Americans remain pessimistic or at best fretful, but on balance there’s no country with which they ought to want to trade places. China owns the world’s second-largest economy, but hundreds of millions of its people remain impoverished, and it’s not clear how well one-party rule can manage the challenges of pollution, an aging population and growing class divisions. Europe is in a slump with no foreseeable way out. Japan and Russia are on paths of steep demographic decline. The United States remains, relatively speaking, wealthy, a magnet for immigration, and a leader in entrepreneurship and innovation. What it has lost, or temporarily mislaid, is the formula to generate steady growth that benefits everyone, from top to bottom.

Mr. Obama’s answer is for the government to invest more in the foundation stones of economic dynamism and opportunity: education, research and infrastructure. That was the message of his reelection campaign, and we think it is correct. But it can’t be the whole story. On its current path, the government won’t be able to sustain the kind of investment the president favors because in just a few years its entire budget will be swallowed by entitlement spending, much of it on the well-off elderly, and interest payments on the ballooning debt.

In his first term Mr. Obama completed some unfinished work of the New Deal and Great Society, ensuring for the first time that no American will have to live without health insurance. In his second he could solidify the long-term future of this completed package of social protection. Reforming Social Security and Medicare won’t be easy, but the longer the job is postponed the more painful it will become. Mr. Obama could do it in a progressive way, making sure that the most vulnerable are protected. He would have to take on the extremes of both parties, which prefer eternal combat to essential compromise, but most Americans would cheer.

Right-sizing entitlements would also allow the United States to provide the global leadership that no one else can or will provide. Mr. Obama’s first-term emphasis was on retrenchment, not surprising after a decade of grinding wars in difficult places. But the world remains a dangerous place, as Defense Secretary Leon Panetta recently reminded us. If the United States were to cut its military spending so much that it could no longer respond to an unexpected threat in Mali or offer assurance to far-away allies in the South China Sea, the eventual result would be turmoil far costlier than the annual defense tab. Making that case to the American people, however tired they may be of hearing it, is another task for a national leader.