What Obama Faces in 2011

HONOLULU Hawaii - President Obama has vowed to make jobs and the economy his top priority in 2011, and while that will probably dominate his agenda, there are a whole host of other issues that will be in the mix.

Obama is taking time on his Hawaiian vacation to work on his State of the Union speech, which will formally set the agenda for the year, but he already hinted at his focus before he left he'll hone in turning around the economy.

He's hoping it will get a boost from his tax deal with Republicans. "It's led economists across the political spectrum to predict that the economy will grow faster than they originally thought next year," Obama said at year-end press conference.

The president will have to make decisions on how to deal with the ballooning deficit and one thing that makes this year different than his first two, is that he'll have to deal with the 112th Congress which is far more red.

"I think that we're still going to have disagreements in terms of spending priorities," Obama said before leaving on vacation.

Analysts seem to agree.

"I think the biggest explosion will be about spending, debt, deficits and health care. Those are the areas where the parties disagree the most," said Larry Sabato Director of the University of Virginia Center for Politics.

Late in January aides say the president will work on our relationship with China, hosting a state visit for President Hu Jinato.

China is a major player in the world economy and also a critical player in dealing with looming threats of Iran and North Korea.

Despite calls from the international community, Iran has failed to stop its nuclear program.

"That means that President Obama may have his hardest decisions about Iran in the next one to two years; whether or not to attack their nuclear facilities. That could be the biggest foreign policy decision, frankly, of his presidency," foreign policy expert from the Brookings Institution Michael O'Hanlon said.

Then there are the wars in Iraq and Afghanistan. Iraqis have finally formed their government and the U.S. has moved to more of an assist role. U.S. troops are slated to leave at the end of this year according to an agreement that was reached.

Some experts have suggested that an extension would be wise so that the Sunnis, Shias and Kurds would have more time to work out their disputes.

"Until those are partially resolved, I'm nervous about the idea of all American troops leaving. So 2011 looks to be another tense year in Iraq, but on balance 2010 was ok," O'Hanlon said.

On Afghanistan, the administration scheduled July of this year to begin a major transition, and then start bringing troops home by 2014 and ending combat operations.

"I think you'll start to see where allies are getting restless if don't see a strategy that's winning in Afghanistan," said Heather Conley, an analyst at the Center for Strategic and International Studies.

Defense Secretary Robert Gates is also slated to leave in 2011, so Obama will have to pick a new Pentagon chief. Gates was a hold over from the Bush administration, so the president's selection will say a lot about his war strategy.

On Capitol Hill, the president has said he wants to bring up the DREAM Act again, which failed in Congress at the end of 2010. The bill would give children of illegal immigrants who graduate high school in the U.S. a chance to get permanent residency.

Also, an old campaign promise is still hovering unfinished. Obama pledged on the campaign trail that he'd close Guantanamo Bay his first year in office, and now entering his third year, the administration still hasn't found a way to do that or where to put the detainees.

Fox News' Mike Emanuel contributed to this report.