It’s voting time! I’m expecting Obama to win, given the pre-election survey analysis, so what can we expect from a second term?
More of the same, and probably a bit less.
On the US economy: Obama’s strategy has been to spend the minimum of political capital necessary to keep the economy from absolutely tanking. The discussion around the original plan in 2008-2009 was, how big? Apparently, the original calculation was $1.8 trillion, then $1.2 trillion. But that was too risky, politically, so the final package was $0.8 trillion, less than half the original number.
The stimulus performed as expected, intended, and designed. It was enough to keep the peak in headline unemployment numbers at 10%, and stopped the slide in GDP. Extension of unemployment benefits, the natural increase in welfare programmes like food stamps, and various other provisions sanded some of the roughest edges off the recession.
Now, the US is slowly working its way back. Its economy is something around 70% dependent on consumer spending. That spending relies on income and wealth. Household wealth has taken a big hit, and households will be adjusting their future spending from the losses incurred. Incomes may be recovering, but the uncertainty associated with this new experience of extended unemployment is likely to encourage more risk aversion. That means less spending and more savings. Slowly, consumer spending will return, but it will take years.
As a result, the US and the world economies are likely to continue on this kinda forward, kinda sideways shuffling.
On the politics: Obama will be stymied. Presidents generally have their big legislative accomplishments early on. Obama’s ARRA was in 2009, and the healthcare reform was in early 2010 after months of haggling.
Recall Clinton’s second term. Lewinsky. Impeachment. The spectre of Vince Foster. The Whitewater investigation. Yes, sure, there was a lot more going on. But the diversions and political fighting were legendary.
Obama’s likely victory is already being cast as illegitimate. His opponents have obviously set up the idea that Obama doesn’t belong — needing to ‘learn how to be American’; ‘no one’s ever asked to see my birth certificate’. They are setting up the excuses: Hurricane Sandy; the liberal press and polls; voter fraud; etc. Whatever the reason, it won’t be because people represented by a majority of the Electoral College wanted him to be President.
In 2010, Republicans explained their strategy for the first term:
The single most important thing we want to achieve is for President Obama to be a one-term president.
Recently, Romney explained the second-term strategy:
You know that if the President is re-elected, he will still be unable to work with the people in Congress….The debt ceiling will come up again, and shutdown and default will be threatened, chilling the economy.
Or, as it’s been translated, that’s a nice little economy you have there.
I think, in this case, Romney is a man of his word. Expect the US economy to do a lot more shuffling, but now with its shoelaces tied together.