A historic moment. An impossible challenge.

How will Barack Obama handle the expectations and the challenges?

Barack Obama

More than 100,000 euphoric people danced and wept in Chicago’s Grant Park on Tuesday night as a Democratic victory swept across the electoral map of the United States. It transformed Barack Obama, the junior senator from Illinois, into the nation’s first African-American president-elect. Across the U.S., voters had waited in long lines, some for five hours or more, for the chance to have their say in the conclusion to the longest and most expensive presidential contest in history. Toddlers were lifted to touch voting screens on behalf of parents; Americans who had lived through racial segregation left the polls weeping, saying they had not thought they’d live to see the day.

Obama, the son of a white mother from Kansas and a black father from Kenya, who grew up in Indonesia and Hawaii, was a mere state senator not yet elected to the United States Senate when he gave an electrifying speech, calling for national unity, at the 2004 Democratic convention. Then, in four short years, he went on to redefine what was possible in American politics. In a bitter and drawn-out primary contest, he bested a pillar of the Democratic establishment, Hillary Rodham Clinton, with his superior organization and unwavering message of change. He prevailed in an ugly presidential race against Arizona Senator John McCain, in which he was called a socialist and a secret Muslim, accused of palling around with terrorists, and saw the validity of his American citizenship baselessly challenged. Despite it all, he picked up states that eluded the Democrats in 2004, including Florida, Ohio and Virginia, in the process earning a national mandate for his presidency.

The rise of the 47-year-old lawyer was the story of a once-in-a-generation political talent. But it was also the reawakening of the Democratic party, in a country where Republicans had set the agenda since taking over Congress in 1994 and the presidency in 2000. It took a financial crisis on Wall Street to finally give Obama a solid lead in the polls by mid-September. But even then, Democrats couldn’t quite believe it. Would voters really select the black candidate in the privacy of the voting booth? They did, in droves. While some Americans said they would never vote for a black man, many expressed their desire not only for “change” from the era of George W. Bush, but also to be a “part of history.”

When he stepped onto the stage in Grant Park on Tuesday night to give his acceptance speech, Obama spoke in epic terms about his aspirations for his presidency. “This is our moment,” he said. “This is our time—to put our people back to work and open doors of opportunity for our kids; to restore prosperity and promote the cause of peace; to reclaim the American Dream and reaffirm that fundamental truth—that out of many, we are one; that while we breathe, we hope, and where we are met with cynicism, and doubt, and those who tell us that we can’t, we will respond with that timeless creed that sums up the spirit of a people: ‘Yes we can.’ ”

But the president-elect leavened the euphoria with words of caution. “The road ahead will be long,” Obama said. “Our climb will be steep. We may not get there in one year or even one term, but America—I have never been more hopeful than I am tonight that we will get there. I promise you—we as a people will get there.”

It will take more than hope. When Obama places his hand on a Bible on Jan. 20 and takes the oath of office as the 44th president of the United States, he will face the biggest economic quagmire since Franklin Delano Roosevelt took over from Herbert Hoover in the midst of the Great Depression. By Inauguration Day, more jobs will be lost, the government deficit will still be soaring and revenues plummeting. The recession, of unknown depth and duration, will be well under way by the time Obama moves into the Oval Office. But even Roosevelt wasn’t facing a war in his first day in on the job, let alone two—the future of Iraq hangs by a thread while the situation in Afghanistan is getting worse. “The events of the last month suggest that the challenges the next president will face are comparable to other emergencies in American history like the Civil War and the Great Depression,” says Sidney Milkis, a political scientist at the University of Virginia and author of several books on the presidency.

It is not unthinkable that Obama’s moment of triumph could be the start of his undoing. Few presidents have entered office not only facing so many problems, but also such sky-high expectations—from fixing the economy, ending the wars and restoring America’s image abroad, to achieving historic racial reconciliation and transforming the “culture of Washington.” Some of his boosters speak in almost Biblical terms about his ability to offer “healing,” and even “rebirth.” Has a load so great ever been placed on what are, at the end of the day, elegant but so very inexperienced shoulders? Could the Obama presidency be doomed to failure before it even begins?

Presidential history offers a stark cautionary tale. Martin Van Buren, a well-heeled Democrat from New York state, became the eighth American president in March 1837. He’d barely started his job when a financial bubble, fuelled by the policies of his predecessor, Andrew Jackson, burst in a spectacular fashion, triggering a crisis that came to be known as the Panic of 1837. Almost half of the banks in the U.S. failed. Land prices collapsed. A five-year depression and massive unemployment followed. So many people went bankrupt that a special law had to be passed to forgive their debts because there were not enough places for all the debtors in jail. The government went into sharp deficit. The national debt grew. Van Buren—mocked by his rivals as “Martin Van Ruin”—never had a chance. He was voted out after one undistinguished term.

The irony for Obama, of course, is that the financial crisis is what helped sweep him into the White House. His sunny “Yes we can!” election campaign burst out from the crowded Democratic field with its talk of healing the racial divide and uniting a partisan nation. But by the time he took to the stage in a Denver football arena for the historic acceptance speech at the Democratic National Convention on Aug. 28, lofty rhetoric was giving way to an economic lament. Sure, there were videos of Martin Luther King Jr., but there were also videos of regular folks worrying about how they would pay for their kids’ college, as Obama’s message focused on bread-and-butter issues.

As the economy further deteriorated, Obama’s campaign pitch narrowed in. He could solve the problems. His half-hour prime time infomercial on seven television networks on Oct. 29—at a cost of up to US$5 million—may be most remembered for the image of an elderly Ohio woman trying to straighten her misshapen rheumatic fingers as she describes how she borrowed against her house to pay medical bills, and the mom in Kansas who was forced to ration snacks for her kids. It was watched by 34 million people.

The day before the election, U.S. manufacturing fell to its lowest level in 26 years. The great question now, as Obama prepares for Inauguration Day, is whether he can keep the gales of fear, loss and frustration—over the economy, and the war—that blew him into the White House from blowing the roof off his historic presidency. Or, as Princeton professor Cornel West recently put it, “The empire is in decline, the culture is in decay, the democracy is in trouble, financial markets near collapse. It’s almost Biblical. And you can imagine what the black brothers and sisters in the barbershops and beauty salons say: ‘Right when the thing is about to go under, they hand it over to the black man.’ ”

How bad will it be? In January, just as Obama moves his wife, Michelle, and daughters Malia and Sasha into the White House, the Congressional Budget Office will be releasing its projections for the 2009 federal budget deficit. For the fiscal year that ended on Sept. 30, the shortfall was an astounding record high US$455 billion. Given the massive expenditures on bailing out the economy, some experts say it could climb past US$1 trillion next year. As for the longer term? In September, the office predicted a US$2.3-trillion cumulative deficit over the next 10 years, a very conservative estimate given that, among other things, Congress is already working on another spending-heavy economic stimulus package, on top of the recent US$750-billion bailout to financial institutions, that could be passed before Obama takes over.

In that kind of a budgetary environment, it’s hard to see how Obama can fulfill his many campaign promises—a middle-class tax cut, subsidized universal health insurance, and spending on alternative energy technologies, among other things. Obama has promised to cut taxes for people who earn less than US$250,000, and has proposed refundable tax credits for low-income elderly people and families paying college tuition, among others. But Roberton Williams, a principal research associate at the non-partisan Tax Policy Center in Washington, calculates that Obama’s tax plan would increase the cumulative 10-year deficit by US$3.5 trillion. “He will not have as much freedom to cut taxes the way he’d like,” Williams says. “All those things might well be on the chopping block.”

A declining economy will make things much worse, for several reasons. For one thing, recessions that lead to job losses are bad enough—as they reduce tax revenues for Washington from wage earners. But this one could be particularly tough on the government balance sheet because the upper-income earners who pay the largest share of taxes have been hit hard by the collapse on Wall Street. Obama had planned to raise taxes on the wealthy, but any tax hike would be a hard sell in the midst of a recession.

Meanwhile, with so many consumers feeling impoverished by the collapse in value of their biggest assets—their homes—and their shrinking retirement portfolios, they have dramatically pulled back on spending, which will also hurt government revenues. “It’s unlikely we’ll go to the depths we’ve had in the 1930s, where there was a 25 per cent unemployment rate,” says Williams. “But we could have a deep and lengthy recession, which would make it hard on anyone.”

In such an environment, what happens to all of Obama’s other promises? Presidential debate moderator Bob Schieffer made this point to both candidates during their final confrontation on Oct. 15. “Aren’t you both ignoring reality?” he asked. “Won’t some of the programs you are proposing have to be trimmed, postponed, even eliminated? Give us some specifics on what you’re going to cut back.” Both candidates’ answers were less than straightforward. In Obama’s case, he promised that every dollar of increased spending would be matched by a spending cut. “We need to eliminate a whole host of programs that don’t work,” he said. “And I want to go through the federal budget line by line, page by page—programs that don’t work, we should cut. Programs that we need, we should make them work better,” he said, promising to use a “scalpel.”

Needless to say, there is skepticism that Obama can cover his spending with cuts elsewhere. “These are big, big holes to fill with spending cuts,” says Williams, commenting on the increases in the debt that Obama’s tax plan would bring. And Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce, just doesn’t see how Obama can offset his promises by slashing elsewhere. “Don’t forget that the economy between now and Inauguration Day is not going to get better—it’s going to worsen,” he says. Josten predicts an increase in the unemployment rate from the current 6.1 per cent to 7.5 by then. The promise of funding new spending with budget cuts elsewhere may be the first to be ditched. “If you’re in a crisis, deal with the crisis,” Josten says. “You’ve got a patient called the economy in the ICU and it has a bullet in its head. You have to stabilize it and move into surgery to remove the bullet.”

Josten is particularly skeptical that Obama will be able to make good on his promise of providing universal health insurance without substantial tax hikes. “The tax increase you are talking about is enormous—the health care system is 14 per cent of GDP,” he says. And he doubts that members of Congress will be eager to take up such a difficult reform before the 2010 mid-term elections. “The political fallout of [George W.] Bush’s failed attempt to reform Social Security and [Bill] Clinton’s reform of health care are pretty vivid memories in Congress,” says Josten.

But Obama campaigned hard on his promises—especially his pledge of a tax cut for 95 per cent of American households. If he doesn’t deliver, it won’t be just a matter of breaking his word—but potentially a long-lasting blow to the party. That’s because Clinton also campaigned in 1992 on a tax cut aimed at the middle class, and ditched the idea when the economy was weak. While Clinton managed to win re-election anyway, if Obama reneges as well, future Democratic candidates might find it hard to be taken seriously on such promises. “He can’t mess with that,” says Milkis. “Probably the most powerful domestic issue Republicans have had is taxes—and going back to before the Revolution taxes have not been popular in America.”

Beyond the immediate crisis, there are other serious economic challenges lurking down the road. In 2011, Social Security will start paying out more than it takes in, shrinking a US$150-billion source of discretionary spending for the government. The Medicare system is in even worse financial shape. Shoring up these massive entitlement programs was a political nightmare even before the economy went south. “Let’s forget the economy, and the fact that the financial markets are screwed up,” Josten says. “Two years ago I couldn’t figure out why 20 people would want to run for president right now.”

In his TV campaign commercials, Obama said that the first thing to do to pay for his plans would be to “stop spending $10 billion a month in Iraq”—and move combat troops out within 16 months. The popular view of the situation in Iraq, where 154,000 U.S. troops are still serving, is that violence is now down because “the surge worked.” It is part of the irony of John McCain’s defeat that he was unable to make Iraq (and his leading role in advocating for the increased U.S. build-up of more than 30,000 additional troops that began in early 2007) a major issue in the campaign—precisely because violence was down and the economy replaced the war in the headlines. However, the Iraqi situation is more complicated. The country is in the early stages of what could become a negotiated solution to its ethno-sectarian civil war. Violence is down because the U.S. military managed to reach numerous bilateral ceasefire agreements with individual combatant groups. Indeed, over 200 separate negotiated deals are now in effect in Iraq, estimates Stephen Biddle, a senior fellow for defence policy at the Council on Foreign Relations, a think tank in Washington.

But they are precarious—and labour-intensive to maintain. The fragile web of ceasefires effectively requires U.S. troops to act as peacekeepers, keeping small incidents from undermining the peace. “It sets up lots of situations in which neighbouring ceasefire groups who profoundly distrust each other are eyeing one another warily across a boundary—literally a street in a town or city,” says Biddle. “What happens all the time is someone miscalculates, they see what they can get away with, they don’t control their own people, there is an accident that is misinterpreted. The victims of the violence want retribution. If there is no peacekeeper present, they take the law into their own hands; there is counter-retaliation, counter-counter-retaliation—and you are off to the races.”

If Obama begins to withdraw more troops from Iraq, there is no one waiting in the wings to replace them. Many experts dismiss the Iraqi army’s contention that it is now strong enough to fill the breach. “If you get two or three years of something that looks like peace in Iraq, you might get standard UN peacekeepers to come do it—maybe even Canadians who are among the best in the world at this job,” Biddle says. “But no one is interested in helping the U.S. fight a war in Iraq. And lots of people are skeptical that this thing will remain at peace”—especially if the U.S. troop presence, which is currently in large part responsible for keeping a lid on widespread violence, is reduced.

Meanwhile, and here is the catch, while Obama has promised to move soldiers out of Iraq, he wants to send at least two brigades of them to Afghanistan, where the situation is deteriorating. (A brigade can include 3,500-4,500 soldiers; the U.S. already has 34,000 troops in Afghanistan.) The government of Hamid Karzai has been ineffectual, the Afghan military has been under-resourced, and the poor reconstruction effort has left the country open to re-infiltration by the Taliban.

But while some say that more troops in Afghanistan might go a long way, it could also draw the Obama administration deeper into a broadening military quagmire that might prove unsolveable. One reason for that is Pakistan. The Taliban and al-Qaeda have been allowed to operate training bases across the Afghan border in Pakistan’s Tribal Areas, where their activities have been tolerated by Pakistan’s security services. So to take on the Afghanistan problem means increasing the pressure on Pakistan. But that country has proven itself unable, or unwilling, to solve the Taliban issue.

As a result, since August the U.S. military has sent some 20 air strikes against suspected Taliban and al-Qaeda targets in Pakistan’s Tribal Areas of Pakistan. But it is a dangerous tactic: the bombings have fuelled even greater anti-American sentiment in Pakistan, increasing already heightened instability in a nuclear-armed nation where experts have long feared the prospect of dangerous weapons falling into terrorist hands—the ultimate nightmare. And, ultimately, the U.S. is unlikely to be able to sustain an expanded conflict. “Both theatres [Iraq and Aghanistan] are hanging in the balance right now and success in either one would ideally require more resources than we’ve got,” says Biddle.

And there are other items on the long to-do list left by Obama’s predecessor: questions about how to close the detention centre at Guantánamo Bay; what to do about detainees there who may be too dangerous to set free but whose trials may be impossible because the evidence against them was collected by torture; the fact that Osama bin Laden is still at large; Iran’s nuclear ambitions (Obama has taken the risky step of offering to engage in talks with Tehran). “Maybe it’s some consolation to have the opportunity to go into the history books as the guy who solved all this stuff—but boy it would be nice to have a little peace and prosperity instead,” says Biddle.

On the domestic front, the number of challenges to be faced—even before the financial crisis—was daunting. Take climate change, for example. Years of inaction by both the Clinton and Bush administrations have meant that greenhouse gas emissions have kept increasing. To reach targeted reductions now will be all the more expensive. Both Obama and McCain had called for a “cap and trade” system that would cap annual emissions in the U.S. Emitters of CO²—such as power plants and factories—would be required to have permits for every tonne of CO² they emit. The permits could be bought and sold, but the system as a whole would likely increase the costs to industry.

Critics, such as the chamber of commerce’s Josten, don’t think the issue will now be a high priority. “I think cap and trade is a $5-billion to $7-billion tax on the overall economy,” he says. “It is drastic and dramatic. It means new taxes, and higher energy costs.” Others disagree. The head of federal government relations at the Pew Center for Climate Change, Manik Roy, says a cap and trade system can be set up—but on terms more favourable to polluting industries than many environmentalists would like. Any plan will have to include a generous “transition” period during which emissions restrictions begin modestly and ramp up several years down the road, and industries would not be charged for the permits.

Another grave problem facing the United States and its prospects for future prosperity is what is being called the infrastructure deficit. It was highlighted by the August 2007 collapse of a bridge carrying commuter traffic over the Mississippi River in Minneapolis, which killed 13 people and injured 145. One-third of major roads are considered in “poor or mediocre” condition, according to Trip, a national transportation research group, and a quarter of U.S. bridges are considered “structurally deficient or obsolete.” The American Society of Civil Engineers has estimated that the cost of just repairing and maintaining existing U.S. infrastructure—such as roads, bridges and the like—amounts to US$1.6 trillion. And that does not account for the new construction necessary to keep up with the increase in population—the U.S. is expected to grow by another 135 million people by 2050 to 440 million—that will further strain already congested highways and an overburdened rail system, among other things.

Meanwhile, the Federal Highway Trust Fund, which uses revenues from gas taxes to help fund transportation projects, is projected to run out of money in 2009. The next Congress will have to deal with how to pay for projects that will be in jeopardy as a result. While competitors such as China and Europe are investing heavily in high-speed rail and other cutting-edge infrastructure, the U.S. is falling behind—and has not undertaken a major national initiative since construction of the interstate highway system started in the 1950s.

There is now a lot of talk about introducing an infrastructure spending bill as a means of stimulating the economy and creating jobs in the short term. The problem is figuring out how to pay for it. A proposal that would have added five cents a gallon to the gas tax to pay for infrastructure has received a cool reception in Congress. Public-private partnerships that allow private companies to build public roads are a potential source of funding, but that has become a politically sensitive issue, particularly if the companies are foreign and want to charge tolls. Obama faces a challenge and an opportunity—if only the money can be found. “Many people believe this is an opportunity to do a major overhaul of the entire surface transportation system,” says Maureen McAvey, the executive vice-president of new initiatives for the Urban Land Institute, a research and advocacy group. “We face choices, none of which we want to make, one way or another if we’re going to have modern infrastructure and it’s going to cost more. It will be either in the form of higher taxes, user fees, a combination of fees from one source or another. It won’t fall like manna from heaven.”

Van Buren’s sorry plight in the 19th century aside, presidential history also teaches that in crisis lies opportunity. After all, America’s two most revered presidents—Abraham Lincoln and Roosevelt—both led the country through times more difficult than today. Lincoln, of course, faced the Civil War. And when Roosevelt was sworn into office in 1933, the country was a shambles. “Four years into the Great Depression, it wasn’t simply that 90 per cent of the people felt the country was on the wrong track,” notes Richard Norton Smith, a presidential historian at George Mason University. “Roosevelt himself feared that if he failed he would be the last democratically elected president of the U.S.”

Roosevelt was able to rally Americans behind him, much like Bush did in the early days after the attacks of Sept. 11, 2001. “People had a sense that Roosevelt presented a program that was more in tune with problems the country was facing, and was providing protections for individual men and women from the marketplace,” says Milkis. “I’m not sure if the country still has the capacity to rally behind a president and be patient. But I think it’s wrong to assume that because we have a profoundly difficult economic crisis the next president is doomed to fail.”

It helps that Obama will enjoy a Democratic majority in Congress. “It was a great advantage for Lincoln and Roosevelt that they had strong control of Congress,” notes Milkis. Imagine the added layers of difficulty, he notes, if McCain had won the election and faced an antagonistic Democratic Congress, much like Richard Nixon did when the pressures of an unpopular war in Vietnam and a stagnating economy provided the backdrop to the breakdown of his presidency in the Watergate scandal, and his resignation. “Then the parallels with the late 1960s and early 1970s would be very appropriate,” Milkis adds.

What will not help Obama is inexperience. It has affected others: when John F. Kennedy, also young, was elected in 1960, he could give an inspirational speech, but he quickly got embroiled in the Bay of Pigs fiasco, and tensions with the Soviets led to the construction of the Berlin Wall. And Bill Clinton, who had been only a young governor of a small state, also had early problems once he reached the White House, ranging from personnel scandals to a failed health care reform. As a result, Republicans stormed Congress in the mid-term elections of 1994 and formed a majority in the House of Representatives for the first time in 40 years.

But some are optimistic that, despite the challenges, Obama will lead a new “liberal moment” for America. Historian Smith is one of those. “There won’t only be a new universe in Washington, but it will reflect a willingness and desire on the part of Americans to do things very differently, to see a different kind of political culture, that will hopefully lead to addressing issues we haven’t dealt with in years—such as deficits, debt, and neglecting our infrastructure,” says Smith. “How long have we told ourselves that because there are many things government does badly, there is nothing it does well?” Obama, he argues, won by presenting himself as a pragmatic problem-solver rather than an ideological culture-warrior. “I think the next president will have an upwelling of popular support. I think people will want the next president to succeed and will be willing to follow him away from the kind of small, dreary, divisive politics that have really defined the last generation.”

The chamber of commerce’s Josten also agrees that Obama faces an opportunity—if he is skilful enough to seize it. “It’s like the old saying, don’t solve problems—pursue opportunities,” he says. “There is a huge upside—a lot of people would take over a business in decline because the upside potential is so great. It’s easier than taking over a company that is growing at 12 per cent a year. That’s a tough act to follow.”

So far, Obama has put a brave face on the difficulties he will face. To his close friends, he has reportedly expressed a fear of disappointing the people who put so much faith in him, but outwardly he has appeared characteristically unruffled. It took a comedian, Jon Stewart, to ask Obama bluntly whether he had any second thoughts given the challenges ahead: “Is there a sense that you don’t want this? You may look at the country and think, ‘When I thought I was going to get this, it was a relatively new car. Now look at it!’ ” Obama was philosophical: “This is the time to want to be president. If you went into public service thinking that you could have an impact, now is the time where you could have an impact.” And, he added: “Every once in a while you have these big challenges and big problems. It gives an opportunity for us to really move in a new direction. This is one of those moments—on things like energy and health care and economy and education—where I think people recognize that what we’ve been doing isn’t working. I think people will be more open to change.”

For another dose of optimism, Obama can look to the experiences of presidents Ronald Reagan and Clinton, who came to of?ce when the economy was weak, but were re-elected because it improved over their time in office. The question for voters four years from now will be, as it was when Reagan once put it so succinctly: “Are you better off than you were four years ago?” Given the low expectations for the near future, Obama—and all Americans, whether they voted for him or not—are hoping there is nowhere to go but up.