What Now, Mr. President?

Photo by Scott Audette/Reuters/Landov

For President-elect Barack Obama the time of transformation nears. His challenge will be to transform campaign themes of “hope” and “change” into action that will revive an ailing economy, expand health care coverage and redirect America’s foreign policy.

Older Americans will be watching closely. Though they cast ballots for Obama in a smaller percentage than their younger counterparts, 50-plus Americans share high expectations for the 44th president—with good reason. They’re among those most affected by the precipitous decline in the stock market that trimmed $2 trillion from retirement savings and unsettled anyone living on a fixed income or hoping to retire in a few years. In his campaign, Obama promised to address the health needs of those workers too young to qualify for Medicare. He also highlighted his concern for the fraying safety net for the nation’s older members—Social Security, Medicare and Medicaid.

But the economic meltdown that helped propel Obama into office will also limit how much he can spend to fulfill the promises he made on the campaign trail.

“The country’s broke,” says Larry Sabato, director of the University of Virginia’s Center for Politics. “I don’t think people understand the degree to which we are broke. People are going to be unhappy. Obama’s not going to be able to do what he promised: There’s no money.”

Nobody knows what the economy will look like in January, except that it won’t look good. So Obama will most likely need to wait until he takes office before choosing his first steps, says John Rother, director of policy at AARP.

Democrats in both chambers of Congress have eight years of pent-up legislative dreams, and Obama has backed many of their spending priorities. They picked up at least 20 House seats and seven Senate seats in the November election. That gives the Democrats and Obama unaccustomed flexibility.

But the mortgage crisis, global financial gloom and a federal budget deficit exceeding $1 trillion mean the economy has to be “the first priority, because without that, nothing else works,” Rother says.

The public seems to agree. The economy proved to be the fulcrum for Obama’s victory over Republican Sen. John McCain, with nearly two-thirds of voters listing it as the most important issue, according to a survey of voters as they left the polls.

Republican pollster Ed Goeas of the Tarrance Group in Alexandria, Va., said polls showed very clearly that the market free fall pushed many older voters toward Obama. In September, registered voters ages 50 to 64 favored McCain over Obama by 48 to 45 percent, according to a Gallup Poll. Those 65 and older favored McCain 49 to 41 percent. But as retirees and those nearing retirement opened their savings statements in early October, McCain’s support among those 50 and older dropped, he said. On Election Day, voters ages 50 to 64 favored Obama over McCain, 50 to 49 percent. (Voters 65 and older preferred McCain over Obama, by 53 to 45 percent.)

But the economy means different things to different age groups, says political scientist Susan MacManus of the University of South Florida, who studies older voters. To young voters, the availability of jobs is important; for families, it might be the ability to own and keep a house; and for those 50 and older, it could well be financial security in retirement.

Several of Obama’s proposals speak to these concerns. If Congress can’t quickly cobble together a second economic stimulus package, including a middle-class tax cut, during its lame-duck session, Obama has said he’ll make it his priority as of Jan. 20. He has also repeatedly pledged to eliminate income taxes for the more than 7 million people over 65 earning less than $50,000 a year.

Barbara Kennelly, a former Democratic congresswoman who now heads the National Committee to Preserve Social Security and Medicare, said she expects Obama to move quickly to jump-start the economy by creating jobs with a plan to build roads or make other infrastructure improvements. While stimulating the economy, such a plan could also be an opportunity to reshape and connect communities to better meet the needs of older citizens by making alternative forms of transportation affordable and readily available, says Joseph F. Coughlin, director of the MIT AgeLab in Cambridge, Mass.

Tackling the nation’s health care problems and dealing with the 45 million Americans who lack coverage might also be hard for Obama to ignore, at least completely. It was a central issue of his campaign. If he chooses to move on it, Obama will find strong backing in Congress. Senate Health, Education, Labor and Pensions Committee Chair Edward Kennedy, D-Mass., has had his staff working on getting a big health reform bill together for months. And Obama’s own plan to set up a national health insurance exchange is reflected in a proposal outlined by Senate Finance Committee Chair Max Baucus, D-Mont. The exchange, to be paid for by canceling the 2001 tax cut for people earning more than $200,000 a year, would allow those unable to get employer-provided care and those with preexisting medical conditions to buy private health coverage.

Obama is expected to press businesses to “pay or play”—meaning provide health coverage for their workers or else pay into the exchange. Health care is especially crucial for workers between ages 50 and 64 because they often have medical issues, some have preexisting conditions, and losing a job can mean losing health coverage.

Former House Speaker Newt Gingrich, a Republican from Georgia, is optimistic that Obama will back a plan Gingrich has been working on with Sen. Hillary Clinton, D-N.Y., to encourage medical providers to computerize health records. Electronic records can save lives and help root out fraud in Medicare and Medicaid, he said. Obama has said he would give $10 billion to health care providers who implement health information technology systems.

Still, no one thinks health care reform is going to be easy. Accomplishing change is hard in the best of times, and the nation’s financial constraints might force Obama to forgo sweeping changes in favor of pushing through only parts of his health care reform, Kennelly says.

Without first getting at the larger health care problems that drive up costs faster than the rate of inflation, solving Medicare’s financial woes won’t be possible, Kennelly says. Obama will, however, face one immediate Medicare challenge. At the end of 2009, the formula expires for how health care providers are reimbursed for treating Medicare patients. This sticky issue has been postponed for several years—with budget hawks saying the program’s costs must be cut and advocates for the program’s beneficiaries insisting that reduced payments for doctors would decrease access to health care for Americans age 65-plus. In the past, Rother says, political stalemate meant “the can got kicked down the road. I hope there will be more effort to solve the problem [now].”

Kennelly predicts that the new president will protect Medicare and the rest of the nation’s safety net for older citizens. “He’s got a very good understanding of the older generation,” she says. “He understands that any successful country takes care of its older generation.”

Obama has indeed ruled out cutting benefits or raising the Social Security retirement age. He has also proposed shoring up Social Security by raising the cap on the Social Security payroll tax and adding a surtax on income above $250,000.

Brian Riedl, senior budget analyst at the Heritage Foundation, a conservative Washington think tank, isn’t persuaded. Obama is unlikely to solve the long-term problems of Social Security, Medicare and Medicaid, Riedl says, which are “like termites slowly eating our fiscal house.”

As boomers age, those entitlement programs will face increasing financial pressure. Without cuts in benefits or more taxes to preserve them, Riedl says, those programs will consume all federal spending by 2050.

Though Obama faces enormous challenges, he also has the opportunity to capitalize on the mandate of an Electoral College landslide. To many of his backers, he already has a major accomplishment to his credit—becoming the first black president. Among those backers are retiring Florida state Rep. Joyce Cusack of DeLand, an African American who lived through the nation’s ugly era of segregation.

Cusack was filled with emotion on Election Night as Obama took the stage in victory, and the following morning marveled that her 5-year-old twin granddaughters, chanting “Barack Obama wins” at her breakfast table, face a future free of so many of the obstacles that Cusack faced. Obstacles like riding to college in the back of the bus, and having to stage protests just to win the right to drink a soda at a lunch counter.

“We have not always been treated as first-class citizens,” says Cusack, 66, who was an Obama delegate to the Democratic National Convention. “To elect a black man as president of the United States tells me we, as African Americans, are first-class citizens. I have come the complete circle.”

At the same time, she believes the voters have chosen the right person to balance the needs of a struggling nation.

“He’s inheriting a mess, but he’s smart, and he’s going to surround himself with competent people,” says Cusack. But, “just like in your household, some things are going to have to go on the back burner.”

Tamara Lytle was Washington bureau chief and a correspondent for the Orlando Sentinel from 1997 to 2008.