Nearly two years after it began, the Great Election of 2008 is finally in our rearview mirror. On January 5, 2009, Congress will reconvene with the largest Democratic majorities since 1993. In 10 weeks, Barack Obama will assume the presidency. But the newly elected leaders will be facing a "perfect storm" of bad news: an economy in recession, a financial crisis that has spawned an ever-expanding role for government in our financial system, wars in two countries, and a budget deficit of staggering proportions.
President-elect Obama and his Congressional colleagues will be faced with a series of difficult decisions about how to stimulate the economy, restore confidence in the financial system, increase health care coverage, confront our dependence on foreign oil, and deal with the wars in Iraq and Afghanistan—to name just a few of the issues that will be on the table on Day One.
The key to success for the Democrats, particularly in the first months of 2009, will be their ability to prioritize and stop themselves from overreaching. Historically, when a party has gained control of both chambers of Congress and the White House, there has been a tendency for that party to try to do too much, to see themselves as having a "mandate" from the American people that policymakers too often assume to be carte blanche for doing whatever the majority party wishes.
President-elect Obama made a lot of promises on the campaign trail, but he will have to be very selective in what he chooses to focus on at the outset. Moreover, the budget situation means he'll have to scale back his ambitions and find pragmatic solutions.
Let's take a look at some of the key policy issues affecting investors and what might happen in 2009.
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