What to Expect from Obama's Second Term

A few shreds of evidence that Obama might follow through on a center-right policy agenda

What will President Obama's second term, which begins this week, bring?

Here's a best-case scenario and a worst-case scenario.

The best case is that Obama follows through on some of the proposals that he, or members of his administration, have already made that fit broadly with free-market, fiscally conservative principles.

During the 2012 campaign, for example, Obama proposed lowering the corporate tax rate to 28 percent from 35 percent. An individual income-tax plan proposed by the chairmen of an Obama-appointed commission on the budget deficit would lower the top individual income tax rate to 24 percent. The president has spoken of changing immigration policy to attract entrepreneurs born abroad: "In a global marketplace, we need all the talent we can attract, all the talent we can get to stay here to start businesses." In negotiations with Republicans, he has floated the idea of basing Social Security cost of living adjustments on "chained Consumer Price Index," which would have the effect of trimming government spending on one of the giant entitlement programs.

In other words, if President Obama merely follows through on what he or his appointees have already either formally or informally proposed, he'd reform immigration in a way that removes obstacles to a free market in labor and free movement of individuals, cut both corporate and individual top tax rates to levels lower than in the George W. Bush or Reagan administrations, and adjust Social Security benefits to put the program, and the U.S. government, on sounder financial footing.

That's the best-case scenario.

The worst-case scenario is that, having achieved tax increases on upper-income Americans as part of a fiscal-cliff deal earlier this month, Obama will return to seek, and achieve, yet more tax increases, under the banner of combating the scourge of income inequality. On immigration, Obama will decide that it's more politically useful for his party's dominance of Latino voters to have an immigration bill voted down by House Republicans than to have one actually passed.

And on entitlement reform, Obama will decide that, because the programs become insolvent decades down the road, the problems would better be tackled by some future president who is himself or herself of the age to be a beneficiary of these programs. A president such as, say, Joe Biden, who will be 74 on inauguration day in 2017, or Hillary Clinton, who will be 69. On the entitlement issue, Obama will console himself that ObamaCare provided some tools for beginning to get control over Medicare costs.

Which is the more likely outcome, the best-case scenario or the worst-case scenario?

Look at Obama's first-term record, and there are at least a few shreds of evidence to support the best-case scenario of Obama following through on a center-right policy agenda. He did extend the Bush tax cuts for four years and add a payroll tax cut. He did extend President Bush's war on terror by surging troops in Afghanistan, ordering drone attacks, keeping the Guantanamo detention center open, and killing Osama Bin Laden.

Yet there is plenty of evidence, too, to support the worst-case scenario, of a president more interested in redistribution than in growth, a "you didn't build that" president who, to the extent he thinks about growth at all, sees it as driven by government spending ("investment," "stimulus") on education and infrastructure rather than by individual private-sector risk-takers, a president more interested in scoring political points than in crafting bipartisan legislative compromises. Witness the lack of progress on either immigration or deficit reduction in term one.

Which of the two scenarios will we get?

If there's ever a moment to hope for the best while expecting the worst, inauguration week is it. Either way, you won't be disappointed.