Barack Obama's job won't be easy at all. He will take over the US presidency at a time of a deep financial crisis and the beginning of an economic recession - if not crisis - that will impose huge financial constraints on his administration.
Hence, Obama will have to water down many of the economic and social plans he presented during his campaign. Obama will face a number of acute issues, and the solution will require money - a lot of money.
These include projects to help poor families pay their mortgages and to temporarily support the financial sector and the automobile industry. He may take the first steps toward healthcare reform.
But the reform itself, which will be very costly and demanding, he will have to be postponed until better days, most probably the second half of his first term or even until his second term - provided he gets that far.
Taxes, taxes and taxes
In the short run, the incoming president will hardly be able to reduce taxes significantly, although in his campaign he pledged tax relief for 95 percent of Americans.
It will also be difficult to increase corporate taxes, having called such a strategy unproductive during his campaign. Obama promised trade unions to better protect domestic jobs from being moved abroad, but he will have to do that with caution. The well-educated statesman is well aware that America's prosperity is largely based on free trade.
Overcome recession
What we should expect from the incoming president is more moderate attitudes typical of the Democrats. He will try to stimulate the economy more than the Republicans, especially in the event of a deep recession. He will have the Congress on his side, which will be a big advantage, although in the Senate he will stay short of a supermajority of 60 votes, needed to prevent a filibuster.
Not only does Obama seem to be a competent leader, but he is also capable of surrounding himself with competent people. Whether he picks Larry Summers or Timothy Geithner as his Secretary of the Treasury, the US economic policy will be in the hands of pragmatic experts - especially since Ben Bernanke is staying as Fed Chairman.
Obama is thus giving hope to most Americans and the whole world that America will, in the end, not only overcome the recession, but also advance economically and socially.
Obama in Europe
For Europe, Obama's presidency will represent a big opportunity to restore strong transatlantic relations based on enhanced mutual respect and more intensive cooperation.
This seems crucial also in light of the recent suggestion by the Russian president that Iskander missiles should be stationed in Kaliningrad. In return, Obama will require that Europe step up its so far sluggish willingness to reinforce the transatlantic partnership by more substantial financial participation.
It will be up to Europe to unite and to offer Obama a well-designed set of mutually beneficial initiatives. Europe should start immediately, because Asia, Latin America and even Africa are already actively pushing cooperation proposals. Basically, we have a global competition in this sphere.
The Czech Republic will soon preside over the EU, and as such will have a unique chance to play a globally important diplomatic or even historic role. We will see in a few months how well the country has prepared.
Jan Švejnar is a professor of economics at CERGE-EI in Prague and at University of Michigan. In 1994-2003 he was an economic adviser to President Václav Havel, and in February 2008 he ran against Václav Klaus for Czech president.
