For Obama, huge challenges vs. big assets

WASHINGTON (AP) -- Barack Obama will inherit two wars and the worst economic conditions in three generations when he takes the oath of office on Jan. 20. Ironically, that challenge might be a blessing for the president-elect - unemployment is so high and consumer confidence so low that even modest improvements will let him claim progress.

Obama also brings extraordinary assets to the task.

The president-elect enjoys high approval ratings, well-regarded Cabinet appointees and a smooth running transition operation that grew almost seamlessly from his successful campaign team. Fellow Democrats will hold solid House and Senate majorities to help move his agenda through Congress.

But political veterans and presidential scholars say Obama can't waste time. He must decide which major issues to tackle in his first 100 days in office, when his political capital will be at its peak. His powers and popularity might wane as he looks to end the Iraq war and enact repairs to an economic system that has ravaged jobs, home ownership, retirement accounts and Americans' optimism.

"His goal is to strike a sustainable balance between the politics of sequencing and the politics of urgency," said William Galston, a domestic policy assistant in President Bill Clinton's administration. He said Obama must determine "what are the risks of overreaching versus underreaching."

So far, Obama has given few hints about which goals might have to wait. Asked recently about tougher regulations on auto emissions and reinstating an offshore drilling ban, for example, he said his advisers will review them "in the weeks to come." And earlier this month, he told reporters he had not decided "how we're going to deal with the rollback of the Bush tax cuts for the wealthiest Americans."

Presidential historians say Obama will have to set priorities soon, even if he does it discreetly in hopes of avoiding confrontations with key constituency groups. On overhauling health care, for example, Princeton historian Fred I. Greenstein said Obama might create study groups and commissions that will push it to the back burner without leaving the impression it's being ignored.

Greenstein, who has written several books on the presidency, said he gives Obama high marks for running his transition with the same brand of assertive self-confidence he showed during the campaign. The transition has been characterized, he said, by "a very strong sense of maintaining control and professing to be waiting in the wings but filling up all the presidential space, and doing things in textbook order."

Obama's first high-stakes policy choices will involve a costly stimulus plan, which might be ready for his signature within days of his taking office. His aides are working with congressional leaders on a package that could spend $850 billion over two years, much of it on infrastructure, schools and other construction-heavy projects.

He must pick winners and losers from scores of interest groups scrambling for a piece of the stimulus pie. Some want billions of dollars for energy programs, including ethanol pipelines, nuclear power plants and "green" projects that use renewable fuels. Others want mass transit help, cell telephone towers, travel and tourism marketing, and countless tax breaks.

"The fiscal stimulus bill gives him a tremendous opportunity to work with Congress quickly to produce a very significant piece of legislation" that helps the economy and "makes a down payment on some policies central to his agenda," said Thomas E. Mann, a government scholar at the Brookings Institution.

Meanwhile, Mann said, Obama also can launch discussions of how to revise energy and health care policies "without setting specific dates for completion."

Issues that cannot wait, however, include the wars in Iraq and Afghanistan. Obama has repeatedly said he wants to withdraw U.S. troops from Iraq within 16 months, although he has left himself some wiggle room. Top military leaders advocate a somewhat slower schedule, and the new president will have to resolve the matter.

Obama wants to increase the U.S. military presence in Afghanistan, which might draw more public attention and controversy if the economic news were not so dominant.

For now, at least, Obama enjoys strong public support. Political insiders say his Cabinet picks are savvy and substantial. A recent AP-GfK poll found that nearly three in four Americans approve of how Obama has handled the transition. That's about the same level of support his two immediate predecessors enjoyed.

But there is no guarantee that Obama's actions will reverse the dramatic drops in employment and the stock market, or the crises in the financial and automaking sectors. With billions of taxpayer dollars pouring in, Americans may want results soon, and the new president's popularity could rapidly diminish if they don't materialize.

"I find it hard to believe that, no matter how skillful he is, he can sustain this level of hope and support," said Galston, the former Clinton aide. "To govern is to choose," he said, and every time a president chooses, some groups are disappointed.

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