President Obama will inherit a budget deficit that many analysts say could hit a trillion dollars for the first time in history, severely crimping any promises for tax cuts or spending on new programs. He faces a diving economy that has traumatised Americans trying to buy a home, pay for college or plan for retirement. And he'll confront the complexities of trying to extricate U.S. forces from Iraq, and a resurgent conflict in Afghanistan. A look at Obama's campaign promises and the challenges that stand in their way:
THE ECONOMY, TAXES AND DEFICITS
The promise: Retain President Bush's tax cuts for families making less than $250,000 a year and provide more relief to the squeezed middle class by creating new tax breaks for lower-income families; protect middle-class taxpayers from the Alternative Minimum Tax; exempt seniors making less than $50,000 a year from paying income taxes, expand the tax credit for college and provide incentives to encourage savings, and help pay for child care and mortgage expenses.
For the shorter term, Obama supported the $700 billion financial bailout plan passed in October and backs a second stimulus plan that would provide up to about $150 billion on top of the $168 billion package of tax rebates passed earlier in the year. It could provide tax rebates or credits, extend jobless benefits and spending on infrastructure projects like roads and bridges, as well as sending food aid to the poor and money to states to pay their Medicaid bills. Separately, Obama also proposed a $1,000 emergency energy rebate to families and penalty-free withdrawals of up to $10,000 from 401(k)s and IRA's. He also proposes a $3,000-per-employee tax credit to companies for each new job they create.
The problem: Obama's spending plans and middle-class tax relief will confront exploding budget deficits - $438 billion this year, and growing as the down economy reduces tax revenues and increases spending on bailouts and anti-recessionary programs. The nonpartisan Tax Policy Center estimates Obama's proposals would reduce projected tax revenue by $2.95 trillion over the next decade, compared to what would happen if Bush's tax cuts were to expire as scheduled at the end of 2010.
ENERGY
The promise: A crash program to begin to wean the country off of its dependence on oil. The goal is to reduce U.S. petroleum demand by an amount equal to the 3.5 million barrels a day now imported from unfriendly Venezuela and the volatile Persian Gulf. Obama also would invest $15 billion a year over the next 10 years to spur commercial development of alternative energy - wind, biomass and solar - and more energy-efficient buildings and automobiles. And he wants a short-term rebate of $1,000 per couple to help with rising energy costs.
The problem: Here, too, the economic crisis throws new spending into doubt - including Obama's alternative energy plans. The $150 billion program also is tied to Congess tackling global warming by putting a price on greenhouse gases, a prospect that faces many obstacles. The call for an energy rebate also may lose its urgency as gasoline prices have dropped by more than a third and heating oil by almost half from their peaks last summer.
HEALTH CARE
The promise: Increase the number of people with health insurance by having the government subsidize the cost of coverage for low- and middle-income families. To help pay for that expense, increase taxes for those families earning more than $250,000. Obama also would require employers not offering health coverage to pay a percentage of their payroll toward a national health plan. Small businesses would be exempt. He would also mandate that children have health insurance, and he would expand who can participate in Medicaid and the State Children's Health Insurance Program.
Obama's plan would let people choose a public, Medicare-like plan or browse a shopping center of sorts for private insurance plans. The National Health Insurance Exchange would create rules and standards for participating private plans, and insurers would have to issue every applicant a policy regardless of pre-existing health conditions.
The problem: While the plan would help millions of people obtain health insurance, health analysts say it falls short of universal coverage. The Tax Policy Center says the Obama plan would reduce the number of uninsured by 18 million in the first full year of operation, from the current figure of 45 million. That still would leave millions of uninsured adults. Meanwhile, the penalty on employers that don't offer health insurance could increase the cost of operating a business. Also, the plan will cost an estimated $1.6 trillion over 10 years, according to the Tax Policy Centre.
FOREIGN POLICY
The promise: Obama says he would engage both allies and adversaries to repair the U.S. image abroad and regain leverage and leadership that he says Bush squandered with the Iraq war. He says he will marshal international pressure against Iran, boost U.S. efforts against extremists along the Afghanistan-Pakistan border and get a faster and firmer start on Middle East peacemaking. He vowed to "renew the tough, direct diplomacy that can prevent Iran from obtaining nuclear weapons and curb Russian aggression."
FOREIGN POLICY
The promise: Obama says he would engage both allies and adversaries to repair the U.S. image abroad and regain leverage and leadership that he says Bush squandered with the Iraq war. He says he will marshal international pressure against Iran, boost U.S. efforts against extremists along the Afghanistan-Pakistan border and get a faster and firmer start on Middle East peacemaking. He vowed to "renew the tough, direct diplomacy that can prevent Iran from obtaining nuclear weapons and curb Russian aggression."
The problem: The Bush administration has already reversed many of its policies that other nations saw as isolationist or bullying - for example, by joining international diplomatic efforts with "axis of evil" nations Iran and North Korea. But even those haven't produced great results and neither has yet to achieve its desired goal. Obama has suggested he would continue such efforts, but there is no guarantee they will yield greater success. The Bush administration has also in recent weeks engaged in unilateral strikes against extremists inside both Pakistan and Syria, prompting furious responses from those countries. Obama says he, too, will go after terrorists this way but any president wanting to step up such activities will face strong resistance from local authorities and probably pay the price for violating other nations' sovereignty by seeing cooperation cut back.
DEFENCE
The promise: Pull all U.S. combat forces out of Iraq within 16 months, send more combat troops to Afghanistan and provide better care for wounded troops and veterans.
The problem: A troop pullout by mid-2010 is feasible, although some argue that it risks shifting full responsibility to Iraq's security forces before they are ready. The Bush administration, which originally opposed setting any pullout date, has targeted departure by the end of 2011, although the Iraqis have yet to agree.
Until U.S. forces are pulled from Iraq, there are none to bolster the force in Afghanistan. Balancing needs in those two countries will be an immediate challenge for Obama. There is broad consensus on the need for more troops to combat an emboldened insurgency in Afghanistan and to train government troops there, but the trick is to accomplish that without giving up gains against the insurgency in Iraq and without robbing combat-weary soldiers and Marines of the rest periods they need.
Caring for veterans and the wounded entails enormous costs, and the scope of the health care requirements for returning troops is not yet fully known.
EDUCATION
The promise: An $18 billion plan that would encourage, but not mandate, universal pre-kindergarten; teacher pay raises tied to, although not based solely on, test scores; an overhaul of President Bush's No Child Left Behind law to better measure student progress, make room for subjects like music and art and be less punitive toward failing schools, and a tax credit to pay up to $4,000 of college costs for students who perform 100 hours of community service a year. Obama would pay for part of his plan by ending corporate tax deductions for CEO pay. He has backed away from his proposal to save money by delaying NASA's moon and Mars missions.
The problem: With the budget stretched thin, a huge infusion of cash for early childhood education or college costs seems unlikely. Federal spending on education has already been rising for more than a decade. Congress and the White House will be in no hurry to tackle No Child Left Behind, which was due for a rewrite in 2007; the economy, the war and health care are stickier and more pressing concerns.
