President Barack Obama's next term will be full of difficulty and tough choices, according to an article posted on the Tax Policy Center's blog. "His biggest challenge: Find a way to break the logjam between Democrats who are reluctant to slow the growth of programs such as Medicare and Medicaid, and Republicans who insist that all deficit reduction must come from spending cuts and none from new taxes," Howard Gleckman, editor of the TaxVox blog and resident fellow at the Tax Policy Center, said in his post. "Obama will find some moderates of both parties eager to deal, but he will also face hardliners who are not." The following is a list of the biggest challenges facing the president in his upcoming term, according to the Tax Policy Center.
The expiration of the 2001-2010 tax cuts will bring spending cuts to all government programs except Social Security and Medicaid.
Both Congress and Obama will likely work together to extend the Alternative Minimum Tax patch, which provides tax cuts to about 25 million middle- and upper-middle income households.
One concern is if Obama will replace the 2010 payroll tax cut with an alternative for working people, according to the TaxVox post.
"The president has shown no interest in individual tax reform but has supported the idea of a rate-cutting, base-broadening corporate tax rewrite. His aides insist corporate reform is easier, though I have my doubts," Gleckman said in his post.
Division in the business community and other conflicts may hinder any corporate tax reform.
Despite Obama's desire to keep both Medicare and Medicaid the same, many Senate moderates want to make major changes to the programs.
These changes include putting a cap on Medicaid funding and moving Medicare to a premium support system.
The question is: Will Obama compromise?
The 2010 Affordable Care Act will bring with it many changes.
Tax increases on high-income families will take effect in 2013. Major insurance reforms will begin in 2014 with expansion of Medicaid for the working poor.