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Barack Obama will be the next President of the United States and will govern with huge Democratic majorities in the House and Senate. What will he do?
In his two-year campaign for president, Obama made many promises he cannot keep, and was exceedingly vague when it came to what he would do about critical issues such as the nation’s ongoing financial crisis. However, it is possible to make some educated guesses about where he’d try to take the country in the face of some major challenges.
Economic Stimulus: Congress will not enact a stimulus plan in a lame duck session, but it will set the stage for big tax cuts and spending hikes in the first weeks of the Obama Administration. The measure could include many of the tax credits he proposed in the campaign, as well as costly new alternative energy subsidies he favored. Obama could quickly name a Treasury Secretary so his nominee can work with current Treasury boss Hank Paulson to address the ongoing financial market crisis. Reregulation will be another tough issue that will sap a lot of his administration's vigor.
Tax hikes on the wealthy: They are not going to happen as long as the economy is in a slump. Obama may try for these rate increases in 2010, but not in 2009.
Health Reform: For at least a month, Obama operatives have been quietly passing the word: There will be no major reform of the health insurance system in a first Obama Administration. Instead, the new president will focus on expanding SCHIP, the health program for low-income children, and pushing incentives to encourage hospitals and doctors to adopt information technology.
Climate Change: Forget about cap and trade—the critical effort to raise prices to discourage the use of fossil fuels. It won’t happen in a slumping economy.
Deficit Reduction: Off the table. The economy will give Obama the excuse he needed to ignore deficits, at least for his first year. The big question: How will the bond market react to what could be a $1 trillion deficit in 2009?
The War in Iraq: While the war got relatively little attention in the general election, Obama has made an irrevocable promise to his Democratic base. He must begin withdrawing troops immediately. This will take up a huge amount of energy in the early months of his administration and have a profound impact on his domestic agenda.
Post-partisan politics: Forget about it. Neither Democrats nor Republicans will be in any mood.
Long-range economic policy: In many ways, the bad economy will allow Obama to duck critical long-term issues, such as entitlements, trade, and tax reform. But sooner or later, he will have to decide: Will he run a Bob Rubin economic policy or follow a Bob Reich agenda? Neither man is likely to serve in his administration, but the echoes of their differences remain, still unresolved eight years after the end of the Clinton presidency.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.