Midterm elections loom over President Obama and Congress
Despite a budget compromise, spending battles will continue
Republicans will make Obamacare a major campaign issue
NSA surveillance, immigration reform and Middle East talks will be prominent
For President Barack Obama and Congress, 2014 will be the year of the blame game.
Congressional elections in November mean that every issue gets framed by politicians and pundits in the context of who won or lost as Republicans and Democrats vie for control of the U.S. House and Senate.
The challenge will be in distinguishing reality from spin as events both anticipated and unexpected unfold at home and abroad.
Obama heads into the sixth year of his presidency with a growing economy and momentum toward winding down the longest American war, which would normally translate into broad public support.
However, the nation’s first African-American president has the lowest poll numbers since he took office in 2009, reflecting public dissatisfaction over the botched Obamacare rollout, classified revelations of the huge government surveillance network and the dysfunctional politics of Washington.
At the same time, polls also show record public dissatisfaction with Congress after two years of stalemate that culminated with the 16-day government shutdown in October.
Here are the topics certain to dominate the discussion and influence who ends up as winners and losers a year from now:
It’s the economy, as always
More than anything else, the state of the economy next December will determine whether Obama had a successful 2014.
The President’s main challenge is to make economic growth on paper translate into tangible gains for people.
Despite slow but steady growth in 2013, a CNN/ORC poll released Friday showed 70% of respondents considered the economy in generally poor shape, with just over half saying they expected it to remain that way at the end of 2014.
Those numbers come as the stock market has surged, unemployment is at a five-year low, auto sales are at a seven-year high, gas prices have dropped and the housing sector that dragged the country into recession in 2008 is rebounding.
At the same time, figures remain high for the long-term unemployed, the under-employed and those who have dropped out of or never entered the work force. Some of the unemployed are losing long-term jobless benefits that expired on Saturday.
The Obama administration gets credit for the U.S. recovery from recession and the incremental growth of recent years, but Republican opponents argue its policies hinder stronger performance by failing to further reduce federal deficits and debt, lower taxes and ease regulations.
CNN Polling Director Keating Holland said several factors contribute to the discrepancy between the economic figures and poll results, including the tendency for public opinion on major issues such as the economy to shift slowly.
In addition, he noted that wealthy Americans were probably feeling the benefits of economic growth more than everyone else so far, and that national statistics can mask problems in specific regions. Holland also cited partisan politics, saying that “many Republicans won’t feel – or at least admit – that the economy is improving until there is a Republican in the White House.”
“The same was true for Democrats under either Bush, but when the Republicans are the ones who are badmouthing the economy due to partisan politics, it makes it all the more difficult for good news that only benefits the wealthy to have an impact on the mood of the country overall,” he said.
Since Republicans won back control of the House in 2010, no Washington fight has been more stubborn than the battles over the budget and taxes.
Repeated brinksmanship over spending issues worsened the partisan divide, with both sides accusing the other of intransigence.
The October shutdown proved so politically damaging, especially for Republicans, that congressional budget negotiators subsequently worked out a compromise two-year spending framework intended to remove the possibility of a similar impasse until after the November election.
Instead, the first spending showdown of 2014 will involve extending long-term unemployment benefits that expired on Saturday.
At his yearend news conference on December 20, Obama called for Congress to pass a three-month extension when it returns from holiday in January.
House Democratic leader Nancy Pelosi chimed in Friday, calling a failure to extend the unemployment benefits expiring for 1.3 million people “immoral” and adding that “for the Americans affected by this Republican inaction, there’s no time to waste.”
A key question is whether the additional spending to extend the benefits must be offset with savings elsewhere in the federal budget, as demanded by Republicans.
Then in late February or early March, the government will run out of money to pay all its bills, requiring an increase in the federal borrowing limit, the Treasury says.
Past brinksmanship around the deadline to raise the debt ceiling led to the first downgrade of the U.S. credit rating in 2011, along with condemnation from the public and business community.
After the recent budget deal, Republican leaders say they will need concessions on deficit reduction for their party to support a debt ceiling hike.
At his news conference, Obama repeated his refusal to negotiate over what he called the obligation of Congress to uphold the nation’s full faith and credit.
“Now, I can’t imagine that having seen this possible daylight breaking when it comes to cooperation in Congress that folks are thinking actually about plunging us back into the kinds of brinksmanship and governance by crisis that has done us so much harm over the last couple of years,” Obama said.
Meanwhile, Obama and Democrats continue to push for the GOP-led House to vote on a major immigration reform measure already passed by the Democratic-controlled Senate.
The measure includes a path to legal status for millions of immigrants living illegally in the United States as part of a broader overhaul of the immigration system.
Conservative Republicans consider it an amnesty for illegal immigrants, but moderate Republicans support reforms to make inroads among Hispanic-Americans who traditionally vote Democratic and strongly supported Obama in 2012.
Democrats, meanwhile, know that immigration reform would further enhance their party’s popularity among Hispanic-Americans, the nation’s largest minority group.
The most vulnerable issue for Obama and Democrats is the health care reforms known as Obamacare that passed with zero Republican support in 2010.
Republicans detest the reforms requiring people to get health coverage as the ultimate example of big government run amok, and will focus their 2014 campaigns on attacking Obama and Democrats over them.
While GOP efforts to dismantle or repeal the reforms have failed so far, Republicans got a major boost in October with the failure of the government website set up to help people buy health coverage.
Then came reports that insurers were sending cancellation notices to individual policyholders, undermining Obama’s repeated pledge of previous years that “if you like your health care plan, you can keep it.”
PolitiFact declared Obama’s false promise its “lie of the year,” and the administration lost control of the Obamacare narrative under relentless GOP attacks.
Now Republicans warn of more hidden impacts including higher premiums and canceled coverage in the coming year, as Obamacare gets fully implemented.
“This really represents the single … biggest instance of consumer fraud in the nation’s history,” GOP Sen. John Cornyn of Texas recently told reporters.
With the website working better, more than 1.1 million people signed up for coverage between October 1 and December 24 for obtaining a policy effective January 1, Health and Human Services reported in a blog post on Sunday, with 975,000 of those coming during December.
Other consumers have until March 31 to enroll, and the administration has eased requirements on some because of the initial problems.
Obama and Democrats hope the new momentum after the delayed launch in October can overcome the negative public perception created by the botched launch and fierce GOP criticism.
The issue will remain in the public eye, though. Attack ads against Democrats who supported the law already are running in some places.
At his yearend news conference, Obama said he was studying a review he ordered of the National Security Agency surveillance revealed by classified leaks by former contractor Edward Snowden, including the bulk collection of phone records.
The President hinted at changes next month when he announces his decisions on the review’s recommendations, citing a need to alleviate public concerns that the government spied on its own people, even if it didn’t.
“It is clear that whatever benefits the configuration of this particular program may have may be outweighed by the concerns that people have on its potential abuse,” Obama said. “And, if that’s the case, there may be another way of skinning the cat.”
Legal challenges to the surveillance possibly working their way up toward the U.S. Supreme Court could ratchet up pressure on Obama to act. So far, one federal judge ruled the collection of phone records probably violated the Constitution, while another ruled Friday it was legal.
The surveillance under the Patriot Act started in the previous administration in the aftermath of the September 11, 2001, terrorist attacks. It continued during Obama’s presidency and only became public knowledge because of Snowden’s disclosures.
For both parties, the issue is tricky because it combines elements of national security and civil liberties to avoid easy categorization as a liberal or conservative matter.
The Middle East will remain a major foreign policy focus for Obama in 2014, with deadlines for two substantive negotiations coming up.
Talks aimed at forging at least a framework for an Israeli-Palestinian peace agreement are supposed to conclude around the end of April, with negotiations on Iran’s nuclear program given until around June to reach a final agreement.
No one expects either issue to get fully resolved in the coming year, but the outcome of the ongoing talks will provide new evidence on whether Obama’s efforts to redefine the U.S. role in global affairs is yielding results.
His approach has yielded some success, including the killing of Osama bin Laden, the NATO aerial blockade in Libya and Syria giving up its known chemical weapons supply.
Some conservative Republicans who favor a more robust foreign policy criticize Obama for what they call a failure to lead. They cite the 2012 terrorist attack in Benghazi, Libya, that killed four Americans including Ambassador Chris Stevens, as well as continuing turmoil in Egypt following its Arab Spring revolution and the ongoing carnage of Syria’s civil war as U.S. foreign policy failures.
The Iran talks involve the most immediate risk. Israel is believed to be poised to launch a military attack if it believes Iran can reach the point of being able to build a nuclear weapon.
In the negotiations involving the United States and the other four permanent members of the U.N. Security Council – France, Russia, China and Britain – as well as Germany, Iran is being pressured to give up materials and technology for making a bomb and submit to verification by the international community.
Iran’s goal in the talks is to get rid of the sanctions crippling its economy. Israel and U.S. legislators from both parties have criticized a preliminary deal in the talks that froze some of Iran’s nuclear program in exchange for easing some international sanction as the negotiations continue.
Meanwhile, U.S. troops in Afghanistan are set to return home by the end of 2014 to conclude the war that began in 2001, after the 9/11 attacks.
The administration continues to try to complete a bilateral security agreement with Afghanistan that would to keep some forces in the country beyond 2014.
However, even if such an agreement gets worked out, Obama will say he fulfilled his campaign pledge from 2008 to end the long-running wars in Iraq and Afghanistan that he inherited.
CNNMoney’s Gregory Wallace and CNN’s Alan Silverleib contributed to this report.