President Gephardt began his term on a high note, enacting a national minimum wage increase and an increase in Medicare funding from Congress. He was also able, very early into his term, to appoint a new Supreme Court justice when Archibald Cox announced his retirement in 2001. Gephardt promoted former Solicitor General Walter E. Dellinger III of North Carolina to the bench, the first time a non-judge had been appointed since Cox joined the court 26 years previous.
Then he had to turn to foreign policy, having left the Congo to his cabinet while he concentrated on domestic policy while the iron was hot. Very little could be done until Gephardt and UN Secretary-Generals Boutros Boutros-Ghali and his successor, Amara Essy, succeeded both changing the operational parameters of the Congo Stabilization Force (CSF, MINUSTAC's military division) and enlisting the help of more African with peackeeping and occupation duty, freeing up Western soldiers to search for rebel holdouts, although this came with the drawback of increased American casualties and expenditures, which made the Congo effort even more unpopular.
The creation of the Internet in the early 1990s had led to an explosion of start-up companies and business ventures as businesses and consumers headed on-line alongside increasingly large numbers of Americans. With regulators struggling to regulate the new businesses and both the Republican-controlled House and President Wilson in favor of leaving the new medium with loose regulations, it came as no surprise to savvy financial analysts that in late 2001, the bubble burst as large quantities of start-ups that investors had thrown money at had made very little and some were being investigated for egregious fraud. The economy was further hurt when it became clear that the result of the Energy Freedom Act that President Wilson had pushed through was that private companies had bilked municipalities out of billions of dollars following the government incentivizing switching to private energy companies.
While President Gephardt and Congress quickly walked back energy deregulation as the executives of several large energy suppliers were brought to trial, the damage the "Internet bubble" had done had put the United States into a recession, with unemployment reaching 8 percent in early 2002. Efforts to shore up the economy quickly was not enough to prevent Congress from falling back into Republican hands, with the GOP sneaking into the majority with 51 seats.
The latter half of the presidential term started out rocky for Gephardt. The brutal repression of ethnic fighting in the Caucasus by the Soviet Union gave the West pause and the relationship with the Soviets cooled as a result. A hostile Congress prevented Gephardt from doing much in the way of domestic policy, although Republican leaders, consciously avoiding high-profile fights with the president that had characterized the last two years of the Huddleston Administration, managed to have cordial relations with Gephardt and a good working relationship developed between Gephardt and Speaker Dan Coats.
Mid-2003 saw an extraordinary turnaround for the Congo as the CSF's strategy of continual harassment and isolation of guerrilla bands saw almost all of them collapse by this time and the leaders came out of the jungle to take part in peace talks with Congolese officials, mediated by the UN and US State Department. The near-overnight change caught everyone outside of CSF command and the Defense Department off-guard and the withdrawal of almost all American troops by the subsequent December following the Kinshasa Agreement saw the president's approval ratings shoot up nearly twenty points from immediately prior to the end of hostilities.
The emergence of the issue of gay marriage and gay rights became an issue as well when, after the Supreme Court struck down the federal ban on same-sex marriage in
Vigano v. Holder and state legislatures began to weigh in on the issue. While the president came out in favor of civil unions instead of full same-sex marriage, he listened to the advise of his aides and did not push the issue as it drew close to 2004.