Jan. 23 (Bloomberg) -- U.S. President Barack Obama begins his second term confronting a familiar and frustrating incongruity: the gap between how much change he has fostered and how little about the country seems different.
A partial accounting of Obama’s first term reveals more accomplishments than most presidents secure in two. The health-care law, of course, is almost certainly the most significant piece of social policy passed since the Great Society. The rescues of the financial and auto sectors, though begun under President George W. Bush, were mostly carried out and completed under Obama. The Dodd-Frank financial reforms included the creation of the Consumer Financial Protection Bureau. The stimulus financed long-term investments in everything from weatherization to electronic medical records and high-speed rail.
The list goes on: The end of the Iraq War, along with a timetable for ending the war in Afghanistan. The killing of Osama bin Laden. The repeal of “don’t ask, don’t tell.” Executive actions to supplant the stalled Dream Act, enabling undocumented immigrant youths to stay legally in the U.S. Huge increases in auto fuel-efficiency standards. More than $3 trillion in deficit reduction over a decade.
Yet despite it all, the status quo seems strangely undisturbed. Unemployment is exactly where it was the month Obama took office. The recovery has been lethargic. Washington is even more bitterly polarized. Inequality continues to increase. The number of uninsured Americans has barely budged. Wall Street remains unstable. The oceans, to hark back to a famous line from a 2008 Obama speech, continue to rise. Battles over spending, taxation and the deficit consume Washington. Congressional gridlock and brinkmanship threaten the economy.
Some of the disconnect between accomplishment and impact is due to the muffling effects of House Republicans or the economic crisis. And some is a result of the unusually long lag that accompanied Obama’s most significant first-term accomplishments. This makes Obama’s second term somewhat unusual: His legacy will be secured less by enacting new policy than by consolidating previous achievements.
Foremost among them is the Affordable Care Act, which won’t begin delivering on its core promise to insure tens of millions of Americans until 2014. If Obama leaves office having implemented a successful, near-universal health-care program, he will be -- and will be seen to be -- a transformative president. Yet even now, after the law prevailed in the Supreme Court, its success is no sure thing.
The implementation of any major law confronts potholes, but the Affordable Care Act faces unusually large challenges. In a nod to Republican concerns during its drafting, the law created a huge role for states. But many Republican governors are using that power to undermine the law rather than tailor it to state needs.
By the end of this year, the federal government must establish health-insurance exchanges in as many as 25 states where (mostly) Republican governors have refused to set them up. That will be a gargantuan task. Even worse, the Supreme Court’s decision upholding the law also ruled that state participation in the Medicaid expansion, which accounts for about half of the new insurance coverage, is optional. Currently, only 22 states have committed to the Medicaid expansion.
Opposition to the law, however, will probably fade. The Medicaid formula, in which the federal government pays all of the costs of expanded coverage upfront and 90 percent thereafter, will prove difficult for states to resist for more than a year or two. But it will take time for Republicans to figure out the politics of making peace with the bill, much less playing a constructive role in its implementation. The key for Obamacare, then, is making sure that it functions well in the states that are implementing it, proving that the law can work when a state doesn’t purposefully make a hash of it.
The Dodd-Frank Act poses similar challenges. The bulk of the law’s rules were left to the various regulatory agencies to write. Of the 398 rules required, only 198 are finished, according to an analysis by the law firm Davis Polk & Wardwell. This is partly due to the size of the task, but also due to an organized counterattack from lobbyists, who seek to gum up the rules-writing process, and Republicans, who have cut funding for implementation.
Perhaps the toughest challenge of Obama’s second term will be getting Washington out of the recovery’s way. The economy, while hardly roaring, is showing real strength. Housing is turning around, and the labor market continues its slow recovery. Although there were notable exceptions -- including a weak housing policy -- the effort to rescue the economy largely worked.
But analysts agree that Washington is holding the recovery back. House Republicans’ strategy of forcing a seemingly endless series of cliffs, ceilings, sequesters and potential shutdowns has cast a pall over the economy. Every business that considers expanding confronts another potentially disastrous political showdown in the weeks, or months, ahead. Each high-wire conflict gives business a reason to pause rather than invest. If Washington would simply stop threatening the recovery -- forget actually making it better! -- the economy would probably look a lot better in four years than it does now.
The Obama administration still hopes to make big changes in immigration, gun control, tax reform and other policy areas. Perhaps that optimism will prove justified. But even if it can’t persuade Congress to make anything better, the administration will have its work cut out convincing Congress that it should stop making the recovery worse.
(Ezra Klein is a Bloomberg View columnist. The opinions expressed are his own.)
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