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What '03 Will Throw at Bush

From overcoming Iraq and North Korea to escaping the taint of Trent to igniting economic growth, he'll be busy all year long

By Richard S. Dunham

It was a good year for President Bush. He maintained record-breaking popularity levels, his party swept Congress in the midterm elections, and he bested his Democratic foes on legislative battles ranging from homeland security to the budget. On the international front, he won a surprising diplomatic victory when the U.N. Security Council voted unanimously to approve a resolution tightening the screws on Saddam Hussein's Iraq. And U.S. law enforcement has so far managed to avoid a second wave of catastrophic terrorism on American soil.

Still, despite Bush's 2002 triumphs, he has plenty to be nervous about as the calendar flips over to 2003. Here are 10 challenges the President faces in the New Year:

Attack on Iraq. Despite White House and Pentagon insistence that a war to topple Saddam isn't inevitable, the American public seems to be braced for the second military campaign against Iraq in a dozen years. Expectations are high, too -- perhaps too high. An overwhelming majority of Americans think the war will be quick and relatively bloodless.

So the pressure is on the President to (1) defeat Iraq's military in short order, (2) remove Saddam from power, (3) avoid a backlash from international terrorists and U.S. allies, and (4) organize a military occupation of limited duration and even more limited casualties. Of course, the Administration is probably hoping against hope that Saddam's enemies stage a coup that would preempt the need for a massive invasion.

Crisis in Korea. North Korea's erratic dictator, Kim Jong-Il, seems determined to force a confrontation with the U.S., if for no other reason than to wring concessions from Japan, China, South Korea, and the Yankee military machine. The saber-rattling on the Korean peninsula is an unwanted distraction for Defense Secretary Donald Rumsfeld and the White House. And it poses a troubling question: Which country is more dangerous, a despotic Middle Eastern dictatorship that might be trying to develop weapons of mass destruction or a despotic Northeast Asian dictatorship that proudly possesses nuclear weapons and threatens to use them against its neighbors?

If the President doesn't play it right, his (hopefully) easy victory over Saddam could be followed by a much more difficult showdown with Pyongyang, with tens of millions of lives in Seoul and Tokyo on the line.

Mr. Popularity? Can the most popular President of modern times continue to taunt the fickle finger of fate? Yes, Dubya's job-approval ratings have been higher for longer than those of Franklin D. Roosevelt, John F. Kennedy, and Ronald Reagan. But his popularity score has softened from a high of 88% to the mid- to low-60s. Those are still impressive numbers, but will he keep riding high if the public continues to feel anxious about the soft economy and the no-end-in-sight war on terrorism?

Team Bush, constantly conscious of the demise of the once-popular President George Herbert Walker Bush, will do everything in its power to prevent history from repeating itself.

Gore's Good-Bye. Now that Al Gore is out of the running, the remainder of the Democratic Presidential field will jockey for position in 2003. The big question: Can any Democrat emerge at the top of the Class of 2004, much as Bush did for the Republicans in 1999? Before a single vote is cast, three races will take place: The fund-raising stakes, the endorsement game, and the battle for top consultants. It's likely that several of today's top tier of contenders won't even make it to the first primary of '04.

Who might survive? Instant favorites Joe Lieberman of Connecticut, John Kerry of Massachusetts, or Dick Gephardt of Missouri? A dark horse like Vermont's retiring liberal governor, Howard Dean, or centrist freshman Senator John Edwards of North Carolina? A late starter, such as Tom Daschle of South Dakota or Bob Graham of Florida? A retread like Gary Hart or Joe Biden? (How about Walter Mondale?)

If the Democrats stage a messy nomination fight, Bush's reelection prospects will become even brighter. But an early front-runner could change that dynamic.

Money Men. It's out with the old and in with the new Bush economic team in 2003. Exit Paul O'Neill and Lawrence Lindsey. Enter new Treasury Secretary John Snow and National Economic Council Chairman Stephen Friedman. The newcomers have impressive résumés and a bevy of fans on Wall Street and in America's boardrooms. But they have a two-fold challenge: Crafting an economic plan that will speed recovery and selling it as a boon to all, not just wealthy individuals and corporations.

Will the new economic team pass the test? After all, on paper, O'Neill and Lindsey had tremendous credentials, too. But they learned the hard way that the pressures of Washington in-fighting and the TV spin game are a huge challenge to even the most savvy business type.

Tax Cut Free-for-All. The Republican sweep of Congress guaranteed passage of a third tax cut in three years for the Bush Presidency. But expect a prolonged and politically bitter debate over its contents. Bush will be pushing to accelerate the 2001 tax cut and make it permanent. He's also likely to ask for a reduction in the double taxation of dividends, incentives for corporate capital investment, and further breaks for hard-hit investors. Democrats will decry tax cuts that disproportionately benefit the wealthy.

Will Bush compromise and accept a generous tax package that benefits everybody? Or will he play hardball and throw only a few crumbs to Democrats and the working poor? He probably has the votes for a damn-the-Democrats approach. But it could backfire at the polls in '04 -- particularly if the economy doesn't bounce back and the deficit continues to explode.

The Business Wish List. Corporate America strongly backed Bush's 2000 campaign, helped to underwrite the GOP's 2002 congressional races, and spent millions to push the Republican agenda on issues ranging from trade to health care. The White House bypassed business in the 2001 tax plan. Now, many in the business community say it's payback time.

That means hefty business tax breaks in the 2003 bill. It means relief from government red tape. It means tort reform, or at least a few preliminary steps toward comprehensive measures to cap civil damages. It means outsourcing more government services. And it means a prescription-drug plan that benefits drugmakers and insurance companies.

That's the business community's dream -- and also the Democrats'. The donkey party wants nothing more than a D.C. feeding frenzy for fat cats in '03, the better to create an antibusiness, anti-Bush backlash in '04.

A Lott of Compassion. Thanks to Trent Lott, the President is on the spot over his "compassion" agenda. Major newspapers have blasted Bush for being too much talk and too little action on programs to aid the needy. The Lott controversy served to remind Americans that the White House hasn't been very effective at convincing Congress to act in this area.

Bush's faith-based initiative failed on Capitol Hill, and many of his other proposals to aid the downtrodden seem to have been filed and forgotten. Well, Democrats will remind the public over and over again in the next two years of the "Lott Republicans." Bush can't ignore this issue: Compassion, the White House realizes, plays big among swing voting blocs such as working moms and suburbanites.

Judicial Juggernaut. Get ready for the messiest confirmation battles this side of Clarence Thomas and Robert Bork. With Republicans back in control of the Senate, the Administration is readying a long list of conservative judicial candidates who could reshape the federal courts. Democrats have their own litmus tests: they're warning that they'll fiercely resist right-wing judges who oppose abortion rights or affirmative action.

The supreme battle will come if a vacancy opens on the Supreme Court, where Chief Justice William Rehnquist and perhaps others are rumored to be nearing retirement. This may become a sleeper issue in the '04 campaign, where Bush and the Democrats will both claim the mainstream mantle against the extremists on the other side of the legal barricades.

The War on Terrorism. The most unpredictable of challenges facing the President is the shadowy war against al Qaeda and its terrorist allies. Is America prepared to thwart chemical, biological, or radiological attacks on the mainland? Are the "first responders" properly equipped and trained to handle the potential fallout? President Bush hopes Americans never have to find out.

So do his Democratic opponents, though the 2004 Presidential field is beginning to criticize Bush for failing to do enough to mobilize the nation against terrorism. It's either a gross act of political cynicism or an accurate assessment of current conditions -- or maybe both. With Osama bin Laden still alive and preaching hate, polls show that just one-third of Americans say the U.S. is winning the war on terrorism. The President doesn't want that number to shrink any further in '03.

No doubt Bush and his inner circle have a lot to celebrate as the year draws to a close. Bush's unlikely ascension to the Presidency has been long forgotten in the aftermath of September 11. Against the backdrop of the legislative and political victories he secured in 2002, he's looking like one of the most powerful American leaders in years. But 2003, a crucial year for anyone planning to run for President in '04, beckons. And Bush faces formidable challenges in the New Year.

Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BusinessWeek Online

Edited by Beth Belton

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