...President Riley would be the first Republican president arguably since Theodore Roosevelt who became noted for his economic program when he began pushing for what became known as the "New Covenant". At the heart of the New Covenant was the tax plan that the president had outlined in the 2008 campaign: income tax rates on the lower class and business would be lowered while those on the high-income tax bracket would pay more. The New Covenant's tax philosophy was able to pass through the divided Congress with relatively few changes from Riley's initial proposal, with both parties being able to overlook the parts of the bill they disagreed as a result of the parts they did like.
The second stage of the New Covenant did not fare nearly as well. The president proposed a balanced budget amendment that would require cuts to be made to most non-defense agencies in order to meet with his requirements. While this passed the House with a narrow majority, the Democratic-controlled Senate voted the balanced budget amendment down. Riley, undeterred, tried again in 2010 before the midterms and had a similar result.
President Riley would be the first Republican president since George Bush nearly thirty years before to be able to appoint new justices to the Supreme Court. Shirley Hufstedler opted to retire in 2009 after 38 years on the court, and Riley replaced her with Fourth District Court of Appeals Justice Maureen Mahoney of Virginia. In 2010, John Paul Stevens, the only other Republican appointee besides Mahoney on the court, decided to retire as well. Riley replaced him with Eighth District Court of Appeals Justice Steven Colloton of Iowa.
The midterms saw the Republicans lose seats but retain control of the House while the Democrats lost seats in the Senate but similarly retained control. President Riley agreed with his advisers' assessment that the political situation in Congress had not changed enough to push for the balanced budget amendment for a third time, so he moved on to another plank of the New Covenant. Taking a page from Canadian Prime Minister John Manley, Riley pushed for greater emphasis on technology and science in high schools and colleges. While the high school portion was scrapped in congressional negotiations, the Innovation in Education Act of 2011 has resulted in the a large number of technical and vocational colleges expanding and the American manufacturing and technology sector boom that has continued for the past five years...
On the foreign policy front, President Riley inherited Gephardt's headaches about the Middle East. The replacement of the Hussein regime by a Shi'ite government which looked to Iran and President Ghalibaf had destabilized the balance of power in the region and Secretary of State Zoellick spent a large part of his tenure attempting to calm down Saudi, Jordanian and Turkish concerns about Iranian aggression while negotiating with a difficult supposed ally in President Ghalibaf of Iran.
The Palestinian Intifada claimed a great propaganda victory when recently retired Israeli General Yoni Netanyahu was killed in a mortar attack in late 2009. The death of Netanyahu, who was one of Israel's greatest war heroes and most beloved citizens, enraged the Israeli population and the Israel Defense Forces (IDF) soon launched Operation Righteous, a counter-insurgency military operation against Palestinian fighters. The harsh methods used by the IDF in Operation Righteous, including abetting officers who authorized torture of Palestinian prisoners and with little concern given to collateral damage when ordering bombing strikes, led to the international community switching from sympathizing with Israel for the shocking loss of a national icon to turning against them. President Riley, despite his support of Israel, condemned what he called an "extreme overreaction by the State of Israel". The victory of a right-wing coalition largely fueled by Israeli grievance with what they viewed as abandonment by their American allies and push to crush the intifada kept American and Israeli relations at their lowest point in history by the time the president came up for re-election...