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Will Obama’s lame-duck dealmaking survive in the new year?

Even with the deep partisan divide, Obama and Congress worked together in the lame-duck session. But pressure on the president from the left and right will grow in the new year.

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There have been rumblings that Obama will make deficit reduction – a topic rife with risks on Obama’s left – a major focus of his State of the Union message. If the perception is that Obama is prepared to scale back elements of the social safety net, such as Social Security, he could face open revolt. The tax-cut deal has already shaved a few points off his job approval among liberal Democrats.

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If Obama decides he doesn’t like the bargain Republicans are offering him, he can go around them, suggests John Podesta, President Clinton’s chief of staff and director of Obama’s transition to the presidency.

“Congressional gridlock does not mean the federal government stands still,” writes Mr. Podesta in a recent report for his think tank, the Center for American Progress. The report, called “The Power of the President,” suggests multiple avenues for making and implementing policy that don’t involve Congress: executive orders, rulemaking, agency management, convening and creating public-private partnerships, commanding the armed forces, and diplomacy. On energy, for example, the report proposes a temporary $2-per-barrel fee on imported oil. That would discourage oil imports, encourage moves toward energy independence, and raise money that could be applied to deficit reduction.

On the economy, the report proposes acceleration of the Small Business Jobs Act, legislation Obama signed in September aimed at boosting the liquidity of small businesses and spurring job creation. On education, the report proposes an “educational productivity” initiative that measures outcomes based on dollars spent and helps school districts use taxpayer money more effectively.

Already, rulemaking by federal agencies faces increased scrutiny following the revelation that Medicare reimbursement for end-of-life counseling – dubbed “death panels” by conservatives – was included in the new Medicare fee schedule. This month, the Environmental Protection Agency begins regulating the emission of greenhouse gases, a move conservatives are challenging as a job-killing, unconstitutional power grab.

In Obama’s ideal world, he would be exercising all the levers of power at his disposal, including working with Congress. After all, during his campaign he said he aspired to be a transformational leader like Ronald Reagan. Obama is unlikely to scale back and play for small victories.

“If I had to choose one big, difficult issue he might tackle next, I’d say the looming fiscal crisis,” says Ed Gresser, president of the centrist Democratic Leadership Council. “The public I think is intuitively nervous and aware that we have a problem. Convincing the public of the detail – here’s what we need to do – will be difficult. But there are significant long-term benefits.”

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