Four more years of US fate

As Mitt Romney and Barack Obama tip their hats to the idea the US can't afford to replay the past four years, many of the most potent events we've seen could easily be repeated.

The American presidential candidates go into the final weekend before election day in an effective dead heat.

President Barack Obama has got his swagger back in the wake of an immeasurably improved response to Hurricane Sandy from government agencies and first responders compared to the calamity of New Orleans and Hurricane Katrina in 2005.

Republican challenger Mitt Romney has emerged from a small Sandy ceasefire determined to unseat the most vulnerable sitting president in living memory, courtesy of the economy.

In the final few days of this marathon campaign, the cable networks have been fretting about the latest set of polls numbers, with both Democrats and Republicans disputing results that favour their opposition.

Very few lone voices have had the presence of mind to point out that all the latest polling data take into account the response to Hurricane Sandy, the encouraging S&P/Case-Shiller property numbers for August or the better-than expected employment figures from earlier this week.

Every interview informing the current batch of data was conducted before all that happened. Just how meaningful are they?

Both campaigns are in some way acknowledging that America can’t afford a repeat of the last four years.

The Obama campaign’s central theme has simply been the word "forward,” a dead giveaway that the last four years haven’t gone as planned. But, Obama says, there’s a lot more to be done in the next four years and his popularity rating is five times that of Congress.

The Romney campaign’s central argument is that Obama hasn’t shown leadership on the economy or the budget, ignoring a similar lack of leadership in the Republican dominated Congress. Regardless, America can’t afford another four years of Obama, they claim.

Both sides have sanded the last four years down to some trivial catch phrases to get the attention of voters. The thing is that a lot has happened in the last four years and regardless of who wins, much of it could easily be repeated.

The seeds of gridlock

Obama’s antagonistic forces were marshalled well before the pomp and circumstance of his inauguration had faded. In his book Do Not Ask What Good We Do: Inside the US House of Representatives, Robert Draper details how a group of powerful Republicans met the very night of that historic inauguration day to lay out their plan to make the new president’s life as difficult as possible.

This was January 20, 2009. The Dow Jones had plunged 40 per cent from its 2007 peaks to close at 8219 points, and it still had further to fall. Romney’s running mate Paul Ryan was present at this meeting.

While this would later solidify the notion in the minds of Americans that people work to their own ends in Washington under all circumstances, the Republican narrative against the Chicago Democrat only really grew legs during the healthcare debate.

Fourteen months after his inauguration, the Dow had rebounded 30 per cent and was approaching 11,000 points again. The president signed the Patient Protection and Affordable Care Act, now known with varying levels of respect as Obamacare.

The president’s decision to expand healthcare when he did had two crucial consequences. One, it gave the Republicans a big, scary government program to shape their socialist caricatures of Obama with. Two, for whatever reason, it weakened Obama’s economic credentials. It’s since been revealed that the president and his closest advisers knew full well that this was coming, but to what extent?

The overtures of federal overreach and the trillion-dollar-plus budget deficit combined to help inspire the Republican Tea Party movement, which ran to the mid-term elections on a platform of smaller government and lower taxes (although there was little agreement about what programs should be cut and how).

Crazy as it sounds, on November 2, 2010, America had itself another set of national elections. Just 21 months had ticked by since Obama’s inauguration.

Even with the highly caffeinated Tea Party energising the base, the Republicans only secured 19 per cent of eligible voting Americans at the midterms of 2010. To put this into context, the Australian Greens won 21.6 per cent of the primary vote in the Tasmanian state elections in the same year – although we Australians live under the unfathomable freedom-crushing burden of compulsory voting.

Such is the way, that 19 per cent translated into one of the biggest swings in US political history. The 2010 midterm elections vaulted Republican Congressional Leader John Boehner into the position of Speaker of the House, with some Tea Party enthusiasts to educate.

Dozens of Democrats were ousted from the House, but they did hold on to the Senate 53 seats to 47. That’s if you include the left-leaning independents. The Dow Jones had reached 11,000 points again.

Conservative lobbyist Grover Norquist, founder of Americans for Tax Reform, clutched the signatures of nearly all the new Republican congressional majority to a document pledging that they’d oppose all bills to increase taxes in any form, including the closure of spurious loopholes, without exception. The seeds of congressional gridlock were sown.

Dancing with debt

By May of 2011, the Dow had well and truly shot through 12,000 points and wasn’t far off 13,000. It was here that the battleground where the newly invigorated Republicans and the president would clash became obvious – the debt ceiling.

Treasury Secretary Timothy Geithner was peppering congressional leaders with letters reminding them that if the debt ceiling weren’t raised, the US would default. And if that happened, there’d be trouble kids. The US was also paying record low rates on its borrowings, thanks in part to the mood of global investors and money printing from the Federal Reserve. This was inconsequential to the congressional ‘freshmen’.

With the Simpson-Bowles report having failed to even get out of committee late in the previous year, unstructured negotiations began between the two parties on a few different levels on the matter of reducing the budget deficit. Debt ceiling warnings began to dominate the front pages of the nation’s newspapers.

On July 31, 2011, a deal was finally struck. But the uncertainty left Standard & Poor’s with no option but to conclude that Washington was too willing to play chicken over its obligations to lenders (China being it’s largest). On August 5, America’s debt rating was downgraded and the Dow briefly plunged back through 11,000 points.

Obama’s approval rating began to slip as well, dipping below 50 per cent as the sparkle of hope and change faded. But the US was under no illusions about which branch of government was primarily responsible for this nearly catastrophic event. The Republican Congress booked itself an approval rating in the single digits, where it has pretty much stayed ever since.

The product of this reluctant agreement was the Budget Control Act. While the act itself only slowed the rate of debt growth, rather than actually reducing it in net terms, it did make a series of tax increases and across the board government department spending cuts, known as sequestrations, mandatory, if the two sides couldn’t come to a bipartisan debt reduction agreement.

The deadline set was for January 1, 2013, less than two months after the coming election. The seeds for the fiscal cliff were sown and they will go effectively unaddressed right up until election day.

Americans might have been surprised at the extent to which the congress was capable of putting partisan bickering over national economic interests. But the capacity for pettiness was apparent well before then.

A combination of Republican shamelessness and Democratic cowardice meant that a bill designed to offer healthcare to 9/11 first responders suffering problems directly related to their service, was knocked back by legislators. The major cable networks largely ignored this once unthinkable event and it was left to some prodding from The Daily Show’s Jon Stewart, which proved successful in getting the two sides to pass the bill.

It was events like this, where Washington found ways to screw up bills that no self-respecting American would allow themselves to let slip that inspired the Tea Party to some extent. It was clear that politicians weren’t working for the people.

Sometime later, another movement would gain national attention by asking if Washington isn’t working for the people, then just who are they working for?

The 99 per cent

In September 2011, the Occupy Wall Street movement was born on the cooling tiles of Zuccotti Park, New York, which is a street or two away from Wall Street. Inside the NYSE, traders had moved on from the debt-ceiling crisis and back to the European debt crisis, where a Greek default loomed once again. The Dow was still around 11,000 points.

OWS quickly grew from a few disenfranchised voters in the Big Apple into a national, and somewhat international, phenomenon. It put Mayor Michael Bloomberg in a difficult position – he had to evict a bunch of well-meaning protesters that had decided to make their voice heard on publicly accessible, but privately owned land.

While OWS had few specific demands, the most prominent topic was American campaign finance. To remain in office, each congressman has to spend on average a third of his or her time raising money for the re-election of themselves and their party. Aside from being an immense waste of time, how does this impact their priorities, the movement asked.

The inseparability of these political and business circles became all too obvious when MF Global collapsed. Former Goldman Sachs chief executive Jon Corzine was using MF as his comeback vehicle. After leaving the investment bank he was elected a New Jersey Senator and Governor for the Democrats.

As a legislator, Corzine was one of the Democrats’ most prominent campaigners for better financial regulation after the collapse of Lehman Brothers sparked a financial crisis that required trillions of dollars to fix. One of his favourite issues was leverage.

On October 31, less than a year after being deposed from the New Jersey governorship by talented Republican Chris Christie, Corzine had run MF Global into bankruptcy with some bad bets on European debt. The best estimates put Lehman Brothers at a leverage ratio no higher than 33-1 when it keeled over. Despite his apparent abhorrence to excessive leverage, MF went down with a ratio of 40-1, thanks in no small way to some lobbying from Corzine.

Personality and paranoia

While all this was happening, prospective Republican candidates were tapping their private support networks for money for the nomination process that would select the 2012 challenger for Obama.

No less than 20 televised debates – plenty of practise for Romney – took place where candidates embraced a whole series of strange ideas in order to secure ‘the base’.

The result was the resurrection of birthirism, where candidates would openly question whether Obama was actually born inside the United States. While the president did produce his full birth certificate – after resisting any engagement with such conspiracy theories as beneath the office – polls show to this day that somewhere between 13 and 24 per cent of Americans continue to doubt the origin of his birth.

The birth certificate issue was put to bed for a few months just a few days later when Osama bin Laden was assassinated. But billionaire and TV personality, who cheekily flirted half-heartedly (but publicly) with a presidential tilt of his own, has almost single-handed kept birthirism breathing.

The Republican candidates uttered an innumerable amount of nonsensical statements about the American economy – not one of them talked about the fact that the economy remains sluggish because households are deleveraging. Remember, there was a subprime mortgage crisis?

Almost all of them took time to talk up a trade war with China – which is going through its own leadership transition, not that the US media is particularly interested – and a real war with Iran.

Indeed the Arab Spring provided a reminder to American voters that the seeds of democracy don’t have to be sewn by American fighter jets. Although the recent assassination of the US Ambassador to Libya, along with four other Americans, served as a reminder that ‘organic’ democracy acts no faster or takes any easier than when it’s administered via shock therapy.

All this says nothing about the other traditional go-to US election issues – rights for guns and abortion.

The former has only popped up passingly over the last four years, usually in the wake of another classic American shooting – the attempted assassination of Democratic congresswoman Gabrielle Giffords and The Dark Knight Rises screening in Colorado being the most prominent.

But access to abortion and the fate of Roe v Wade are still being used by both campaigns to talk directly to women – as if unwanted pregnancies are all that prospective American women voters think or care about.

All this information has been variously passed on to voters via a media that’s been undergoing massive transformations. With advertising markets starved, the Huffington Post continued its meteoric rise along with a number of other new online players on both sides of politics. Traditional newspapers continued to shut down, starved of advertising.

The Fox News Network, owned by the parent company of Business Spectator, graduated from usual right wing bias to briefly dabble in the conspiracy theories of Glenn Beck. The rantings of the new, hugely popular character at times verged on the brink of paranoia and provided rival networks with hours of material to discuss for themselves.

Beck’s ‘Restoring Honor’ rally in August 2010 inspired a counter event from Jon Stewart from the team that produces The Daily Show and the Colbert Report. They put on the ‘Rally To Restore Sanity’.

Stewart sits uncomfortably with the perception that he’s a lonely voice of reason in the centre of American cable network power vacuum with the tried-and-true Fox News on the right and an increasingly vocal MSNBC on the left. His first responsibility is to heap ridicule on targets like Fox News and MSNBC, not act as their mediator. Whether he likes it or not, the two roles seem to have converged.

The reality is that Stewart has cultivated an audience looking for news with a comedic edge because American politics has descended into such a deplorable state that you can only laugh at it.

Another kind of storm

And Americans sit uncomfortably in the middle of all this mess. Only a fraction of any of the aforementioned has been reflected in the campaigns or the debates.

Romney’s claim that the last four years represent more than the aftermath of an economic crisis, but an absence of leadership from Obama, simply don’t ring true when you look at the behaviour of his party. His ‘flexibility’ on just about every important election issue is equally uninspiring.

Conversely, Obama underestimated the partisanship of his opponents, fouled up a few key encounters with the Republicans and failed to shift quickly enough from ‘hope and change’ to Washington warrior.

On November 6, a little over half the American population eligible to vote will enter booths around the country to select a candidate that they hope can rise above much of the aforementioned.

Their first order of business will be the debt ceiling, that’s likely to be reached before the end of the year. Oh, and the end of the year is when America reaches its fiscal cliff.

And yet, with so much at stake, the result of the election might come down to the randomness of the hurricane. New Jersey Governor Christie has had some very kind words to say about the president’s response to the crisis – far nicer than he’s ever had for Romney – and New York Mayor Bloomberg has thrown his support behind Obama because he believes in climate change. He'd previously indicated he wouldn't endorse either candidate, but then Sandy wrecked his city and only one of the presidential nominees believes in climate change, which creates more extreme weather patterns.

For what it’s worth, when the NYSE emerged from the Sandy shutdown, it was at 13,100 points, almost 60 per cent higher than the day Obama was inaugurated. The betting agencies say he's got a 67 per cent chance of winning a second term.

Where will the Dow be in four more years?


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