A breathtaking array of problems will immediately demand the attention of the next president.

One of the smartest guys in Washington is political economist Tom Gallagher, who monitors the intersection of economics, policy, and politics for the ISI Group, a Wall Street advisory firm. On the subject of budget deficits,

Gallagher is fond of quoting the late economist Herb Stein, who said that the problem isn't that wolves are at the door, it's that termites are in the foundation. Some of our country's problems are termites, not wolves. Unfortunately, as Gallagher warns, our system is geared more toward dealing with wolves.

Many of the problems gnawing away at the United States are rooted in our "$53 trillion 'real' national debt," the term coined by former Commerce Secretary Peter Peterson and former Comptroller General David Walker to describe our actual national debt, including unfunded liabilities such as Social Security and Medicare. Exacerbating these problems is a gradually retiring Baby Boom Generation twice the size of the current senior population. The crush of debt being passed on to future taxpayers is unconscionable, prompting Peterson, now chairman of the Blackstone Group, to hire Walker and commit $1 billion of his fortune to raising public awareness and prodding policy makers to find solutions.

Beyond Medicare, the constellation of health care problems includes funding Medicaid, covering the uninsured, and dealing with rising insurance costs that are increasingly hurting U.S. competitiveness.

Then there is energy--its cost and availability, and the implications of our dependence on foreign oil. Closely related is the need to shift to renewable-energy sources that don't exacerbate global warming or ravage the environment.

Both political parties are playing ostrich. Many Democrats are dragging their feet on responsible offshore drilling and on nuclear power. Republicans are resisting tougher fuel-efficiency standards and, in some cases, development of alternative-energy sources. Until we acknowledge that the solution to our energy problems is all of the above, we are unlikely to get out of the current mess.

Next on the list are the mounting U.S. trade imbalance, our lack of competitiveness, and our dependence on foreign investment to prop up our credit markets. Even as our global interdependence grows, schools continue to turn out too many students who are ill-equipped to compete in the international economy. And don't forget the entrenched underclass, enslaved in a cycle of poverty from which few escape, and immigration policies that bar some of the brightest minds in the world from American graduate schools.

This month's one-year anniversary of the bridge collapse in Minneapolis is a reminder of our national infrastructure crisis. In a recent meeting with editors and reporters at National Journal, New York City Mayor Michael Bloomberg said that his city's officials are afraid to shut off the water to allow close inspection of some fragile pipes because the water pressure might be the only thing keeping them from collapsing.

The list of national woes wouldn't be complete without mentioning the home mortgage debacle and the related credit crisis. These problems--which will take years to fix--are choking off the ability of businesses large and small to obtain credit to expand or hire workers, and they are making it difficult for people to buy homes and cars. When a credit-driven economy reduces access to credit, that is a real crisis.

A common denominator of many of these problems is government revenue, with the day growing closer when we will need to shift to some form of consumption tax, perhaps as a replacement for the personal and corporate income-tax structure. A consumption tax is a more efficient method of tax collection, and it would boost our trade competitiveness.

Finally, in the area of foreign policy, the United States faces threats posed by terrorism, a nuclear-armed Iran, and an increasingly belligerent Russia.

Clearly, a host of complex challenges will demand our next chief executive's time. But another of the really smart folks in Washington, ViaNovo lobbyist and policy strategist Billy Moore, argues, "History shows that new presidents can usually only accomplish three or four big things in their first term, and that reaching beyond this number results in fewer, not more, achievements."

So, John McCain and Barack Obama, don't say we didn't warn you.

This article appeared in the Saturday, August 30, 2008 edition of National Journal.

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