WASHINGTON (Reuters) - U.S. President Barack Obama faces a long list of challenges as he returned from his Hawaiian holiday on Monday and began the new year.
Here are some questions and answers about Obama's agenda as he nears the end of his first year in office.
WHAT IS OBAMA'S MOST PRESSING CHALLENGE?
Obama's top priority is to cut double-digit, 26-year high unemployment, which has sapped his popularity and may dim re-election prospects for his Democrats in November mid-term congressional elections, in which the party in power traditionally suffers losses.
He is expected to push hard on tackling unemployment to follow up on a jobs summit and banker meetings in December. Growth resumed in the third quarter after the worst U.S. recession in 70 years, but job creation has lagged, and Obama has vowed to find ways to encourage hiring.
The Senate is expected to consider a $155 billion jobs bill the House of Representatives approved on December 16. The U.S. Treasury also says it will ask Congress to ease restrictions on a bank bailout fund called the Troubled Asset Relief Program, or TARP, to free $30 billion to help the flow of credit to small businesses to help them grow and hire.
WHAT IS HAPPENING WITH HEALTHCARE REFORM?
Obama received a big present on Christmas Eve when the Senate passed its version of healthcare reform, his top legislative priority. But months of political wrangling came at a price -- Obama lost support from moderates and independents wary of the price of overhauling the $2.5 trillion industry.
Obama's fellow Democrats face tough negotiations in January to reconcile the House and Senate bills, which have significant differences on issues such as taxes, abortion and whether to have a government-run insurance plan.
Republicans are determined to prevent Obama from signing historic healthcare legislation in 2010, hoping to deny the president a political victory ahead of the November elections.
HOW WILL OBAMA ADDRESS RECORD DEFICIT?
Obama, under fire for a record deficit, which he blames on a severe recession and reckless spending he inherited from his predecessor George W. Bush, will unveil his budget in early February. The budget will focus on long-term deficit reduction, a theme likely to be fleshed out in Obama's upcoming State of the Union address, but it is also expected to continue to keep government spending flowing in the near-term as the economy slowly recovers.
WILL THE DETROIT PLANE INCIDENT CHANGE THINGS?
Homeland security made an unwelcome push toward the top of Obama's agenda on December 25, when a Nigerian man, identified by Obama as a member of al Qaeda, was arrested for trying to blow up a U.S.-bound flight from Amsterdam.
Republicans are now trying to paint Obama and his fellow Democrats as soft on security, hoping to score political points ahead of the mid-term elections. Obama is seeking answers for the security lapses that allowed the would-be bomber to board the plane. He has summoned spy chiefs to a meeting on Tuesday.
It is not yet clear what impact the attempted bombing will have on Obama's plan to close the Guantanamo Bay prison in Cuba, which has already been delayed from January until later this year. Republicans have urged the president to reconsider his decision to shut the prison and say he should also halt transfers of prisoners to countries such as Yemen, where the bomber was allegedly trained.
WILL OBAMA STILL LEAN ON BIG BANKS?
Obama's plan to overhaul U.S. financial regulation is inching forward but will not yield a bill for him to sign until late spring. The House approved on December 11 its version of legislation to tighten rules to prevent a repeat of the 2008 financial market meltdown. But the Senate Banking Committee is still debating the issue.
Obama in June proposed granting the Federal Reserve new powers to monitor big financial firms that could pose a "systemic risk" to the economy, while creating a new consumer protection agency for financial products. But many provisions are controversial and may be reshaped by Congress.
WILL THERE BE ANY ADVANCE ON CLIMATE?
After helping to broker a non-binding agreement in December among United Nations countries to curb greenhouse gas emissions, Obama must now turn to the Senate to push through a domestic law to cut carbon pollution at home.
The House already passed a bill to reduce emissions 17 percent by 2020 compared to 2005 levels, but a similar initiative in the Senate has stalled.
His efforts face opposition from many Republicans and lawmakers from states that produce coal and oil. As he works to battle high unemployment, opponents of a law argue it would hurt the economy and cost the United States jobs.
Obama's stewardship of the issue, expected to be a priority after healthcare reform is complete, will help determine whether a binding U.N. climate pact can be reached in 2010 after the December Copenhagen talks fell short.
WHAT ABOUT THE WARS?
AFGHANISTAN - With violence in Afghanistan at its highest level in years, Obama in December ordered 30,000 more U.S. troops to the war zone to break the momentum of a resurgent Taliban. The reinforcements will bring the total number of U.S. soldiers in Afghanistan to about 100,000.
The troop increase is proving a tough sell -- with the United States struggling with record budget deficits and high unemployment, the public is wary of spending tens of billions more dollars on the war. Many Democrats also worry it could hurt them in the November election, particularly if more soldiers start coming home in body bags.
IRAQ - Obama has declared the Iraq war will end for the United States by the end of 2011, when remaining U.S. troops will withdraw. A surge in bomb attacks has raised questions about Iraq's ability to combat militants before a national election due in March, but Washington says it is sticking to its withdrawal timetable. Obama is banking on saving billions of dollars from winding down U.S. operations in Iraq to help cut a record budget deficit and subsidize the Afghan surge.
HOW WILL OBAMA TACKLE IRAN?
Iran missed the December 31 deadline to respond to a U.N.-brokered nuclear enrichment deal after initially signaling its interest. U.S. officials say Iran's hardline government is preoccupied with deepening domestic unrest after a disputed presidential election last year.
The United States is now talking to European allies, Russia and China about imposing tougher sanctions, but it is proceeding cautiously, reluctant to impose broad sanctions that could hurt the Iranian people and undermine the opposition.
The U.N. Security Council is not expected to begin talks on sanctions until mid-January at the earliest. Obama must still persuade Russia and China, veto-wielding allies of Iran, to back any new measure, a process which could take months.
(Compiled by Alister Bull, Patricia Zengerle, Ross Colvin and Jeff Mason; editing by Patricia Wilson and Paul Simao)