ELECTION 2012: ISSUES TO WATCH

The Issues: What to Expect in Obama’s Second Term

After a seemingly endless slog, campaign season is over. That was the easy part. A long list of thorny problems awaits the victors.

The floor of the New York Stock Exchange is empty of traders, Monday, Oct. 29, 2012, in New York. All major U.S. stock and options exchanges will remain closed Monday with Hurricane Sandy nearing landfall on the East Coast. Trading has rarely stopped for weather. A blizzard led to a late start and an early close on Jan. 8, 1996, according to the exchange's parent company, NYSE Euronext. The NYSE shut down on Sept. 27, 1985 for Hurricane Gloria. 
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James Kitfield, Fawn Johnson, Adam Mazmanian, Margot Sanger Katz, Jim O'Sullivan, Coral Davenport, Catherine Hollander and Jim Tankersley
Nov. 8, 2012, noon

Politi­cians and their op­er­at­ives like to stress the high stakes of an elec­tion. That, after all, is how you drive turnout. But of­ten this strategy turns cam­paign ar­gu­ments in­to ab­strac­tions: The gov­ern­ment should help, not hinder, the private sec­tor; the safety net must pro­tect the needi­est cit­izens while en­cour­aging per­son­al re­spons­ib­il­ity; we should de­fend the home­land but must do so af­ford­ably. Cru­cial de­bates, for sure — but ones that don’t say much about how gov­ern­ing looks on the ground.

When it comes to mak­ing real policy, Pres­id­ent Obama and Con­gress have a lot of work to do. After (if?) Wash­ing­ton averts the fisc­al cliff, poli­cy­makers will have to im­ple­ment the health care law; law­makers need to de­cide wheth­er a gas tax alone can fund the na­tion’s en­tire trans­port­a­tion in­fra­struc­ture; and gen­er­als must fig­ure out how to shut down ter­ror­ist sanc­tu­ar­ies in Ar­ab Spring coun­tries without send­ing troops. Na­tion­al Journ­al looks at the lit­any of thorny prob­lems that face Wash­ing­ton over the next two years and in some cases — since we now know who will have to solve them — how they might be fixed.

The Eco­nomy

By Jim Tankers­ley

The floor of the New York Stock Exchange is empty of traders, Monday, Oct. 29, 2012, in New York. All major U.S. stock and options exchanges will remain closed Monday with Hurricane Sandy nearing landfall on the East Coast. Trading has rarely stopped for weather. A blizzard led to a late start and an early close on Jan. 8, 1996, according to the exchange's parent company, NYSE Euronext. The NYSE shut down on Sept. 27, 1985 for Hurricane Gloria.  AP

There’s a prin­ciple in math­em­at­ics called “or­der of op­er­a­tions.” When con­fron­ted with an equa­tion stuffed with dif­fer­ent cal­cu­la­tions to make, you do ex­po­nents be­fore you mul­tiply or di­vide, and you mul­tiply or di­vide be­fore you add or sub­tract. Mess up the or­der, and you risk muffing the an­swer. The same is true for the eco­nom­ic chal­lenges fa­cing the pres­id­ent in his second term, which present them­selves as a series of cal­cu­la­tions that Obama and Con­gress must at­tack in the cor­rect or­der if they want to avert an­oth­er re­ces­sion.

The first task is to not kill the mo­mentum that the re­cov­ery has built over the past sev­er­al months. Job growth and con­sumer con­fid­ence are rising. Gas­ol­ine prices, which had been an im­ped­i­ment to growth, are fall­ing. Eco­nom­ists and fin­an­cial ana­lysts are cau­tiously op­tim­ist­ic that head­winds from Europe and China are blow­ing less fiercely than they had feared. Fore­casters pre­dict “mod­estly stronger” growth next year than ori­gin­ally ex­pec­ted, in the words of the ana­lys­is firm MKM Part­ners. But, as the In­ter­na­tion­al Mon­et­ary Fund and many on Wall Street con­tin­ue to warn, a sharp fisc­al con­trac­tion — or, worse, a de­fault on gov­ern­ment debt — would jeop­ard­ize that pro­gress.

So the most im­port­ant eco­nom­ic chal­lenges of Obama’s second term ac­tu­ally be­gin in the lame-duck ses­sion. He and con­gres­sion­al Re­pub­lic­ans must de­fuse the po­ten­tial re­ces­sion-in­du­cing ef­fects of the tax in­creases and spend­ing cuts sched­uled for next year. Punt­ing to spring would buy time but not undo the prob­lem. They’ll also need to raise the debt ceil­ing, prefer­ably without the brink­man­ship that rattled con­sumers and mar­kets in the sum­mer of 2011.

Once that’s done — if that’s done — Obama can move on to a pair of tasks that com­ple­ment one an­oth­er: ac­cel­er­at­ing gross do­mest­ic product growth and shor­ing up the eco­nomy’s de­fenses against an­oth­er fin­an­cial crisis. It’s a needle-thread­ing task, but a crit­ic­al one. The eco­nomy simply isn’t grow­ing fast enough to put 12 mil­lion un­em­ployed Amer­ic­ans back to work any­time soon, and the longer the slow growth per­sists, the high­er the risk that long-term un­em­ployed work­ers will be­come per­man­ently un­em­ploy­able and drag down the eco­nomy for years or dec­ades.

The need for faster growth, coupled with rock-bot­tom bor­row­ing costs, al­most cer­tainly cries out for more fisc­al stim­u­lus, such as bridge-re­pair pro­jects and oth­er in­fra­struc­ture im­prove­ments. Oth­er means to growth might come much cheap­er. Obama and fed­er­al reg­u­lat­ors must fin­ish im­ple­ment­ing the Dodd-Frank fin­an­cial-re­form law. The White House and Con­gress must forge agree­ments on what role the gov­ern­ment should take in the hous­ing mar­ket, par­tic­u­larly in the guar­an­tee­ing of mort­gages. The win­ning bal­ance will be simple, com­pre­hens­ive new rules that min­im­ize red tape. Such reg­u­la­tions, if im­ple­men­ted, should help re­open the flow of cred­it, which con­tin­ues to con­strict the re­cov­ery. The pres­id­ent and le­gis­lat­ors should also help re­solve any “policy un­cer­tainty” that might be caus­ing busi­nesses across the coun­try to delay in­vest­ment and hir­ing.

Obama’s last task will be to strengthen the fun­da­ment­als of the eco­nomy for me­di­um- and long-term growth. That in­cludes im­prov­ing edu­ca­tion, from pre-K to adult job train­ing, to strengthen the work­force and boost Amer­ic­an com­pet­it­ive­ness. And it means bring­ing the fed­er­al budget in­to bal­ance and re­du­cing the na­tion­al debt — which di­vided gov­ern­ment makes more dif­fi­cult but also more likely. These hap­pen to be the eco­nom­ic is­sues that Obama and Mitt Rom­ney talked about most in the cam­paign, and they of­fer per­haps the most-fer­tile ground for bi­par­tis­an com­prom­ise. The pres­id­ent, however, should be wary of skip­ping straight to aus­ter­ity be­fore shor­ing up growth. His second term won’t start in re­ces­sion, but if he works the equa­tion in the wrong or­der, he could find him­self in one soon enough.

Budget

By Cath­er­ine Hol­lander

The talks aimed at pre­vent­ing the fisc­al cliff, the year-end threat of tax hikes and spend­ing cuts, will likely provide a frame­work for at­tempts to reach a longer-term budget deal in 2013, one that could in­clude tax re­form. But with Obama still in of­fice and Con­gress still di­vided, the pro­spects of find­ing com­mon ground re­main un­cer­tain at best.

In the speech Obama de­livered in Chica­go early on Wed­nes­day morn­ing, the pres­id­ent pledged to fo­cus in the com­ing months on work­ing with law­makers across the aisle to re­duce the de­fi­cit and re­form the tax code. In Oc­to­ber, he set the goal of a “grand bar­gain” on the de­fi­cit, one that would prob­ably in­volve some re­form of en­ti­tle­ments such as Medi­care and So­cial Se­cur­ity.

The ad­min­is­tra­tion has de­clined to call for steep spend­ing cuts while the eco­nomy struggles; in­stead, it is fo­cus­ing on de­fi­cit re­duc­tion through high­er taxes on the wealth­i­est Amer­ic­ans, an idea that has little GOP sup­port. Obama has also pro­posed to re­duce the cor­por­ate tax rate to 28 per­cent from 35 per­cent, an area where he is more likely to find Re­pub­lic­an back­ers.

But the pres­id­ent has struggled to work with the 112th Con­gress, even when the rap­idly ap­proach­ing debt lim­it and loom­ing cred­it-rat­ings down­grade pres­sured law­makers to act in 2011, and he’ll be fa­cing many of the same forces in the 113th that made strik­ing a deal last year so dif­fi­cult. Among them is Amer­ic­ans for Tax Re­form Pres­id­ent Grover Nor­quist, whose pledge not to raise taxes was signed by 279 law­makers in the 112th Con­gress.

What was fought bit­terly over in this Con­gress — rais­ing the na­tion’s debt lim­it — pales in com­par­is­on to what mem­bers of the 113th Con­gress have said they will at­tempt. But some ana­lysts are en­cour­aged by the po­ten­tial for a slight change in tone that could lead to pro­gress. Sen­ate Minor­ity Lead­er Mitch Mc­Con­nell said in 2010 that Re­pub­lic­ans’ top pri­or­ity should be mak­ing Obama a one-term pres­id­ent; if you be­lieve that has, in­deed, been the GOP goal, says Philip Wal­lach, a fel­low in gov­ernance stud­ies at the Brook­ings In­sti­tu­tion, the cause no longer ex­ists. And Obama could be more will­ing to com­prom­ise than he was over the past two years, so that he can avoid hav­ing his fi­nal term bogged down in de­fi­cit and tax ne­go­ti­ations.

Obama can send a sig­nal about his will­ing­ness to go big on tax re­form through his ap­point­ment of the next Treas­ury sec­ret­ary (Timothy Geithner, who holds the post, has said he won’t stay for a second term.) Nam­ing Er­skine Bowles, former chief of staff to Pres­id­ent Clin­ton and co­chair of the Na­tion­al Com­mis­sion on Fisc­al Re­spons­ib­il­ity and Re­form, to the po­s­i­tion could in­dic­ate a read­i­ness to strike a bi­par­tis­an com­prom­ise on taxes, Re­pub­lic­an con­gres­sion­al staffers and lob­by­ists say.

No mat­ter what, time may be an obstacle to large-scale re­form, ex­perts warn. The win­dow for a fisc­al agree­ment might close around the be­gin­ning of the 2014 midterm cam­paign. Rat­ings agen­cies and in­ter­na­tion­al cap­it­al mar­kets won’t look too kindly on drawn-out ne­go­ti­ations — with mar­kets pay­ing the price for con­gres­sion­al grid­lock.

En­ergy

By Cor­al Dav­en­port

FILE - In this March 16, 2011 file photo, exhaust rises from smokestacks in front of piles of coal at NRG Energy's W.A. Parish Electric Generating Station in Thompsons, Texas. Everyone wants clean air and water. But people also want to drive their cars whenever they wish and light up a room by flipping a switch. It’s a never-ending balancing act for government as it tries to protect health and the environment while promoting economic growth and jobs.  AP

The pres­id­ent hopes to use his second term to fight glob­al warm­ing. By sign­ing a law to cut fossil-fuel pol­lu­tion and de­cis­ively turn the na­tion to­ward clean, re­new­able-en­ergy sources, Obama could make a pro­found dif­fer­ence in the eco­nom­ic, en­vir­on­ment­al, health, and na­tion­al-se­cur­ity fu­ture of the United States — and the rest of the world. And it’s the kind of sweep­ing achieve­ment that his­tor­i­ans say he craves for his own leg­acy.

Obama’s last, best chance to do this will come as part of a nuts-and-bolts ef­fort to re­form the cor­por­ate tax code.

Here’s why: Eco­nom­ists and en­vir­on­ment­al­ists have long agreed that the most ef­fect­ive way to stop cli­mate change and drive mar­kets to­ward clean en­ergy is to put a price tag on car­bon pol­lu­tion. It’s a time-tested and ef­fect­ive policy. Raise the price of the thing you want less of — pol­lu­tion from coal and oil — and mar­ket forces will drive con­sumers and busi­nesses to buy low-pol­lut­ing sources of en­ergy in­stead. The in­creased mar­ket de­mand for those sources drives up pro­duc­tion scale and lowers the down price.

In his first term, Obama tried and failed to push such a cap-and-trade bill through Con­gress. Co­sponsored by lib­er­al Demo­crats from Cali­for­nia and Mas­sachu­setts, cham­pioned by green ad­vocacy groups, and re­viled by most Re­pub­lic­ans, the meas­ure ran aground in the Sen­ate, and “cap-and-trade” be­came a polit­ic­ally tox­ic catch­phrase. The ad­min­is­tra­tion was in­stead re­duced to us­ing the En­vir­on­ment­al Pro­tec­tion Agency to push through a slate of an­ti­pol­lu­tion reg­u­la­tions.

Over the next two years, the pres­id­ent will have one more chance to push car­bon-pri­cing le­gis­la­tion through Con­gress — this time, however, with a dis­tinctly dif­fer­ent polit­ic­al pro­file. As early as next year, Con­gress is ex­pec­ted to take up a sweep­ing tax-re­form pack­age that would lower cor­por­ate rates and elim­in­ate loop­holes in the tax code. As part of that pro­cess, sup­port is grow­ing for a car­bon tax, to be paired with a cut in the payroll or in­come tax. The strongest sup­port­ers of the idea are con­ser­vat­ive eco­nom­ists — in­clud­ing Gregory Mankiw, Mitt Rom­ney’s eco­nom­ic ad­viser; Douglas Holtz-Eakin, who ad­vised Sen. John Mc­Cain’s 2008 pres­id­en­tial cam­paign; and Art Laf­fer, Pres­id­ent Re­agan’s chief eco­nom­ic ad­viser. Re­pub­lic­ans want to find a way to cut taxes on work or in­come — and many, at least, don’t op­pose the idea of mov­ing that tax over to car­bon pol­lu­tion.

The idea tak­ing shape is to tuck a “car­bon-tax swap” in­to a broad­er re­form pack­age, framed as con­ser­vat­ive fisc­al policy and cham­pioned by Re­pub­lic­ans. That could provide the polit­ic­al cov­er it would need to get through Con­gress, al­though it will still re­quire an up­hill push. One big chal­lenge will be to get enough Re­pub­lic­ans, and many coal-state Demo­crats, to sign on to something that will in­ev­it­ably be labeled an “en­ergy tax” by groups like Amer­ic­ans for Prosper­ity, the su­per PAC linked to the oil con­glom­er­ate Koch In­dus­tries.

Still, a grow­ing num­ber of polit­ic­al pieces are slid­ing in­to place to in­clude a car­bon-tax swap as part of broad re­form. If that hap­pens, it could be the biggest, most trans­form­at­ive en­ergy and en­vir­on­ment­al le­gis­la­tion in a gen­er­a­tion — a policy that could fun­da­ment­ally change the na­tion’s en­ergy eco­nomy for the next cen­tury.

So­cial Is­sues

By Jim O’Sul­li­van

This photo taken Monday, Dec. 13, 2010 shows an image of a three-month-old fetus during a sonogram scan for "Nancy" Yin at a clinic run by Marie Stopes International in Xi'an in central China's Shaanxi province. While comprehensive data are hard to come by, official figures show abortions are increasing, and Chinese media and experts say many if not most of the abortion-seekers are young, single women.  AP

This time, Demo­crats wiel­ded so­cial is­sues as a wedge against Re­pub­lic­ans, rather than vice versa. And from gay mar­riage (which Obama en­dorsed at the be­gin­ning of the gen­er­al-elec­tion cam­paign) to abor­tion (which eli­cited in­flam­mat­ory re­marks on rape from los­ing GOP Sen­ate can­did­ates in In­di­ana and Mis­souri), Demo­crats were only too happy to use these is­sues to di­vide and con­quer.

In Obama’s second term, the fight over health in­sur­ance cov­er­age for con­tra­cep­tion will ig­nite anew. Des­pite months of con­tro­versy, the ad­min­is­tra­tion still hasn’t so­lid­i­fied rules de­term­in­ing how em­ploy­ees of re­li­gious in­sti­tu­tions will get birth-con­trol cov­er­age. Be­fore the im­ple­ment­a­tion date next Au­gust, Cath­ol­ic bish­ops and the Obama ad­min­is­tra­tion will likely go an­oth­er round in the ring.

Even be­fore that, the Su­preme Court may rule on the De­fense of Mar­riage Act. Jur­ists in lower courts have penned nar­row de­cisions that Lan­ae Er­ick­son Hatal­sky, dir­ect­or of so­cial policy at the Demo­crat­ic think tank Third Way, calls “es­sen­tially love let­ters to Justice [An­thony] Kennedy,” fre­quently the high court’s swing vote. Ar­gu­ments for fed­er­al­ism could prove pivotal: Kennedy may be more likely to strike down the fed­er­al law if he be­lieves he can do so without telling every jur­is­dic­tion what rights they must ac­cord to gays and les­bi­ans.

Even if the Court nul­li­fies the 1996 law, poli­cy­makers would have to un­ravel an ad­min­is­trat­ive Gor­d­i­an knot. The act touches So­cial Se­cur­ity, mil­it­ary be­ne­fits, pro­grams ad­min­istered jointly with the states, and im­mig­ra­tion rules. “I think the Obama ad­min­is­tra­tion is go­ing to spend an in­tense amount of time on DOMA,” Er­ick­son says.

Health Care

By Mar­got Sanger-Katz

The Af­ford­able Care act is still un­pop­u­lar, its path to im­ple­ment­a­tion still bumpy. But this much is now cer­tain: It will re­main the law of the land.

Without a Re­pub­lic­an pres­id­ent to slow the law’s im­ple­ment­a­tion or a GOP Sen­ate to dis­mantle it, there will be noth­ing to stop Obama’s sig­na­ture health re­form act be­fore 2014, when its ma­jor pro­vi­sions kick in. Even if Re­pub­lic­ans win de­cis­ive con­trol of Wash­ing­ton in four years with a clear man­date for health re­form, they will be work­ing with a new status quo. “We have one over­arch­ing real­ity: that the Af­ford­able Care Act is the law,” says Paul Keckley, the ex­ec­ut­ive dir­ect­or of the De­loitte Cen­ter for Health Solu­tions, a ma­jor in­dustry con­sultancy.

In the health care sec­tor, that’s ac­tu­ally not mo­nu­ment­al news; busi­nesses have long as­sumed that the Af­ford­able Care Act will move for­ward. Pro­viders and in­surers have been stead­ily ad­just­ing to the shift­ing land­scape, where fin­an­cial in­cent­ives will be dif­fer­ent and profit mar­gins will likely be tight­er. Sev­er­al years of slower-than-usu­al growth in health care spend­ing may in­dic­ate that changes en­cour­aged by the law are already hav­ing an ef­fect — al­though it’s early to know wheth­er the trends will last.

Reg­u­lat­ors, too, have been gear­ing up for the law’s even­tu­al im­ple­ment­a­tion. Al­though the ex­ec­ut­ive branch has delayed is­su­ing ma­jor health care reg­u­la­tions this year, nu­mer­ous sources say that many of the out­stand­ing rules are writ­ten and ready to go now that the elec­tion is over. In the states — even many deep-red states — bur­eau­crats have been quietly lay­ing the ground­work for the new in­form­a­tion sys­tems and in­sur­ance ex­changes they will be ex­pec­ted to run.

Obama’s reelec­tion does end a high level of polit­ic­al un­cer­tainty. Rom­ney ran on a plat­form of total re­peal, even if he softened in sup­port­ing some pro­vi­sions in the fi­nal weeks of the cam­paign. House Re­pub­lic­ans have voted twice to re­peal the law; they will now need a new health care plat­form if they want a role in shap­ing policy. And it’s a de­cision point for state politi­cians: Many have held back on build­ing the in­sur­ance ex­changes or de­cid­ing wheth­er to ex­pand their Medi­caid pro­grams. First they waited un­til the Su­preme Court ruled. Then they waited for the elec­tions.

Now, gov­ernors and state le­gis­lat­ors will need to de­cide — and quickly — wheth­er they’ll co­oper­ate or con­tin­ue fight­ing on ideo­lo­gic­al grounds. “It’s go­ing to sink in that it’s the law of the land; the ACA is not go­ing any­where, and I think you’re go­ing to see most states say­ing that they would rather con­trol their own mar­ket,” says Heath­er Howard, the dir­ect­or of the State Health Re­form As­sist­ance Net­work at Prin­ceton Uni­versity, which is help­ing 10 states with im­ple­ment­a­tion. “I think you’ll see more states mov­ing.”

None of which means that the Af­ford­able Care Act is im­mut­able. The pres­id­ent has prom­ised a $4 tril­lion de­fi­cit-re­duc­tion pack­age — a goal that is ba­sic­ally im­possible to reach without cuts to the ma­jor health en­ti­tle­ment pro­grams. The next year could see bi­par­tis­an pro­pos­als to cut Medi­care, Medi­caid, and sub­sidies for middle-in­come Amer­ic­ans on in­sur­ance ex­changes. Still, even those changes would live with­in the ba­sic frame­work of “Obama­care.” It is the new nor­mal.

Tech­no­logy

By Adam Mazmani­an

Technology: Fiber optics. iStockphoto

Obama’s reg­u­lat­ors ar­rived in Janu­ary 2009 with a laun­dry list of pri­or­it­ies they have largely achieved — a ver­sion of net­work neut­ral­ity called the “Open In­ter­net” rule; more spec­trum for wire­less broad­band net­works; sub­sidies for those who don’t yet have broad­band ac­cess; and lim­its on how much tele­com com­pan­ies can charge for ac­cess to high-speed lines.

The second term will fill in the few blanks left by the first term, prob­ably with new lead­er­ship at the Fed­er­al Com­mu­nic­a­tions Com­mis­sion. At the same time, in­dustry lead­ers and reg­u­lat­ors want to ease the trans­ition from the cur­rent hy­brid ana­log-di­git­al tele­com sys­tem to a di­git­al In­ter­net Pro­tocol-based sys­tem run on fiber-op­tic lines. “What FCC will do next is try to fig­ure out how to have a ra­tion­al IP trans­ition, just as we had a di­git­al tele­vi­sion trans­ition,” says Blair Lev­in, a former FCC of­fi­cial whose name has been men­tioned as a pos­sible chair­man.

This trans­ition could up­date the 1996 Tele­com Act, which would give le­gis­lat­ors a chance to con­test the FCC’s Open In­ter­net plan. Already, courts are poised to rule that the ad­min­is­tra­tion can­not im­pose net­work neut­ral­ity by fi­at. So Demo­crats in Con­gress (urged on by the al­li­ance of con­sumer watch­dog groups and In­ter­net com­pan­ies that fended off the copy­right le­gis­la­tion known as SOPA and PIPA) will try to en­shrine neut­ral­ity in­to law. Stand­ing alone, the ef­fort would prob­ably fail in the House. But GOP mem­bers might agree to net neut­ral­ity for the sake of broad­er de­reg­u­la­tion. They don’t want broad­band reg­u­lated un­der ex­ist­ing tele­com laws; if they’re ex­emp­ted, the big pro­viders will have a freer hand in build­ing and man­aging fiber net­works.

Mean­while, the 2011 Amer­ic­an In­vents Act, a pat­ent law, needs a raft of tech­nic­al cor­rec­tions that could re­ignite is­sues that the meas­ure was meant to settle. One cor­rec­tion would tight­en rules for chal­len­ging pat­ent grants, and would make life more dif­fi­cult for com­pan­ies that amass pat­ent port­fo­li­os for the sake of su­ing in­fringers. These non­prac­ti­cing en­tit­ies, some­times called “pat­ent trolls,” will look to avoid cor­rec­tions that frus­trate their busi­ness prac­tices. Reg­u­lat­ors frus­trated by this trend have be­gun to see an­ti­trust prob­lems in the in­tel­lec­tu­al-prop­erty arena. The Fed­er­al Trade Com­mis­sion, for in­stance, is plan­ning to sue Google (prob­ably this year) for re­strict­ing ac­cess to key smart­phone pat­ents. An­oth­er an­ti­trust suit (mov­ing more slowly through the sys­tem) could charge Google with hurt­ing com­pet­it­ors by fa­vor­ing its own search res­ults.

Demo­crats and Re­pub­lic­ans in Con­gress have also failed to agree on cy­ber­se­cur­ity. Should they en­force min­im­um se­cur­ity stand­ards on crit­ic­al di­git­al net­works owned by private firms — or per­mit com­pan­ies to cre­ate their own cy­ber­se­cur­ity guidelines? Sen­ate Ma­jor­ity Lead­er Harry Re­id has pledged to bring up the is­sue in the lame-duck ses­sion, but if noth­ing hap­pens, the ad­min­is­tra­tion will likely is­sue an ex­ec­ut­ive or­der late this year or early next.

Im­mig­ra­tion

By Fawn John­son

In this photo provided by the U.S. Customs and Border Protection, a silver Jeep Cherokee that suspected smugglers were attempting to drive over the U.S.-Mexico border fence is stuck at the top of a makeshift ramp early Wednesday, Oct. 31, 2012 near Yuma, Ariz. U.S. Border Patrol agents from the Yuma Station seized both the ramps and the vehicle, which stalled at the top of the ramp after it became high centered. The fence is approximately 14 feet high where the would-be smugglers attempted to illegally drive across the border. The two suspects fled into Mexico when the agents arrived at the scene. (AP Photo/U.S. Customs and Border Protection) AP

His­pan­ics want to make sure that, this time around, Obama sticks to his prom­ise to tackle im­mig­ra­tion. In his second term, the pres­id­ent must go after a broad im­mig­ra­tion over­haul with the same zeal he showed on health care re­form — or risk ali­en­at­ing a broad swath of the na­tion’s fast­est-grow­ing demo­graph­ic.

He’s ready. He told the Des Moines Re­gister be­fore the elec­tion that im­mig­ra­tion re­form was his top pri­or­ity once budget and tax is­sues are re­solved. He won 71 per­cent of the Latino vote. Obama voters over­whelm­ingly said they want a path to leg­al­iz­a­tion for un­doc­u­mented im­mig­rants — 79 per­cent, ac­cord­ing to exit polls. Half of Re­pub­lic­an voters also said they wanted leg­al­iz­a­tion. It’s as close to a “man­date” as Obama is go­ing to get.

The biggest policy ques­tion will be how to leg­al­ize 11 mil­lion un­doc­u­mented people in a way that won’t be seen as un­fair to those who are wait­ing to be­come cit­izens leg­ally. The biggest polit­ic­al ques­tion is how Re­pub­lic­ans will handle the is­sue. GOP voters slammed Re­pub­lic­an law­makers for ne­go­ti­at­ing a leg­al­iz­a­tion plan five years ago. Some lost their seats. In the wake of Rom­ney’s loss, GOP op­er­at­ives are em­phas­iz­ing the party’s need to broaden its ap­peal to minor­it­ies, par­tic­u­larly His­pan­ics. But the cal­cu­lus for con­gres­sion­al Re­pub­lic­ans is some­what dif­fer­ent. In­cum­bents have to worry about wheth­er a move to the cen­ter could leave them vul­ner­able to a primary chal­lenge from the right. They will be look­ing only as far as 2014, not 2016.

Obama can’t rely on par­tis­an man­euvers in Con­gress the way he did to pass health care re­form, be­cause some con­ser­vat­ive Demo­crats are squeam­ish on im­mig­ra­tion. He will need to of­fer com­prom­ises to Re­pub­lic­ans, which could come in the form of new guest-work­er pro­grams or an end to open spon­sor­ship rights for U.S. cit­izens to in­vite for­eign fam­ily mem­bers in­to the coun­try.

Still, Obama will need to make a bet­ter show of try­ing than he did in his first term. Back in 2008, he said that im­mig­ra­tion was a top pri­or­ity. His­pan­ics turned out in droves to help him win, and then noth­ing happened. Earli­er this year, he cre­ated a tem­por­ary de­fer­ral pro­gram for il­leg­al youth to shield them from de­port­a­tion, but that is hardly the kind of sweep­ing change that Lati­nos and oth­er Demo­crats are seek­ing.

“We are in a dif­fer­ent po­s­i­tion to de­mand and ask — and ex­pect — a dif­fer­ent de­liv­ery from Pres­id­ent Obama,” says Lorella Praeli, an un­doc­u­mented act­iv­ist for United We Dream, a youth-led im­mig­ra­tion-re­form ad­vocacy group. “The mes­sage is clear: free­dom for 11 mil­lion.”

Edu­ca­tion

By Fawn John­son

The pres­id­ent spent the past year set­ting up the edu­ca­tion agenda for his second term. Now all he has to do is put the strategy in mo­tion. It has three parts — ac­cess to col­lege; waivers for state pub­lic-school sys­tems; and early-child­hood de­vel­op­ment.

Edu­ca­tion Sec­ret­ary Arne Duncan will stay in his Cab­in­et post to guide the ex­ist­ing de­part­ment pro­grams to the fin­ish line. That means the in­cent­ives the ad­min­is­tra­tion now dangles in front of states to cre­ate teach­er eval­u­ations, to re­work their stu­dent as­sess­ments, or to turn around fail­ing schools will con­tin­ue. “I’m a big be­liev­er in car­rots rather than sticks,” Duncan told a group of edu­cat­ors in Septem­ber.

Among Cab­in­et mem­bers, Duncan has an out­sized in­flu­ence on do­mest­ic policy. White House of­fi­cials view the Edu­ca­tion De­part­ment’s Race to the Top com­pet­it­ive grant pro­gram as one of the most suc­cess­ful ways the ad­min­is­tra­tion can en­cour­age states to change policies without hav­ing to pony up lots of fed­er­al dol­lars. Of course, the $100 bil­lion for edu­ca­tion from the eco­nom­ic-stim­u­lus pack­age will not be avail­able this time around. The ad­min­is­tra­tion has fo­cused the last of the Race to the Top money from 2009 on early-child­hood pro­grams.

The Edu­ca­tion De­part­ment’s waivers for No Child Left Be­hind are the best car­rots avail­able to Obama for en­ti­cing states to close fail­ing schools and make teach­ers and prin­cipals more ac­count­able for stu­dent achieve­ment. Without the waivers, most states will face pen­al­ties for fail­ing to meet out­dated bench­marks. Be­cause Con­gress has been un­able to reau­thor­ize No Child Left Be­hind, the ad­min­is­tra­tion’s waiver pro­gram is its only way out. The waiver pro­cess has gone smoothly since Duncan rolled it out last year, but the Edu­ca­tion De­part­ment’s total con­trol over how and when states get them has led to in­ev­it­able grumbling that the ad­min­is­tra­tion could delay ap­plic­a­tions for polit­ic­al reas­ons.

Mean­while, Obama will likely de­vote his bully pul­pit to high­er edu­ca­tion. The pres­id­ent wants the United States to again have the highest pro­por­tion of col­lege gradu­ates in the world by 2020, and to do that he will need to lean on high­er-edu­ca­tion in­sti­tu­tions to keep their tu­ition down and their en­roll­ments up. Iron­ic­ally, neither Con­gress nor the White House can do much to lower tu­ition, be­cause most fed­er­al col­lege aid goes dir­ectly to stu­dents. Still, the high­er-edu­ca­tion law au­thor­iz­ing many stu­dent-aid pro­grams ex­pires next year, which will give Con­gress the op­por­tun­ity to tinker with the for­mu­las and the White House the chance to talk about it.

Trans­port­a­tion

By Fawn John­son

FILE - In this May 17, 2012, file photo, the steel skeleton for the eastern end of the new Innerbelt Bridge in Cleveland sits next to the existing span. Much of America's infrastructure, including its interstate highway system, is more than half a century old and in need of serious work to keep pace with a rising population. Highway, rail and airport bottlenecks slow the movement of goods and commuters, costing billions in wasted time and fuel and even measurably slowing the economy. AP

On trans­port­a­tion, Obama can plan on start­ing his second term the same way he began his first. Then, as now, the fund­ing crisis for the na­tion’s high­ways was a few years off but ap­proach­ing fast. And poli­cy­makers still don’t have a strategy for what to do when the cur­rent high­way au­thor­ity ex­pires in 2014.

Last year, Con­gress and the ad­min­is­tra­tion man­aged to put off the toughest de­cisions about how to fin­ance the na­tion’s roads and bridges when they passed a mini-high­way bill to keep fund­ing at cur­rent levels for two years. (High­way bills tra­di­tion­ally last for five years.) The prob­lems that be­fuddled them then have not gone away. The 18.4-cent-per-gal­lon fed­er­al gas tax can­not keep up with the cost of road main­ten­ance, but too many mem­bers don’t want to raise it. A five-year meas­ure costs at least $300 bil­lion, a fright­en­ing price tag in an age of aus­ter­ity. Mean­while, none of the more soph­ist­ic­ated policy ideas for re­work­ing the sys­tem — an in­fra­struc­ture bank, a plan to re­place the gas tax with driver pay­ments based on vehicle mileage — has left the start­ing block.

Just as in Obama’s first term, budget troubles have pushed a long-term fed­er­al in­fra­struc­ture plan off every­one’s pri­or­ity list. Obama barely men­tioned in­fra­struc­ture in his reelec­tion cam­paign, and when he did, it was to re­vive a sug­ges­tion he made a year earli­er to use war sav­ings to pay for short-term in­vest­ment. Mean­while, the Trans­port­a­tion De­part­ment stands to lose about $1 bil­lion if law­makers don’t reach a deal to avert the fisc­al cliff.

A vo­cal minor­ity in Con­gress wants to fund fed­er­al high­ways only through the gas tax, which would in­volve a 35 per­cent cut in cur­rent fund­ing. The Bi­par­tis­an Policy Cen­ter is­sued a re­port in Septem­ber pre­dict­ing that such a cut would in­crease traffic con­ges­tion and de­crease trans­it op­tions in met­ro­pol­it­an re­gions. States might be able to make up about half of the loss for high­ways through in­creased tolls and state taxes, the re­port said, but they could not count on sim­il­ar mech­an­isms to fund trans­it sys­tems. The mess could al­ter the pub­lic en­nui that AAA Pres­id­ent Robert Dar­bel­net be­moaned on Na­tion­al Journ­al’s trans­port­a­tion ex­perts’ blog. “We’ve all been sound­ing the alarm on this top­ic for years now, but the pub­lic hasn’t en­gaged,” he wrote. And it seems un­likely that the next year will bring any more clar­ity about how to pay for trans­port­a­tion.

For­eign Policy

By James Kit­field

In this Sunday, Nov. 04, 2012 photo, a rebel fighter claims for victory after he fires a shoulder-fired missile toward a building where Syrian troops loyal to President Bashar Assad are hiding while they attempt to gain terrain against the rebels during heavy clashes in the Jedida district of Aleppo, Syria. The uprising against Assad started with peaceful demonstrations in March last year, but has since morphed into a bloody civil war. Activists say more than 36,000 people have been killed in 19 months of fighting.  AP

Emer­ging from the bubble of a do­mest­ic­ally fo­cused cam­paign, Obama will find a world that did not stand still for Amer­ic­an polit­ics. And giv­en that his for­eign-policy plat­form fo­cused on little more than with­draw­ing from Afgh­anistan and “na­tion-build­ing here at home,” he won’t have a man­date in this arena.

The Ar­ab Spring began a civil war in Syr­ia that has claimed more than 30,000 lives. Dur­ing the pres­id­en­tial cam­paign, the Obama ad­min­is­tra­tion es­sen­tially held the es­cal­at­ing con­flict at arm’s length while the rebels fight­ing the des­pot­ic Pres­id­ent Bashar al-As­sad be­came more rad­ic­al­ized, with mil­it­ant Is­lam­ists grav­it­at­ing to the fight and threat­en­ing to turn Syr­ia in­to a breed­ing ground for ter­ror­ism. So Syr­ia’s neigh­bors, es­pe­cially Is­rael, are es­pe­cially wor­ried about who will con­trol As­sad’s chem­ic­al-weapons stock­pile. Syr­ia’s sec­tari­an and eth­nic vi­ol­ence — Sunni versus Shiite, Kurd versus Ar­ab — has already spilled in­to Le­ban­on and Tur­key, and it now threatens Ir­aq. Per­haps most im­port­ant, key U.S. al­lies such as Saudi Ar­a­bia, Jordan, the Gulf States, and es­pe­cially Tur­key are ques­tion­ing U.S. lead­er­ship. The Obama ad­min­is­tra­tion’s as­sert­ive ef­forts this week to uni­fy the Syr­i­an op­pos­i­tion amounts to an ad­mis­sion that the status quo in Syr­ia is un­sus­tain­able.

Next year could also prove de­cis­ive in the loom­ing con­front­a­tion over Ir­an’s sus­pec­ted nuc­le­ar-weapons pro­gram. Dur­ing the elec­tion, Obama went fur­ther than any pre­de­cessor in tak­ing the de­fens­ive op­tion — “con­tain­ment” of a nuc­le­ar-armed Ir­an — off the table, sug­gest­ing that his ad­min­is­tra­tion would use pree­mpt­ive mil­it­ary force rather than al­low Ir­an to ac­quire the bomb. That was not enough for hawk­ish Is­raeli Prime Min­is­ter Ben­jamin Net­an­yahu, however, who in­sists that the win­dow for sanc­tions to de­ter Ir­an is clos­ing. His re­cent U.N. speech warned that by next sum­mer, Ir­an’s nuc­le­ar-weapons pro­gram will cross a “red line” bey­ond which Is­rael has long threatened to use mil­it­ary force, with or without U.S. par­ti­cip­a­tion.

As the world’s su­per­power, the United States has for dec­ades tried to in­teg­rate China in­to the in­ter­na­tion­al or­der. But a host of factors have re­cently com­plic­ated that task. Both Obama and Rom­ney staked out tough po­s­i­tions on trade with China — an elec­tion-sea­son standby that nev­er­the­less an­noyed Beijing of­fi­cials, who hold more than $1 tril­lion in U.S. debt. China is also in the midst of a once-a-dec­ade lead­er­ship trans­ition. Xi Jin­ping, the na­tion’s next gen­er­al sec­ret­ary, faces destabil­iz­ing chal­lenges, from a slow­ing eco­nomy to grow­ing pub­lic de­mand for polit­ic­al re­form. Mean­while, Obama’s stra­tegic “pivot” to Asia has in­censed Chinese mil­it­ary lead­ers, who view it as a form of con­tain­ment. China has also ad­op­ted a bel­li­ger­ent pos­ture to­ward its claims on dis­puted is­lands in the South and East Chinese seas, sug­gest­ing that mil­it­ary of­ficers may be tak­ing ad­vant­age of the lead­er­ship trans­ition to in­crease their in­flu­ence.

Trans-At­lantic re­la­tions, too, could vex Obama. Al­though the White House can do little more than dis­pense ad­vice, a debt de­fault by a euro­zone coun­try could plunge the glob­al eco­nomy in­to re­ces­sion. On the mil­it­ary front, in­debted NATO al­lies con­tin­ue to cut de­fense spend­ing to the bone, even after the 2011 Liby­an air op­er­a­tion ex­posed sig­ni­fic­ant short­falls in their mil­it­ary cap­ab­il­it­ies. A with­draw­al of NATO forces from Afgh­anistan sched­uled for the end of 2014 could be­come an­oth­er source of al­li­ance di­vi­sion if, as many ex­perts fear, the Afghan gov­ern­ment and se­cur­ity forces can­not take con­trol of their coun­try. Fi­nally, the Obama ad­min­is­tra­tion’s pivot to Asia, with­draw­al of most for­ward-de­ployed troops from Ger­many, and de­cision not to lead NATO’s Libya op­er­a­tion has some al­lies ques­tion­ing the U.S. com­mit­ment to the al­li­ance.

Na­tion­al Se­cur­ity

By James Kit­field

War- and re­ces­sion-weary voters simply didn’t want to hear about Afgh­anistan dur­ing the pres­id­en­tial cam­paign, and, with few ex­cep­tions, both can­did­ates ob­liged them. Yet a series of set­backs there have de­creased the pro­spect that U.S. and NATO forces will leave be­hind a stable coun­try in two years. Partly be­cause of in­ad­equate vet­ting for Taliban in­filt­ra­tion, for in­stance, Afghan se­cur­ity forces have re­peatedly at­tacked co­ali­tion troops, mak­ing it dif­fi­cult to trans­fer se­cur­ity re­spons­ib­il­it­ies. At­tempts to ne­go­ti­ate with the Taliban to end a war al­most no one thinks can be won mil­it­ar­ily have also failed; in­sur­gents ap­pear to be wait­ing out the co­ali­tion’s 2014 with­draw­al.

Between now and then, the ad­min­is­tra­tion must set a sched­ule for pulling out the re­main­ing 68,000 U.S. troops. Amer­ic­an mil­it­ary lead­ers want max­im­um troop levels, but Obama has re­jec­ted their pre­vi­ous re­quests for a full-court press. His ad­min­is­tra­tion must also de­term­ine the size of a re­sid­ual sup­port force to linger past 2014, as well as the num­ber of Afghan troops that Wash­ing­ton and its al­lies are will­ing to bank­roll once NATO com­bat op­er­a­tions end. But the ad­min­is­tra­tion has not solved two po­ten­tially fatal flaws that dog the Afghan strategy: a cor­rupt Afghan gov­ern­ment that has struggled to ex­tend its au­thor­ity well bey­ond Ka­bul, and un­con­tested Taliban sanc­tu­ar­ies across the bor­der in Pakistan. Many ex­perts now be­lieve the cur­rent strategy will lead to a pro­trac­ted civil war in Afgh­anistan once NATO de­parts.

The killing in Libya of U.S. Am­bas­sad­or Chris Stevens by mil­it­ant Is­lam­ists points to a grow­ing na­tion­al-se­cur­ity threat: The Ar­ab Spring re­bel­lions have cre­ated ad­di­tion­al space for Is­lam­ist ex­trem­ist groups to op­er­ate. An­sar al-Sharia, sus­pec­ted in the Benghazi at­tack, is one of nu­mer­ous mi­li­tias that vie with the nas­cent Liby­an gov­ern­ment for primacy. Al-Qaida in the Ar­a­bi­an Pen­in­sula, which has launched mul­tiple ter­ror­ist plots against the United States, took ad­vant­age of polit­ic­al tur­moil to seize ter­rit­ory in Ye­men. After a mil­it­ary coup toppled the gov­ern­ment in Mali this year, the Qaida-linked ex­trem­ists of An­sar Dine seized power and en­forced sharia in the coun­try’s north. Is­lam­ist mil­it­ants in Egypt have at­tacked po­lice check­points in the Sinai and launched cross-bor­der strikes against Is­rael. Ji­hadists groups are flock­ing to the civil war in Syr­ia, threat­en­ing to take root in­side an in­creas­ingly rad­ic­al­ized Syr­i­an re­bel­lion. And al-Qaida in Ir­aq re­mains a po­tent threat to Bagh­dad’s weak gov­ern­ment.

After a wave of cy­ber­at­tacks against large U.S. fin­an­cial in­sti­tu­tions and the Saudi Ar­a­bi­an state oil com­pany, the Pentagon has pushed Con­gress for le­gis­la­tion re­quir­ing tough­er cy­ber­se­cur­ity stand­ards at in­fra­struc­ture fa­cil­it­ies in the private sec­tor. Without such safe­guards, the United States is vul­ner­able to a “cy­ber Pearl Har­bor,” De­fense Sec­ret­ary Le­on Pan­etta warned last month.

Closer to home, Obama is try­ing to shave $487 bil­lion from de­fense spend­ing over a dec­ade — one of the shal­low­est post­war cuts in his­tory — without re­peat­ing the Pentagon’s 1990s “pro­cure­ment hol­i­day.” That hi­atus left today’s ar­sen­al (much of which dates from the Re­agan-era buildup) badly in need of up­grades. Rom­ney chided Obama for over­see­ing the smal­lest U.S. Navy since 1917 and the old­est Air Force since 1947. He lost the elec­tion, but he had a point.

This art­icle ap­peared in print as “Just the Be­gin­ning.”

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