Even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime — two wars, a planet in peril, the worst financial crisis in a century. Even as we stand here tonight, we know there are brave Americans waking up in the deserts of Iraq and the mountains of Afghanistan to risk their lives for us. There are mothers and fathers who will lie awake after the children fall asleep and wonder how they’ll make the mortgage or pay their doctors’ bills or save enough for their child’s college education. There’s new energy to harness, new jobs to be created, new schools to build, and threats to meet, alliances to repair.
The road ahead will be long. Our climb will be steep.
We’ve been talking for a while now about the short-term economic priorities facing the United States: financial system stabilization, economic stimulus, mortgage restructuring, and re-regulation of the financial system (domestic and international). But even before the current economic crisis, our country was also facing some major challenges that the Obama administration will have to tackle.
In my personal opinion, the top four long-term challenges facing our country are, in order:
- Global warming: We know with a high degree of certainty that the world is getting warmer, and that this could have catastrophic effects that we can only partially foresee today. Moving our economy from carbon to sustainable energy sources will require a transformation of large parts of the economy.
- Terrorism and nuclear proliferation: While the probability of a nuclear attack by terrorists is extremely low, at present that probability is only going up. This is not particularly an economic issue.
- Retirement savings: Despite all the attention Social Security has received, it is dwarfed by the looming Medicare deficit. In addition, there is evidence that private sector sources of retirement income will not fill the gap that they are expected to fill. First, many defined-benefit pension plans (both private and public) may not be sufficiently funded, because of accounting regulations that allow them to assume optimistic rates of return. (The events of the last six weeks, of course, did not help.) Second, many people’s individual retirement savings are sorely insufficient. I’ve seen estimates of the average retirement savings balances of people in their 50s ranging from $50,000 to $140,000 – and that was before the recent stock market crash, which probably took 15-20% off the average portfolio. And even for people with houses, the housing crash has constrained their ability to live off of them.
- Health care: Approximately 50 million Americans are uninsured today, and the number will only go up as people are laid off and companies cut health care costs during the recession. In addition, objective indicators show that health outcomes in the US are worse than in most of the developed world.
These challenges will be tougher to solve than the immediate challenges of fixing the financial system and restarting economic growth. Let’s hope that the Obama administration can start solving them.