As Barack Obama passes his first half-year in office, it is clear that his greatest challenge lies in how he tackles three interrelated issues:  the economy, health care and energy.  These broad topics may very well preoccupy his administration for the rest of his term and greatly influence America’s future.  They will also impact how Obama and his Administration are perceived abroad, since a president who is ineffective at home usually finds it more difficult to exercise leadership in foreign affairs.

It is not that Team Obama has been inactive of late in the foreign arena.  Just this morning, Obama spoke at a Washington meeting on US-China trade relations.  Joe Biden recently returned from a trip to Georgia and Ukraine and Hillary Clinton is just back from a trip to India and the ASEAN conference.  George Mitchell is in Syria, Holbrooke in “Afpak.”  Al-Maliki was in Washington last week.  Not exactly a dormant period diplomatically.  In fact, Obama  was so occupied with foreign diplomatic travel this past month (Russia, Italy, Ghana), following an active June foreign travel schedule (France, Germany, Prague, Egypt) that it provoked some political attacks and weakened the White House’s lobbying effort on behalf of health care reform.

Now Obama needs his foreign affairs team to forge ahead alone, in order to free him to focus on the challenges he faces at home.

As numerous polls attest, there is a new political atmosphere in Washington and throughout the country.  After impressive victories at home and a smooth, self-confident entry onto the world stage, President Obama now approaches, six months into his  four-year mandate, a more skeptical and troubled electorate.  Problems that he inherited, both foreign (e.g., Iraq, Afghanistan) and domestic (e.g., the financial crisis) can no longer be blamed entirely on George W. Bush.  Obama effectlvely controls the Washington political agenda and is now responsible for what happens — or doesn’t.

Most dramatically, Obama has thrust health care reform (really health care insurance reform) to the top of the national agenda and has allowed it to be perceived as a “make or break” issue for his administration.  How Americans pay for health care services is an admittedly large problem.  (Americans pay more for health insurance than just about anyone else, costs keep rising, which leads in turn to more and more Americans losing their coverage.)  Some sort of government action is required, otherwise the costs of treating the millions of uninsured (who eventually get treated for free in hospital emergency rooms) will continue being passed on to the rest of us in the form of higher insurance premiums.  But how to straighten out the mess has proven devilishly difficult to figure out, let alone explain to the American people.  It is much easier to score political points by emphasizing the weaknesses of the Democrats’ plans than to suggest and support amendments to them.  Obama has tried in the past two weeks to focus attention on the long-term merits of doing something on health care, even as the immediate economic price of any comprehensive legislation makes it hard to sell politically.  The Democrats on the Hill are less than successful because — ironically — two of their best advocates in this kind of situation, Hillary Clinton and Rahm Emmanuel, were drafted by the Obama Administration to work in the Executive Branch.

Obama also needs a break with the U.S. economy, which is averaging now more than 8 per cent unemployment (15 per cent in Michigan) with home foreclosures continuing at a record pace.  It is not just that the economy is in recession, as many have pointed out, but that so many industries are dying.  By some estimates, more than 20 per cent of the U.S. workforce is either unemployed or underemployed.

The third element of this “perfect storm” is energy, which we have temporarily forgotten about because of the temporary drop in oil prices.  This drop helps businesses and families cut costs, but reduces the incentive to invest in green and renewable energy.  Congress will have to mandate the development of cleaner production of electrical power to help save the planet, to make the U.S. more energy independent, and to create new jobs to replace those now leaving the economy.  Will Congress see the argument for action?

Failing to promptly address America’s domestic challenges will eventually sink the U.S.’s hopes to conduct a foreign policy based on broader U.S.-led international collaboration.  First, because domestic issues will distract attention away from the important foreign agenda and, second, because our partners will see in our lack of leadership at home a dim prospect for our leadership abroad.