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The Honolulu Advertiser
Posted on: Wednesday, November 5, 2008

Obama now must tread fine line

By Doyle McManus
Los Angeles Times

Hawaii news photo - The Honolulu Advertiser

Barack Obama, Joe Biden and their wives were cheered by the crowd in Chicago's Grant Park after Obama's victory speech last night. Obama and his vice president will take office while having to deal with a global financial crisis, a huge deficit and partisan political demands.

MORRY GASH | Associated Press

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WASHINGTON — Barack Obama won the presidency yesterday by persuading voters to embrace a seeming paradox: contradictory principles of change and reassurance.

The Illinois senator combined ambitious goals and a cautious temperament. He promised tax cuts, improved healthcare, new energy programs and fiscal discipline — all without the bitterness and stalemate that arose when those issues have been tackled in the past.

Now, as Obama moves through his transition to the White House, this effort to square the political circle becomes the defining challenge in the months ahead.

Too much of the ambitious liberal as he begins to govern, and he rekindles partisan squabbles he was supposed to transcend.

Too much the cautious mediator who reaches across the aisle to compromise with Republicans, and he risks losing the energy and idealism that attracted millions of hopeful voters.

The president-elect will have little undisturbed time as he works to strike the balance. The nation is in dire economic straits. His Democratic Party has been waiting since early in President Clinton's administration for a chance to implement its agendas. And the Republican opposition, though deeply wounded, is unlikely to roll over.

In some ways, the economic crisis may work to Obama's advantage.

The seriousness of the problem and the lengths to which President Bush went in response — $700 billion alone to bail out banks and other financial institutions — may give Obama some fiscal elbow room. Complaints about a rising deficit may not stir much concern if housing, the auto industry and the rest of the economy continue to slide.

Also, Obama advisers and other senior Democrats say, as the new president focuses on stabilizing the economy, he will have to seek some early victories with bipartisan support — and defer many of his biggest, potentially most divisive, goals until later.

"First you've got to deal with the economy," said Leon Panetta, a former Clinton chief of staff who will be a consultant to Obama's transition team. "If you don't get that back on track, it undermines every other priority you want to achieve."

Congress is likely to pass an economic stimulus package by the end of the year. If it doesn't, that will almost certainly be Obama's first order of business.

Even if Congress does pass a stimulus, Obama will probably ask for more — including some version of the middle-class tax cut he made a centerpiece of his campaign — plus energy and infrastructure projects that would create jobs in a time of rising unemployment.

"We'll create 2 million new jobs by rebuilding our crumbling roads and bridges and schools," Obama said in a speech last week. "And I will invest $15 billion a year in renewable sources of energy to create 5 million new energy jobs over the next decade — jobs that pay well and can't be outsourced."

All that spending will create a budget problem for a president who has promised to reduce the ballooning federal deficit — and a debate in Congress between big spenders and deficit hawks.

But if the economy sinks into a recession that some are already comparing to the Depression of the 1930s, that debate may be less paralyzing than in the past.

"Are there limits to the spending he can do in his first term?" asked William A. Galston, another aide to the Clinton White House. "Some people say no — that we're already spending so much, another $150 billion won't hurt. But Obama has to decide how much deficit spending the political market will bear. If the budget hits a trillion dollars, the nation will go into sticker shock."

What priorities are likely to be downsized or delayed?

A prime candidate is Obama's plan for near-universal healthcare, which would cost hundreds of billions of dollars to implement. Instead of moving to a comprehensive plan, Obama may try smaller steps, one at a time.

Obama's ambitious energy proposals may also be tackled piecemeal, advisers said. Some elements, such as the job-creating investments in alternative energy that Obama emphasized last week, are broadly popular.

But tough limits on greenhouse gas emissions from energy-generating plants and other facilities will be harder to pass because they impose new costs on existing energy producers.

"This is going to be a tremendously heavy lift to get passed," acknowledged Heather Higginbottom, Obama's chief domestic policy adviser in the campaign.

And some Democrats are already debating whether Obama's promised middle-class tax cut should be scaled back to lessen the hit to the budget. "He should be able to persuade the country that some promises are going to have to be put on hold," said Will Marshall of the centrist Democratic Leadership Council.

Obama's transition aides and Democratic congressional leaders have been drawing up a list of easy-to-pass items with broad bipartisan support.

The best way to get an Obama administration off on the right foot, they say, is to score some early, eye-catching successes.

"To start on the right foot, you've got to tee a few things up and make damn sure that you win," Panetta said. "That sends a signal to Congress and the public that you're serious about governing."

A prime candidate for early action is an expansion of the State Children's Health Insurance Program to make health care available to children in low-income families, funded by an increase in tobacco taxes.

A second early priority, aides said, would be federal funding for stem cell research. In 2007, President Bush vetoed funding for both embryonic stem cell research and expanded health insurance for children.

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