The prize that President Barack Obama won on 4th November 2008 is an America that has little in common with the one his predecessor, George W Bush, inherited in 2000.
In 2000, the US was at peace with the world. The Cold War was over, market economies were ascendant, a massive budget surplus combined with tremendous national self-confidence. America was both internationally admired and the world’s undisputed superpower.
The America that Obama has earned is different. The US budget deficit is forecast to be over 4%, or $1 trillion this year. This will have to be financed through higher taxes, or through massive bond issues. Either way, the state will be tied up in debt that will require careful management. This at the same time that the US economy is already shrinking, while the whole world faces recession.
Obama also faces a world in which US hard power is discredited, and its soft power is being undermined by the growth of wealth in the world’s emerging markets. The likelihood is that, over the next ten years, the US will slip from being the world’s largest economy, to its third largest.
As US economic growth slips to -0.3%, China’s and India’s have slipped too, to around 8% and 6%. This may be unpleasant for US egos, but the world should celebrate the astonishing wealth creation in the world’s two largest nations.
What this means for Barack Obama is that he must run an economy that is under incredible economic strain, with a country that is no longer able to call the shots alone, but has to compete amongst other equally powerful economies.
The extent of the Democrats’ victory across all organs of state means that they can govern virtually unimpeded. The call for an America that divorces itself from the world economy, raises protective tariffs against foreign imports, and imposes legislation that over-protects employees, over-strengthens unions and over-regulates local businesses will be overwhelming.
An America that goes down this path will hurt itself by cutting its ability to create wealth and grow out of the recession. Such an approach risks the US following Japan down its 20-year path of economic stagnation. It also decreases the opportunities for international trade growth.
However, the tone of the world economy is now being set in Asia, not the US. An America that chooses not to participate is a country that simply accelerates its relative decline and is deliberately choosing not to define the nature of the future world economy. That is not to say that the US economy is no longer relevant, but it does mean that this is the moment in which the US leadership has to decide on the nature of their future engagement with the world.
Do they provide economic leadership through active engagement by driving closer international integration on American terms, or do they fade into obscurity to lick their wounds behind high walls?
That is the nature of the choice facing President Obama, and it will be his first test. The Republicans have little representation in government; they are divided, humiliated and punished. President Obama will be unable to look for bipartisan support.
He will have to challenge his own party in order to lead.
As for the Republicans? They are in the wilderness.
Changing Politics, Parallel Pasts
The British and American elections of 1979 and 1981, respectively, resemble what happened in the US on 4th November.
The 1970s were not kind to world politics. Collectivist and Socialist tendencies in left-wing political parties were devastating both Europe and the US. Riots, wars, market failures, the world had them all. Voters wanted something new and in 1979 voted in an outsider, Maggie Thatcher. In 1981, US voters followed suite with an outsider of their own, Ronald Reagan.
Both, in their own different ways, reinvented their parties, their countries and cast their opponents out of mainstream government for a long time.
It was 1993 before Bill Clinton proved that the Democrats didn’t have to be terrifying to business, while still meeting their social objectives. The ideology — of moving to the political centre by adopting some of the policies of political opponents — became known as the Third Way and was adopted across the Atlantic by a Labour party that would be out of government in the UK for almost 20 years. In 1997, Tony Blair adopted much of Bill Clinton’s stance and swept the Labour Party to a significant victory.
This is where the stories diverge. The US Republicans were able to recover pretty quickly after losing to Bill Clinton. The Democrats seemingly attempted to discard the thinking of Bill Clinton and were punished by a return to George W Bush. The UK Conservative Party has spent just over 10 years out of government and now, in the form of David Cameron, has created a person who has the charm of a Bill Clinton or Tony Blair and is showing that a Conservative Party can be pro-business without being anti-poor. He is reinventing his party rapidly, and is very likely to be the UK’s next prime minister.
In the US, however, the Republican Party has adopted highly partisan politics. Sarah Palin is pure red-meat Republican conservative values. And she is ancient history. A GOP that reflected more of what John McCain used to stand for in 2000, and less of what Sarah Palin believes now, would be a party that speaks to the centre.
Barack Obama has returned to Bill Clinton’s message. In more ways than Hillary Clinton, he actually represents continuity with the Democrat government of 1997.
In one peculiar way, though, he also picks up something from the Bush government — the requirement for a strong and experienced vice-president. Prior to Dick Cheney, the vice-president could be the court jester. Joe Biden will be a powerful partner. The future of US politics seems to be that “maverick” presidents with a new approach to politics can win if grounded with an experienced party stalwart as a sidekick.
John McCain, it appears, never intended to become president. He seems almost to have deliberately given his Republican base everything they wanted from a candidate, and nothing that would get him elected.
The likelihood is that, after the Republican Party almost vanishes from mainstream political view, they will have to spend a considerable period in the desert before they ever represent a meaningful part of the body politic again. Perhaps they can look across the Atlantic, as Tony Blair did before him, and take a leaf out of David Cameron’s approach, if they are ever to claim to represent anyone in the US again.
Leading the US, Looking at the World
Obama has created vast expectations; not just at home, but around the world.
Even with a stable and growing economy, many of his promises will be hard to guarantee and those expectations will be difficult to meet. The hair-shirt that the current economic debacle requires will put paid to financing many of his cherished ideas, at least in the short-term.
The trouble for Obama is that he is also the president who will inherit the promises created by Social Security, Medicare and Medicaid — the US’ massive entitlement programmes — just as they start to bankrupt the nation.
So Obama has his work at home cut out for him. He needs to deliver on his message, but he also needs to recognise the difficulties he is inheriting from previous administrations, as well as the vested interests that will conspire to keep him from addressing them.
At the same time, though, he offers the most dramatic and sweeping opportunity for America to reinvent its reputation and relationships with the world.
It will be hard for anti-Yankee governments, from the Ayatollah’s in Iran, to Chavez in Latin America, to continue their current reasoning for hating America. Firebrands in the Islamic world will find it difficult to justify hatred for the leader of a country whose second name is Hussein. The ex-colonies will find it difficult to justify their own failures as being mirrored by the experiences of black Americans. Democrats (with a little-“d”) all over will be awed by the spectacle of a perfect example of democratic legitimacy at work.
Obama becomes a shining example, not only of how far a minority may aspire, but also of the overwhelming tolerance and exceptionalism of the American people, and of the power of free choice and free speech. That is a lesson that could be as inspirational for the world as was the fall of the Berlin Wall in 1989.
In acknowledging the astonishingly difficult job that President Obama now has, Scholars and Rogues both congratulates and wishes him well.
However, our support during the campaign is now at an end. After a brief honeymoon, the real work must start and — given the difficulties — must start soon.
Be sure, we will be watching.