Obama must act fast on the economy

First up, the president has to tackle the “fiscal cliff” of scheduled tax increases and spending cuts that could cripple the US economic recovery if it is allowed to kick in at the end of the year. To do this, and to ensure that the signs of economic recovery that gave his campaign a boost do not prove to be illusory, Obama has to find a way of reaching across the aisle and dealing with Republicans in Congress.

Though Mitt Romney lost, the 2012 election was not a complete disaster for Republicans. Democrats kept control of the Senate but Republicans retained control of the House of Representatives and increased their power in governors’ offices across the country. Worryingly for Obama and the Democrats, those Republicans who lost their seats in the House were mostly moderate Republicans, leaving the president facing a more hardline House than before.

Even Obama’s supporters concede that he has not proven adept at building relationships across political lines. If he is to enjoy a second term marked by significant achievements, he will have to find a way to do this.

“There’s still a big radical portion of the Republican Party and that’s going to be a problem. President Obama needs to figure out how to deal with a very fractious House of Representatives. He wasn’t able to do that before. It’s a very difficult thing to do and President Obama’s not a back-slapper, deal-cutter kind of guy so it’s a real challenge for him,” said Elaine Kamarck, former adviser to Bill Clinton.

But after losing two elections, Republicans might just be willing to work with Obama, if not through a spirit of conciliation then through rank partisan fear that if they don’t come together in some way, they will be blamed for gridlock, which could bring dire consequences at the midterm elections in 2014.

Whatever Obama decides to focus on, he needs to act fast. What he achieves in the first 30 days will be crucial in setting the tone for the rest of his second term.

His major challenge is coming up with a plan to simultaneously tackle the budget deficit and grow the economy. Another pressing task is the implementation of his universal healthcare policy, something he must do in a way that makes the controversial initiative more widely popular.

He will also have staffing changes to make. History shows that presidents tend to select the best men and women for the job in their first term, so he will have his work cut out for him injecting fresh talent and drive and replacing a handful of key staff members who have indicated they plan to leave.

Hillary Clinton has already said she will vacate the Secretary of State position. One-time Democratic presidential candidate Senator John Kerry is the favourite to take over. Whoever holds the post will play a pivotal role in the new administration, which faces foreign policy challenges from Iran, Syria and China.

As for the rest of his team, as a second-term president, Obama at least has the advantage of a staff which is battle-tested and battle-ready to face the inevitable surprises of government.

The biggest questions facing Obama’s second term in office are, in a sense, existential. Should the president aim to be bolder this time around than he was the last, aiming to make fundamental changes to the way American society operates? Or is it a time for measured moderation and a steady hand on the economic tiller?

“In the second term there’s a very different dynamic. He doesn’t really have anything to lose from an electoral point of view so he may be driving for initiatives that are uncomfortable even for members of his own party [if they have their own midterm election to fight],” said Patrick Griffin, associate director of the Centre for Congressional and Presidential Studies at American University.

Armed with the moral authority of a second term, Obama has already been stealing the initiative this week by calling for middle-class tax cuts “now”.

In his impassioned and lengthy victory speech, Obama hinted that he intends to tackle some of the grand but unrealised promises of his first campaign, such as an overhaul of immigration and tackling climate change.

But there is another sense in which the president needs to decide what he is about. There are signs that his reserved, almost secretive style of government is alienating not only enemies on Capitol Hill but allies too. No mistake that Obama has formed a remarkable rapprochement with former president Bill Clinton. In his second term, Obama would be wise to develop some of that Clintonian charm and inclusivity to help him get his policies through.

Critics decry Obama for being too professorial and measured for his own good and for running an insular and exclusive team. It is a key aspect of his character, but in his second term he needs to thaw out and show that he leads from the heart as well as the head.

Should Obama take control early in his second term and push through some major 
policy initiatives then he has the potential to go down in the history books as a great American leader, one who pulled the country out of the biggest recession since the Great 
Depression, who passed the Affordable Health Care Act, who ordered the assassination of Osama bin Laden, and 
who oversaw an orderly withdrawal from Afghanistan and Iraq.

Should he fail to work with his political opponents to solve the economic, political and foreign affairs challenges facing America then he will be held personally responsible for a historic missed opportunity. The world is watching.