The Second Term

Now that President Bush has been re-elected, attention turns to his second term. What are the top issues the administration will have to deal with in the second term? Here are my top three.

1. Iraq This one is obvious. Polls show the public is not too happy with the way things are going in Iraq so far. Since the election, major fighting has broken out in Fallujah and Mosul, resulting in casualties on both sides and the PR nightmare of video showing a Marine executing a defenseless man, in a mosque no less. Critics of the Iraq war have always loved to trot out the specter of Vietnam. With the war becoming an expanding civil war against a committed guerrilla enemy, this comparison is becoming more apt. In 1968, the stench of Vietnam transformed American politics, with the sitting president all but run out of town and the Democrats, who had controlled the White House since 1932, giving way to an era of Republican domination of the presidency. If we are still talking about Iraq in four years, the same effect could take place. Bush has been given a reprieve by the electorate to finish the deal in Iraq. He has his second term to do it, which means at a minimum ending the fighting. If he succeeds, Iraq could well be his legacy, as Germany and Japan were for Truman. If he fails, Iraq could well be his legacy, as Vietnam was for Lyndon Johnson.
2. Social Security In the next decade, the baby boomers are going to hit retirement age and begin drawing their social security benefits, which threatens to overwhelm the system through sheer numbers. Politicians have raided the social security accounts for decades to compensate for mushrooming budget deficits. Now, the bill is coming due. If social security is to have a long life, the president must reform it in the next term.
3. Health Care This issue never got the attention needed in the campaign, but threatens to be perhaps the biggest domestic issue in the coming years. The cost of health care is skyrocketing, resulting in equally alarming increases in the cost of health insurance. This insurance cost places a tremendous burden on employers. My employer alone estimates a cost in excess of $50 million in 2004 for health insurance, and we're not exactly a Fortune 500 sized company. Those costs are estimated to increase 15-20% next year. This becomes an economic issue, among other things. Providing insurance to new employees is a significant cost for an employer to bear, and so becomes a disincentive to hire people. I believe this is one of the reasons unemployment has stubbornly refused to fall back to the levels seen in the Clinton years when insurance costs were much lower. It is much more costly for companies to hire people today relative to the boom times of the 90's, so employers are less inclined to do so. As costs continue to explode, unemployment will increase, dragging the economy down. Shifting the cost more to employees, while helping the employer, will reduce the amount of disposable income in the marketplace, resulting in a reduction of spending and consumption, again dragging the economy down. The president must do something in the next term to deal with this. As I have noted elsewhere, it is not merely a question of controlling the cost of insurance. Costs must be viewed in a comprehensive way.