WASHINGTON -- Confrontations
abroad. A divided Congress at home. A budget stalemate on the horizon
that threatens another recession.
Come Nov. 7, President Obama or
President-elect Mitt Romney might be forgiven if he pines for the good
old days of campaign rallies and negative ads.
The world won't
wait for either man to enjoy his victory celebration. The bad blood and
battle lines between Democrats and Republicans are likely to spill over
rather swiftly from politics to policy matters. And only 55 days will
remain before a convergence of tax increases and spending cuts threatens
to throw the slowly healing U.S. economy back into recession.
"If
you watch cable news on any station the day after the election, all
you're going to hear is 'countdown to the fiscal cliff,'" says Erskine
Bowles, who co-chaired a fiscal commission that recommended nearly $4
trillion in deficit reduction over 10 years.
Without
action, almost every tax cut enacted since 2001 is set to expire at the
end of the year. The resulting $500 billion tax hike would raise the
average American household's tax burden by $3,500, according to the
non-partisan Tax Policy Center.
The first $110 billion of a
planned $1.2 trillion in spending cuts over 10 years to reduce the
deficit also would begin at the start of the new year. Defense Secretary
Leon Panetta has warned that, left unchanged, those defense cuts would
threaten the nation's security.
A new or re-elected president
confronted by an immediate crisis isn't unprecedented, of course. Obama
came into office four years ago facing an economic cataclysm that became
the deepest recession in 70 years. Bill Clinton was welcomed with a
budget mess. Ronald Reagan walked into the Iran hostage crisis. Richard
Nixon was immediately immersed in the Vietnam War. The comparison
extends deep into history: Franklin Roosevelt faced the Great
Depression; Abraham Lincoln, the onset of the Civil War.
But the
next president also is likely to face a deeply divided country and
Congress. If today's polls are accurate, a narrow victory will not
provide an electoral mandate. He will be forced to reach across the
aisle for help in tackling these daunting issues.
"In terms of an
environment for transition, this is pretty much the worst I've seen,"
says Paul Light, professor of public service at New York University.
"It's going to be knock-down, drag-out from Nov. 7 on."
At the
same time, the president or president-elect will have a slew of
personnel moves to make, including Cabinet-level nominations that need
Senate confirmation - in a Senate that will likely be nearly divided.
Romney would have an administration to populate. Obama would need to
replace key people, led by Secretary of State Hillary Rodham Clinton and
Treasury Secretary Timothy Geithner, who plan to step down.
And
the world won't stop revolving while the next president gets his sea
legs. Potential crises in the Middle East, Iran's slow march toward a
nuclear bomb and the enduring global economic slowdown will demand
attention even as the domestic budget impasse dominates the agenda.
Staring at a 'fiscal cliff'
The pre-eminent challenge is finding a path to reduce the nation's
debt and deficits while stabilizing the economic recovery. A looming
calendar of expirations and automatic triggers - the "fiscal cliff" -
threatens economic and budgetary mayhem if Washington can't forge
compromise in the wake of the election.
"You could see (the
economy) slowed by 3% next year. You could see as many as 2 million
people lose their jobs. You could see unemployment go to 9%," Bowles
warns. "Sometimes a crisis propels action in the Congress."
The economy faces a twofold threat at the end of the year when tax
cuts passed in the Bush administration are scheduled to expire, raising
taxes on 90% of Americans. At the same time, across-the-board spending
cuts would be triggered as a result of a congressional panel's failure
last year to find a path to deficit reduction on its own.
Enacting
tax hikes and spending cuts during a slow recovery are all but certain
to throw the economy into a recession, given the current 2% growth rate -
below the 3% rate most economists believe is needed for an economic
rebound.
Also expiring at the end of the year are the tax breaks
enacted as part of Obama's 2009 economic stimulus, including expansions
of the child tax credit and earned income tax credit; a temporary
payroll tax break; a "patch" on the Alternative Minimum Tax, exposing 26
million taxpayers to higher taxes; and a package of pet tax breaks,
including one that encourages charitable giving.
More worrisome is
the next vote to raise the government's borrowing authority, which the
Treasury Department estimates will be reached in February, just weeks
after the president's inauguration. A heated debt-ceiling battle in 2011
between the White House and Congress threatened the nation's credit
rating and sent stocks tumbling.
And then there's the potential
for another threatened government shutdown. The Obama administration and
congressional Republicans clashed over spending limits last year but
cut a last-minute deal to avert a shutdown after weeks of brinksmanship.
The government's current funding extends only until March 27.
"What
the next president is looking at in 2013 is a steady series of
cliffhangers," says Stan Collender of Qorvis, a federal budget expert.
"I'm not sure I see a way out of this unless everybody gets religion."
Yet
as time grows short, there is growing consensus that Washington will
not be able to solve all its fiscal problems between Election Day and
Dec. 31. Congressional negotiators have yet to begin talks on the
possibility of short-term fixes, which will be influenced by who wins on
Nov. 6.
A world of uncertainty
To hear Romney
describe the Middle East as a "rising tide of chaos" in the last debate,
one could imagine international affairs intruding on the next
president's time as well.
"We don't know what the world is going
to throw at us down the road," Romney said. "We make decisions today in a
military that will confront challenges we can't imagine."
The
former Massachusetts governor made the point to illustrate his
opposition to further cuts in the Pentagon's budget, threatened by the
budget stalemate. But it just as easily could apply to a number of
global hot spots that may confront the next president as early as Nov.
8, when China's Communist Party begins the process of selecting new
leaders.
The most likely place is Syria, where violence that began
in March 2011 during the Arab Spring has killed 30,000 Syrians and
spilled over into Turkey and Lebanon. But the entire Middle East and
Persian Gulf region remains volatile: Iran's nuclear program hasn't
buckled under the weight of sanctions and negotiations. U.S. dealings
with Egypt's new government have been tense. And the Israeli-Palestinian
situation is always a simmering wild card.
"You've got to divide
the region into two sorts of realities - the migraines and the root
canals," says Aaron David Miller of the Woodrow Wilson International
Center for Scholars.
Negotiations over Iran's nuclear program
will likely resume in late November or December, regardless of who wins
the election. Those talks involve five other countries, but Obama has
opened the door to possible talks between just the U.S. and Iran.
"The
clock is ticking," he said at last week's debate. "We're not going to
allow Iran to perpetually engage in negotiations that lead nowhere."
Romney
has said he would tighten existing economic sanctions and seek to have
President Mahmoud Ahmadinejad indicted for genocide.
He also has
threatened immediate actions against China. "On day one, I will label
them a currency manipulator, which allows us to apply tariffs where
they're taking jobs," Romney said during the debate.
Such a move
could trigger a trade war, pushing China policy up on the presidential
timetable, says Eswar Prasad, professor of international trade policy at
Cornell University.
Job One: Make friends
After a
relentlessly negative campaign that was the most expensive in history,
the central challenge for Obama or Romney might be to repair relations
with the other party. By all accounts, it won't be easy.
"It is
the single most important roadblock" to a successful start, says Mickey
Edwards, a former Republican congressman whose new book carries the
subhead How to Turn Republicans and Democrats into Americans. "The challenge that they both have is how they reach out."
Easier said than done.
Obama
has spoken to House Speaker John Boehner by phone just twice since
July, to discuss the fiscal cliff and the situation in Libya, spokesman
Kevin Smith says. Obama's extended hand also would be met by Senate
Republican leader Mitch McConnell, who made defeating the president a
prime objective.
Romney would face Senate Democratic leader Harry
Reid, who has accused him of tax evasion, among other frequent attacks. A
Democratic Senate would be a powerful barricade against Romney's
agenda, which includes pledges to repeal Obama's health care law and
permanently extend the Bush tax cuts for all.
Either president
should "devise a strategy to reach out (to Congress) and almost do
nothing else," says Dan Glickman, a former Democratic congressman now at
the Bipartisan Policy Center. "There's just no way to get big
legislation through without working them, massaging them, toasting them,
dining with them."
For Romney, the task would be complicated by
the need to fill out an entire administration. Even if Democrats don't
retain control of the Senate, they could block his nominees.
"I
wouldn't envy the Romney folks the day after the election," says William
Galston, a former domestic policy adviser in the Clinton
administration. "They have an enormous number of things they have to do
simultaneously."
The president also will have to contend with
outside pressures from lobbyists, unions, corporate interests and
ideological foes. Americans for Tax Reform President Grover Norquist,
whose anti-tax oath has been signed by almost every Republican member of
Congress, is girding for a fight if Obama is re-elected. "There's no
compromise," Norquist says, adding his prediction for an Obama second
term: "There's a stalemate."
Despite all the obstacles, Sen.
Patty Murray, D-Wash., a Democratic leader who co-chaired the failed
deficit-reduction panel, says a deal is possible if Republicans give on
taxes.
"There is a balanced deal to be had," she says. "I think
we're back to a starting point now for the president to bring people
together."
USA Today