What must the president elect of the United States do in order to avoid an economic meltdown?
Obama is banking on dialog and change. There will be reforms, but not those that many are imagining. The permanent and changing reality will impose a pragmatic agenda that will go beyond his good intentions.
(From Madrid) IF THERE IS ANYONE out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer, said president elect Barack Obama in his first speech after learning of his triumph, which will carry him to the presidency on January 20, when he is sworn in as commander-in-chief on the steps of the Capitol Building in Washington.
The American dream, which many -especially the heads of state that have made a cult out of their anti-Americanism- had left for dead, is being revived by the black senator from Illinois, who turned 47 in August and will be the youngest president since John F. Kennedy took the presidential oath of office in 1961 at the age of 43. “This unity speech, given during a time of crisis, has catapulted him into the nation’s leadership and provided him with a more than normal amount exposure”
Obama even defines himself as a product of the American dream, and his non-political past indicates that that is the case. His father, a Kenyan immigrant, and his mother, born in Kansas, met at the University of Hawaii. They were married in that same state and Barack was born on August 4, 1961, but they separated only two years later. His father returned to Kenya and Obama only saw him once more before he died in a car accident. His mother remarried and moved to Indonesia in 1967, where Obama lived for four years. Then came Hawaii, Los Angeles, a political science degree from Columbia, work as a community organizer in Chicago and a law degree from Harvard, before he permanently settled down in Chicago. He had met Michelle Robinson there in 1989, and married her in 1992. Their first child, Maila Ann, was born in 1998, and Sasha followed in 2001.
Even his recent rival, the Republican senator from Arizona, John McCain, came to say of Obama that he is a voice of strength and moderation, an American success story.
There are no red states or blue states, emphasized Obama, in reference to the colors of the Republicans and the Democrats, there is the United States of America. This unity speech, given during a time of crisis, has catapulted him into the nation’s leadership and provided him with a more than normal amount exposure.
“The very night that he learned of the results, the future president warned about the excessively high expectations that many people have for his historic triumph” Obama’s first signals are clear. He will work with the Republicans, the other half of the country, and especially in the heartland of America. The difference between the percentage of the popular vote obtained by each party at the polls was around 6 percent. His government will be made up of people from both parties and represent the ethnic reality of the world’s most powerful nation. In short, it will be an inclusionary government. Ninety six percent of blacks, 67 percent of Hispanics, 61 percent of Asians and 43 percents of the whites living in the country voted for Obama. State politics has been a constant in the American administrations when dealing with many issues. Today’s crisis also requires this type of politics, and the president-elect is ready to implement it.
The vote-grabbing campaign has ended. Obama and his promises have already reached the chair of honor. Now, like all politicians, he must find a balance between what has been promised and what can be done.
The very night that he learned of the results, the future president warned about the excessively high expectations that many people have for his historic triumph. Americans have truly written a historical page for the books. Slavery was only abolished in the United States 143 years ago, and blacks were only really granted the right to vote nationwide in 1965.
A COMPLEX AGENDA
The problems are very complex and it is not guaranteed that everything that was promised in the campaign can be accomplished during the current period, or even during a possible second democratic administration.
“Jimmy Carter’s four years were so disappointing that they guaranteed Ronald Reagan’s victory in 1981 and the beginning of twelve years of Republicans” There will be setbacks and false starts. There are many who won’t agree with every decision or policy I make as president, and we know that government can’t solve every problem. But I will always be honest with you about the challenges we face, said Obama in his speech.
Jimmy Carter rode a wave of enthusiasm to the White House, as a reaction to the Nixon scandal. He also aroused great expectations, but he faced an unfavorable economy. In the end, Jimmy Carter’s four years were so disappointing that they guaranteed Ronald Reagan’s victory in 1981 and the beginning of twelve years of Republicans in the White House.
The agenda awaiting Obama in the Oval Office is complex. A serious mistake that could later lead to disillusionment would be to glorify the Obama administration ahead of time. It would be not knowing how politics works.
“Roosevelt’s victory was presaged, and the legislative majority allowed him to set in motion the first plans to jump start the economy immediately after taking office” The New York Times, which strongly supported Obama, stated: No time for laurels; now the hard part.
Drawing parallels with the past, by assuming the government of the world’s most powerful nation, Obama is facing a situation comparable to the one Abraham Lincoln faced when he came to power at a time when the nation was collapsing due of the Civil War, or the one that Franklin D. Roosevelt experienced upon assuming the presidency during the height of the Great Depression.
With the elections over, the American scene bears some resemblance to the one that FDR encountered after winning in 1932, in the aftermath of the economy’s collapse after the crisis of ’29, with 12.5 million people unemployed. At that time, Congress and the Senate were also in his party’s hands. Like with Obama, Roosevelt’s victory was presaged, and the legislative majority allowed him to set in motion the first plans to jump start the economy immediately after taking office. That short period of feverish legislative activity is known as the first one hundred days of the New Deal.
IT’S THE ECONOMY…
Americans voted with their eyes on the holes in their pockets, and not on the international crises and conflicts. They voted like they did because they are suffering the socio-economic consequences of the crisis. “At least four of every ten voters indicated that their family’s financial situation has gotten worse during the last four years” They voted with their personal interests in mind. As they have done throughout nearly their country’s entire history, the great majority of Americans looked within.
Six out of every ten voters chose the economy as the most important issue facing the country. None of the other four items on the list -energy, Iraq, terrorism, and health care- was chosen by more than one out of every ten people.
Therefore, it came as no surprise that voters also have a bitter view of the state of the country’s economy.
Almost half indicated that the economy is bad and almost everyone said that it is not in good shape.
“Even though the anti-deficit lobby is small, it is as powerful as that of Americans opposed to tax hikes” At least four of every ten voters indicated that their family’s financial situation has gotten worse during the last four years. A third said it was the same and approximately a quarter said that it was better.
With their eyes on the future, half of those interviewed said that it worries them that the current economic crisis could hurt their families’ finances next year, and another third were worried to some degree.
The Democratic president’s promises were important, but his success will depend on how many of them he manages to keep, and what benefits they will bring the taxpayers. Regarding the decisions made from the White House, there are no miracle solutions that will satisfy everyone. Spending cannot be increased without raising taxes or increasing the deficit. And yes, even though the anti-deficit lobby composed of bankers and economists is small, it is almost as powerful as the much larger group of Americans opposed to tax hikes.
Obama promised to lower taxes for 95% of American workers and tax those whose income exceeds $250,000 a year. “This time the risk is not only inflation, but a catastrophic collapse of the dollar. The current recession is not a prelude to a rapid recovery” He proposed an annual fiscal reduction of $500 per worker and $1,000 for each family, and he would abolish taxes for the elderly whose salaries do not exceed $50,000 a year. However, the Democratic candidate wants to raise capital gain taxes from 15 to 28 percent, and tax the exceptional profits accumulated by oil companies in order to provide taxpayers with an energy rebate. He plans to unfreeze $50 billion for large infrastructure projects.
Obama is in favor of limiting carbon gas emission and creating a market for carbon permits, in other words, making companies pay for the right to pollute. His goal is an 80% reduction in carbon emissions before 2050, and he wishes to invest $150 billion in ten years in clean energy technology. Obama is, after being opposed, in favor of limited off-shore drilling.
However, with a deficit for 2009 estimated at more than a trillion dollars, including the $700 billion injected into Wall Street, not even a Democrat-dominated Congress will finance a net increase in spending.
This time the risk is not only inflation, but a catastrophic collapse of the dollar. The current recession is not a prelude to a rapid recovery. “The financial conditions will be so decisive in the next administration that the president elect already has a second economic stimulus plan in mind”
He also promotes a comprehensive immigration reform unlike the previous policies, which divided the nation instead of finding real solutions. He trusts that the first step towards resolving the immigration problem is to strengthen border security in order to have better control over who enters the country and how.
He sees education as the vehicle of social and economic mobility, providing hope and opportunity to millions of young people. At the same time, he seeks to guarantee that all students receive a quality education, regardless of race or class. He attests that every American has the right to receive affordable health care, and he assumes the moral obligation that this carries with it.
These are promises that are very difficult to keep in the middle of the current crisis. The money has to come from somewhere. The Clintons, who were in a better situation, could not solve the health care problem, something that their detractors still remember today.
The financial conditions will be so decisive in the next administration that the president elect already has a second economic stimulus plan in mind. This would be a new economic rescue plan, arriving after the $700 billion package approved by the outgoing George W. Bush administration and Congress, which partly nationalized the private bank system and a $150 billion tax cut given to American workers at the beginning of the year. “The top American automotive company’s net loss reached $2.5 billion in the trimester ending in September”
The figures for the new aid would go from $60 billion to $100 billion and would be focused on increasing public spending after Obama assumes office.
The crisis will wallop Obama’s government and will cause him to carry out his proposals. The latest indicators are not encouraging. Some 240,000 jobs were cut in October, raising the unemployment rate to 6.5 percent, its highest level since March 1994. This figure is even higher than what was expected: a loss of 200,000 jobs (which is already a high number) and a 6.3 percent unemployment rate.
In the automotive sector, the American company Ford announced a net loss of $129 million this trimester; it is less than what was forecasted, but the company stated that it would lay off 10% of its workforce. In turn, General Motors, the largest American manufacturer, announced that in 2009 it could find itself with a level of liquidity so low that it would not be able to continue its operations, and for that it has declined to purchase its competitor Chrysler, and signaled that is will take all possible steps to avoid bankruptcy. The top American automotive company’s net loss reached $2.5 billion in the trimester ending in September, a figure higher than what was predicted.
Today, the proposal to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico, and to revise others, makes sense for American workers. Obama wants to make sure that all Free Trade agreements contain guarantees on work and environment conditions. In addition, he wants to abolish the tax exemptions for American companies that relocate out of the country.
“The president elect has demonstrated support for the imposition of aerial exclusion zones in the western Sudanese region of Darfur to stop the genocide” Obama has reiterated and stressed the importance of multilateralism and the restoration of diplomatic relations with the entire international community, including with new and old adversaries like Iran, Cuba, Venezuela, and North Korea, in contrast with the unilateralist approach of the current president, George W. Bush.
But, on the other hand, the majority of Obama’s advisors are veterans of the Clinton administration, whose own mark of liberal interventionism -avoiding the UN when it came to issues like the Balkans, Sudan, and the Middle East- is part of their background.
Consistent with interventionist viewpoints, like that of his vice president Joe Biden, who voted for the war in Iraq, the president elect has demonstrated support for the imposition of aerial exclusion zones in the western Sudanese region of Darfur, unilaterally if necessary, to stop the genocide. There will not be radical changes, but yes, a policy of soft power.
Obama promises to put an end to the Iraqi conflict in a responsible way within 16 months. Contrary to maintaining permanent bases, he is willing to promptly send troops in the event of a catastrophe or genocide. “The first indications of what Iraq’s future path will be should be known shortly after the president elect takes office on January 20” Directing his forces and resources to the war in Afghanistan and the fight against Al-Qaeda’s terrorism, he will send two more brigades to said Asiatic country, in such a way that there could be more American soldiers fighting there in 2010 than there are now.
The end of the war, which according to the Congressional Budget Office costs $145 billion per year, would signify the fulfillment of a campaign promise and would free up resources for the fight against Al-Qaeda and the Taliban in Afghanistan. However, some of his advisors are doubtful as to whether Iraq will able to defend itself without the presence of the Americans.
Besides, after having investing so much effort and so many of its resources, the United States cannot allow a nation of 27 million people, strategically located next to Iran, Syria, and Saudi Arabia, with one of the highest levels of oil output in the world, to succumb to chaos.
The first indications of what Iraq’s future path will be should be known shortly after the president elect takes office on January 20, when the Iraqis elect the legislatures of the country’s eighteen provinces, in which Shiites, Sunnis, and Kurds are not going to manage to come to an agreement.
A CHANGE OF COURSE WITH RESPECT TO THE MIDDLE EAST
Obama will not be able to sidestep the complex situation in the Middle East either. If he wants to contribute to peace, not only between Israelis and Palestinians, but also between Israel and its Arab neighbors, Obama will have to responsibly neutralize the regional destabilization: Iran.
“Emmanuel’s well-known close ties to Israel guarantee that there will be a straight path drawn from the president to that old, as-yet unresolved problem of peace in the Middle East” The president elect is in favor of maintaining dialog with Iran if and only if it can advance the interests of the United States. This dialog must start with low level talks. He is in favor of international sanctions in order to push Iran towards transparency with respect to its nuclear program, but does not throw out the military option as a last resort, which would discredit his anti warmongering credentials. In the future president’s opinion, the development of nuclear arms by Iran is unacceptable and the Islamic republic must cease its support of terrorist organizations. The ayatollah government has already taken it upon itself to compare his statements with those of President Bush.
To Obama, the United States’ commitment to Israel is not negotiable. He is against the policy of colonization of the Palestinian territories. The senator is in favor of a Palestinian State, and he advocates the isolation of Hamas and Hezbollah for as long as they refuse to renounce terrorism and recognize Israel’s right to exist.
The first sign of this political course was marked by the designation of his Chief of Staff, the congressman from Illinois, Rahm Emmanuel. Emmanuel’s well-known close ties to Israel guarantee that there will be a straight path drawn from the president to that old, as-yet unresolved problem: peace in the Middle East.
To those who would tear this world down – we will defeat you. To those who seek peace and security – we support you. And to all of those who have wondered if America’s beacon still burns as bright – tonight we proved once more that the true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals: democracy, liberty, opportunity and unyielding hope, Obama said as he marked stance on foreign policy.
Obama spoke to various world leaders on the phone after his victory. The global financial crisis and the international conflicts were among the matters discussed with the principle American allies.
Obama maintained several telephone conferences with world leaders in order to talk about the financial crisis and the global situation. The president elect spoke with the President of Mexico, Felipe Calderón; the Prime Minister of Australia, Kevin Rudd; the Prime Minister of Canada, Stephen Harper; the President of France, Nicolas Sarkozy; the Chancellor of Germany, Angela Merkel; the Prime Minister of Israel, Ehud Olmert; the Prime Minister of Japan, Taro Aso; the President of South Korea, Lee Myung-bak; and the Prime Minister of Great Britain, Gordon Brown. In addition to those leaders the President of China, Hu Jintao; the President of Egypt, Hosni Mubarack; the President and the Prime Minster of Poland, Lech Kaczynski and Donald Tusk; King Abdullah of Saudi Arabia; the President of Pakistan, Asif Ali Zardari; the Prime Minister of Italy, Silvio Berlusconi, and the President of Spain, José Luis Rodríguez Zapatero were also included.
In some way, these calls show in which direction the White House will direct its attention. Obviously, in light of the current crisis, Latin America will not be at the top of Washington’s list, save for specific matters.
The president elect’s policies will be marked by multilateralism, in search of a more just world in which problems are solved with consensuses or the necessary majorities, with the blessing of the United Nations, in this way leaving behind the unilateralist policy of his predecessor, the Republican George W. Bush.
Obama, who captivated with both his political intelligence and his moderation, spoke as the new president of the world’s most powerful nation and promised a new dawn of North American leadership.
Time and reality will be responsible for providing us with answers about the White House’s new tenant, who will move in as a cycle marked by its unilateral vision of the world comes to an end. Obama is banking on dialog and change. Without a doubt there will be reforms, but not those that many are imagining. The permanent and changing reality will impose a pragmatic agenda, which will go beyond the electoral promises and intentions of the White House’s historic black tenant.