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7 November 2012, Gateway House

Obama’s next four years

Though U.S. President Barack Obama was re-elected by a generous vote, he will continue to face the legislative gridlock of the past two years. How he acts in the coming weeks will tell us whether there is a newly-revitalised President in town, or the same one the world has got to know in the last four years.

Editorial Advisor, Gateway House

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U.S. President Barack Obama asked Americans to give him a second term to finish the reforms he had started four years ago – and they did. Defying polls that predicted a very close election, Obama won his second term in the White House in a sweep, holding onto nearly all of the states that he had won in his first term and increasing his gains with blacks, minorities and women. It was a victory for a campaign that carefully appealed to a changing America, where diversity and shifting demographics mean minorities and women dominate voting patterns.

Based on the U.S. system of deciding elections with electoral votes from each state, Obama won 303 votes versus 206 for Romney. In the popular vote however, the candidates finished neck and neck. Obama’s impressive win was based on winning electoral votes in key swing states such as Ohio, Pennsylvania, Virginia and Colorado. In edging out Romney, he ran a better on-the-ground, rather than national, popularity campaign.

Obama’s challenger, Republican Mitt Romney, was backed by a party that relies for nearly 90% of its support on white men – especially men vulnerable to a weak economy and international competition. Although Romney moved his message to the political centre in closing weeks, his party also strongly supported an anti-immigrant, Christian right approach that would use politics to inject social and religious values into personal lives.

Ignoring his social agenda liability, Romney concentrated his campaign on fixing the U.S. economy. Polls before the election backed him on that approach, with voters saying he would be a better choice to drive growth and jobs than Obama.

But the election results show voters even more concerned about Romney’s social agenda. They appeared unwilling to take the chance that the candidate, based on his favourable record as Governor of Massachusetts, was really a moderate spouting hard-line rhetoric only to appease conservatives within his party. That concern looms even more importantly when stacked against the number of Americans without work.

In effect, voters did what they never did in the past—they didn’t vote for their pocketbook first but did vote for their personal values. Historically no president has been elected with unemployment over 7%. In the U.S, it is almost 8%, despite back to back $1 trillion budget deficits and massive monetary inflation by the Federal Reserve Bank.

Even so, analysts question whether the generous vote for Obama is really a mandate to continue past policies.  And if not, what room he has to effect change. The President will be faced with the same legislative gridlock of the past two years. The lower House of Representatives will remain Republican, with the ability to block, frustrate and make trouble for the President at every turn unless he is able to cut deals with them. The upper house Senate will remain Democratic and thus be able to checkmate the House, but it will be unable to initiate any legislation of its own.

The test of how the President handles this stalemate will be immediate. In a few weeks, the government has to decide what to do about automatic spending cuts and tax hikes that will take place on 1st January. Called the “fiscal cliff,” the combination of higher taxes and cuts would suck $500 billion out of the economy, enough to cause a recession. The likely outcome for lawmakers is to extend the current situation for six months or longer, giving Obama time to come up with a better plan.

It will be necessary for the President to confront promises and issues raised by both sides during the campaign. These include:

Jobs and the Economy: Jobs dominated the campaign, with each candidate promising to lower unemployment through a better business climate. Romney backed lower taxes and breaks for small business as a way to create jobs and said he will replace Federal Reserve Chairman Ben Bernanke because of the Fed’s seemingly unlimited monetary expansion policies.  Both candidates pledged to lower the corporate tax rate (currently 35%) but also close tax loopholes in the process.

International: There was no significant difference between the candidates. The American people want to get out of regional wars and do not want to enter any more. Polls show many were disillusioned by the Arab Spring and want no part of getting involved with any support against the Syrian regime of Bashar al-Assad. Obama preached about getting the troops home from Afghanistan by 2014; Romney avoided any suggestion about committing troops to future hot spots. Freed of having to run again, Obama may have more room to ignore his strident left-wing base and push a hard line on support to the Middle East.

China: Both Obama and Romney said they will get tougher on China, with Romney vowing to label China a currency manipulator. Obama made clear he will stop short of that, but he will be under pressure to keep his promise to “get jobs back” from China.

Defence Spending: Romney sought to paint Obama as weak on security because of the $200 billion cuts that the President proposed in the U.S. defence budget over a decade. Obama will now need to prove he can get those cuts as part of overall spending reductions, without making his party look soft.

Election Spending: Romney and Obama spent close to $500 million each on their campaigns. Add in spending for upper and lower House races and it will be a $2 billion election year. A chunk of Republican spending comes from faceless political action groups who can raise unlimited funds from wealthy donors, generating advertisements that favour their interests. Unions spent the same way for Obama and Democratic candidates with issue-based advertisements that pummelled opponents.

The most important benefit Obama will have in his new term is the freedom to act without having to prepare for another campaign. Will he go further left, as critics fear, or lead forcefully from the centre, taking advantage of the broad Democratic base that voted for him? How he acts in the coming weeks will indicate whether there is a newly revitalised President in town or the same one the world has got to know in the last four years

Bob Dowling is the Editorial Advisor at Gateway House: Indian Council on Global Relations.

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