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Washington Matters


7 Priorities for Obama's Second Term

Kenneth R. Bazinet

Immediate tasks include finding ways to avoid the fiscal cliff and Iranian nukes.



A victorious President Obama has two top priorities moving into his second term: Putting Republicans in Congress on notice that they need to tackle the fiscal mess, and warning Iran it must shut down its nuclear program or face attack.

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With the GOP leaders, Obama will compromise. With the Iranians, the president will be resolute.

On the fiscal front, Obama will offer the Republicans another grand bargain that encompasses raising the debt ceiling, re-negotiating the mandated cuts in Pentagon and domestic spending and dealing with the Bush-era tax cuts that expire at the end of the year.

Although it's true that the president has no mandate from this tightly fought election, he does have a trump card: He will dangle the Bush era tax cuts in front the GOP leaders to get them to negotiate. Obama will want some big-ticket items to get him to not allow tax cuts to expire, such as a transportation and infrastructure repair and jobs bill and another extension of unemployment benefits for chronically jobless Americans.

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House Speaker John Boehner will be better positioned to negotiate, since the ranks of the often obstructionist tea party caucus in the House and Senate took a hit in the elections, albeit just a small one. Boehner will remind his party's rank and file in no uncertain terms of this new reality as talks with the White House proceed. The Republicans will demand and receive deep cuts, but they will also have to agree to open revenue streams, either by way of tax increases or eliminating tax breaks.

Big and small business leaders will back Boehner in urging the GOP to make a deal, rather than adopting another crash-and-burn bargaining position that could disrupt the financial markets. The cut-and-tax framework of the Simpson-Bowles debt-relief commission will be the blueprint for the talks, but it won't be an etched-in-stone document. It will be more like the concept Obama and Boehner agree to follow.

It's unlikely, however, that there will be a deal of any magnitude reached during the lame duck session that begins shortly. Instead, look for Congress to punt any long-term solution until the spring of next year, at the earliest, agreeing to once again temporarily extend the deadlines for the fiscal doomsday scenario. The fiscal cliff talks will set the table for broader tax reforms, which are sure to be discussed into late 2013.

One word of warning -- the one Mitt Romney gave his supporters -- don't expect any tax reforms to give taxpayers or corporations deep savings. Both sides understand there will have to be tradeoffs.

Turning to foreign affairs, the plan for Iran is not complicated: Either Tehran will end its nuclear weapons program, or it will face joint attacks from the U.S., NATO and Israel. The Iranians' decision will have to come sooner than anyone anticipates.

The Syrian government should be sweating a bit more, too. With the U.S. presidential election in the rear view mirror and pressure increasing to take out President Bashar al-Assad, it shouldn't be a surprise if the U.S. joins a coalition of nations that wage a targeted air campaign against the regime. Attacks on Syria could come sooner than action against Iran, especially if Assad's tanks continue to try to provoke Israeli troops in the Golan Heights.

Don't expect to see the timetable altered for withdrawing combat troops in Afghanistan. The U.S. will pull all of those forces out by the end of 2014, as Obama has promised.

Also on the priority list in the near and long term:

3) An estimated $12 billion disaster aid bill for states recovering from Hurricane Sandy is likely to pass in the lame duck session. About half would be used to replenish the Federal Emergency Management Agency's disaster coffers, while the remainder would be used for loans to state and local governments, the Small Business Administration disaster loan program and the Army Corps of Engineers.

4) Obama will aggressively push immigration reform in his second term -- and given the thumping Republicans took at the hands of Hispanic voters in this election, it will have a very good chance of passing this time.

5) The president's second term will also have a fresh focus on boosting American exports. Expect one or two trade deals that help the U.S. begin to make some modest gains in lessening the trade deficit.

6) More regulations involving the implementation of the Affordable Care Act will kick in, and the Environmental Protection Agency will start the process of putting new rules on the books regarding air and water quality. Good odds, too, that the Food and Drug Administration will issue new food safety regulations.

7) Obama will also play a role in the negotiations that will ultimately lead to Greece's exit from the EU. Other countries, like Portugal or Ireland may follow, but Obama will want to ensure that it is not done hastily so it doesn't disrupt the financial markets.

There may be some surprises ahead in the second term, but nothing monumental. The mainstream media will likely get hung up on channeling "Obama's legacy," but that's missing the point. Obama's legacy was set the day he became America's first black president, and it was rubber-stamped when heath care reform was passed. Everything else, as they say, is gravy.

With reporting from Senior Associate Editor Richard Sammon



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