enough time to study the details. He never addressed the question of how he would turn a program designed as a short-term bridge loan into a long-term reorganization.

“I do want to emphasize to the Big Three automakers and their executives that the American people’s patience is running out, and that they should seize on this opportunity over the next several weeks and months to come up with a plan that is sustainable. And that means that they’re going to have to make some hard choices,” he said.

Mr. Obama said it was his intention to preserve jobs “for years to come” and that he wanted to make sure “that it’s not just workers who are bearing the brunt of that restructure, that they’re not the ones who are taking all the hits.”

Yet as the economy falters and joblessness balloons, Mr. Obama will be under extreme political pressure not to be too tough on the industry.

Already, Ron Gettelfinger, the president of the United Automobile Workers union, said he was pleased that the administration acted on the loan requests, but said the president added “unfair conditions” that singled out blue-collar workers.

Mr. Gettelfinger said the union expected to appeal to Mr. Obama to alter the expectations for wage and benefit cuts. According to Treasury Department officials who drafted the wording, Mr. Obama would be free to change the requirements and loosen the standards, especially on how much workers would have to give up.

Mr. Bush announced the plan early Friday, before the markets opened, and took no questions about its details. The day before, he conceded that he had been forced by the severity of the economic downturn to ignore many of the free-market principles he came to office embracing.

G.M. said it expected to draw on the first installment of its loans by Dec. 29. Soon after it pays suppliers and workers, the troubled automaker will begin putting drastic downsizing plans into effect, outlined to Congress this month, which include eliminating more than 30,000 jobs, shutting factories, shedding dealerships and determining the future of its Saab, Saturn and Pontiac brands.

In Detroit, a visibly relieved Rick Wagoner, G.M.’s chairman, told reporters that the loans would allow the automakers to pay their bills and prevent a financial crisis from spreading through the industry’s suppliers and dealers.

Mr. Wagoner, who has been G.M.’s chief executive for eight years, added that he had no plans to step aside during the difficult months ahead. “Do you think I would have gone through what I’ve gone through in the past two months if I didn’t want to stay?”

His reaction was echoed at Chrysler. “We intend to be accountable for this loan, including meeting the specific requirements set forth by the government, and will continue to implement our plan for long-term viability,” Chrysler’s chairman, Robert L. Nardelli, said in an e-mail message to employees.

Beyond the initial hurdles to provide all of the money, it will be left to Mr. Obama to make the tough judgments needed about the future of the industry. Are enough jobs being cut and factories being closed? Have the right product lines been consolidated? Are all of the stakeholders on the same page enough to make the long-term viability plans workable? And how should financial viability be defined?

On paper, Mr. Obama will inherit a club to wield against the automakers and the unions: he can threaten to “call” the loans and require repayment in 30 days.  Yet as a practical matter, demanding immediate repayment would be enormously difficult to do, unless Mr. Obama chose to drive the two icons of American industrial strength into bankruptcy court during the first 70 days of his administration.

His aides know that he will come under tremendous pressure, including from the U.A.W., which supported his candidacy and helped finance his campaign. “What we’ve seen from the U.A.W. already forces Obama to make a decision over whether to throw the U.A.W. under the bus,” said Brian Johnson, an analyst with Barclays Capital.

The bailout Mr. Bush announced is missing one major element: a “car czar” to administer the program, a key feature of the legislation that was defeated in the Senate last week. Until the end of Mr. Bush’s presidency, in just over a month, the Treasury secretary, Henry M. Paulson Jr., will play that role. But it is unclear what will happen after Mr. Obama is sworn in.

For now, his auto brain trust is mainly composed of Paul A. Volcker, the former Federal Reserve chairman, who was on the board for the Chrysler bailout in 1979; Austan Goolsbee, whose expertise at the University of Chicago has been the economics of industrial organizations; and Joshua Steiner, who is experienced in financial restructuring.

While many elements of the loan requirements are drawn from legislation that failed in Congress, there is one crucial difference between Mr. Bush’s plan and the one the House approved: it strips away a requirement that Cerberus Capital Management, the private equity firm that owns 80 percent of Chrysler, be held liable for any losses experienced by the taxpayers.

Instead, Cerberus on Friday said it would give the first $2 billion to the government if it ever sold Chrysler Financial, the company’s financing arm. While it has not asked for immediate help, the Ford Motor Company said it welcomed the assistance to G.M. and Chrysler because of the fragile, interdependent nature of the industry and its vast network of suppliers.

Both G.M. and Chrysler outlined a turnaround program calling for deep cuts in operations and expenses in their original requests to Congress for government loans.

But the White House appears to be expecting more than conventional restructuring strategies. Mr. Bush called for the companies to extract major concessions from their bondholders, creditors, dealers, suppliers and the U.A.W.

Under the Bush administration plan, G.M. and Chrysler would each have immediate access to $4 billion upon the signing of the emergency loan agreements with the Treasury. G.M. would then have access to an addition $5.4 billion on Jan. 16 and another $4 billion on Feb. 17 provided that Congress has released the remaining $350 billion for the Treasury’s rescue program.

The companies would be required to limit executive pay, eliminate “golden parachute” severance packages and sell their corporate jets. While the loans are outstanding, the companies would be barred from paying shareholder dividends.

The loan deal also requires the companies to quickly reduce their huge debt obligations by two-thirds, mostly through debt-for-equity swaps, and to reach agreements on wage and benefit cuts with the unions by Dec. 31.