Obama's priorities lie on the home front

Obama begins his second term still mired in the issues of taxation, debt and the deficit, but to some extent liberated by his victory. He is more strident in insisting that taxes must go up for the wealthiest Americans, and has embarked on a new strategy of taking arguments directly to the people in campaign-like appearances.

Republicans were fighting a losing battle in defending tax cuts for the top two per cent, and polls showed twice as many Americans would blame them as Obama if the US went off the “fiscal cliff” – automatic spending cuts and tax increases on January 1st – that would send the US back into recession. An agreement appeared likely to combine higher taxes and lower deductions for the wealthy with some cuts in health and retirement programmes. Obama may face objections from his left flank, particularly if he attempts to raise the retirement age.

Immigration reform

Straitened finances in the US mean ambitious government programmes are not an option in Obama’s second term. Comprehensive immigration reform is the area where he is most likely to succeed, now that many in the Republican leadership have understood that continued opposition would constitute political suicide.

If Obama obtains immigration reform, climate change is the next big issue he is likely to tackle. One idea being floated is to devote the proceeds from a carbon tax to reducing the deficit.

Obama also hopes to appoint one or two new Supreme Court justices in his second term. But the departure of ageing justices is uncertain, and Obama wants a Democrat, possibly Hillary Clinton, to succeed him in 2016 to ensure the transformation of the court into a more liberal body.

The transformation Obama envisages is domestic, not international. Beyond bringing the troops home from Afghanistan, concluding trade agreements with the EU, Latin America and the Pacific region and avoiding World War III, Obama has little foreign policy ambition. His choice of secretary of state to replace Clinton is the most keenly anticipated appointment of the new administration.

Obama wants to prevent Iran from obtaining nuclear weapons and resist getting sucked into civil war in Syria. Speculation suggests he might appoint former president Bill Clinton as Middle East envoy, in the hope of advancing a settlement between Israelis and Palestinians – Obama’s biggest foreign policy failure to date.