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Obama will get no rest before second-term challenges arise

Presidential second terms are fraught with disappointment, but for Obama, there are opportunities to follow up on his successes. First up is the 'fiscal cliff.'

November 07, 2012|Michael Hiltzik
  • Supporters of President Barack Obama react to election returns at a party sponsored by the Democratic Party of Georgia in Atlanta.
Supporters of President Barack Obama react to election returns at a party… (Erik S. Lesser / EPA )

So, Barack Obama, you've been granted a second term. What do you do for an encore?

It has become commonplace to observe that presidential second terms are fraught with disappointment. George W. Bush's was marred by a bogged-down war in Iraq and the collapse of the financial system; Bill Clinton's by the Monica Lewinsky scandal; Ronald Reagan's by the Iran-Contra scandal (but moderated by the end of the Cold War). Franklin Roosevelt squandered the promise of his second term by picking a fight with the Supreme Court, an effort that ultimately undermined his ability to fulfill all the promise of the New Deal.

The challenge of Obama's second term will begin even before his second inauguration. That's because some sort of accord with Congress will have to be reached during the postelection lame-duck period to avert the "fiscal cliff" — that combination of expiring tax cuts and mandated spending cuts that will kick in at the beginning of the year, stifling the economic recovery if no action is taken.

This is where Obama could position himself as a president with a mandate, or the lamest of lame ducks. Throughout the campaign, he signaled that he would stand firm on the expiration of the Bush tax cuts for the wealthiest taxpayers, but he was less specific about what programs he would keep off the bargaining table.

The most important dickering could involve Social Security, Medicare and Medicaid, those programs dismissed by conservatives as "entitlements." The Romney-Ryan ticket made no secret of its plans to hack away at all three, as if they are equal threats to the federal budget. To supporters of the programs, Obama's counter-argument was never sufficiently forceful.

Here's his chance. To protect the Democratic Party's legacy of progressivism, he should make clear to all Americans that despite being lumped together rhetorically, these programs are very different and face very different fiscal challenges. Social Security simply does not face a fiscal problem in the near term — meaning not for at least 10 years or so. Even then, the program is amenable to corrective steps within its own four walls — through changes in benefits or taxes.

Medicare and Medicaid are a different story. Neither can be fixed purely by changing its benefits or tax structure, certainly not by sharply reducing benefits, raising premiums or throwing people off the rolls — all of which were implicit, even explicit, in the proposals of the Republican ticket. The only way to guarantee the survival of these healthcare programs for the future is to attack healthcare expenditures at their sources, meaning the cost of pharmaceuticals, the fees paid to doctors and hospitals, and inefficiencies in utilizing the medical options we have.

That brings us to the signature achievement of Obama's first term, healthcare reform or, to use a label he eventually embraced, Obamacare. The program enacted in 2010 included the first measures specifically aimed at reducing healthcare costs ever to emerge from Washington. Among them are rules limiting the profiteering of health insurers, granting millions more Americans access to cheaper and more effective preventive care, and subjecting Medicare expenditures to heightened scrutiny. But their prospects for success are uncertain. It wouldn't be easy to change the healthcare cost trends in America's aging society under the best circumstances, but these changes need to be rigorously enforced and widely expanded — a major agenda item for the second term.

For all that it was denigrated during the presidential campaign, Obama's first term compiled a significant record of achievement. The stimulus program kept millions of Americans employed who might have lost their jobs otherwise, lowered unemployment by as much as 1.1 percentage points, and raised real gross domestic product by as much as 1.5 percentage points — in the last quarter of 2011 alone, according to the Congressional Budget Office. And that was at a point when its immediate effect was beginning to ebb. It's still rippling through the economy even today. Obamacare will add millions of Americans to the ranks of the insured. And he ended one war and began winding down a second.

For a second-term president, the power of the office is a wasting asset. People in Congress and at other echelons of his party need to curry his favor or fear his authority less and less as the end of his eight years approaches. Starting with the fiscal cliff negotiations, he'll have a chance to show whether he will make the most of the power left to him, or let it wither.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at, read past columns at, check out and follow @latimeshiltzik on Twitter.

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