A Victory, but for What?

Barack Obama has won by a small margin. The Republicans were driven back in the House of Representatives. The Senate hardly moved. The extremism of several Republican candidates allowed for the victory of Democratic candidates in the Senate. The Republican Party must now decide if it wants to be a large governing party or a small oppositional party. Overall, America has become what California has represented for the Republicans for years: A racially diverse state, populated by minorities that demand a great deal from public services. This is not the traditional Republican model. If they do not adapt, they will be marginalized on the long term.

That is not the most important thing.

What counts today is the way Barack Obama wishes to govern. Does he want to be a man of compromise and try, if necessary, to divide Republicans torn by their Tea Party? Or does he want to do the very minimum and wait until the Democratic legislators regain all their power in two years?

The urgency to reduce public spending, to make financial reforms and to increase revenue, begs for the first scenario. I fear that the president will choose the second and will be aided in this bad choice by the extremist Republican leaders. If Wall Street falls today, it will be because this fear is shared by many. If Barack Obama really thinks that the rich are responsible for the woes of the United States, if he thinks that small entrepreneurs are really reactionaries because they are forced to fire employees because they had to pay their insurance premiums, America is doomed.

America wants to believe that Barack Obama is a pragmatic centrist. It also wants its legislators to govern instead of defending policies without ever backing down, especially about subjects unrelated to economic urgency, like abortion.

The budget deficit has reached seven percent of the GDP. Public debt, across all categories, represents 100 percent of the GDP. America cannot afford to continue like this. President Obama will have to make some cuts and get personally involved with negotiations that he hates. He will have to work with Republicans who despise him. That is the price to pay for the essentially negative campaign that he led for over a year. He must identify some viable reductions in public spending. He will not simply be able to count on the economies of the wars in Iraq and Afghanistan that are nearing an end. The American press, who love him, will have to recognize that governing is not just about making speeches and distilling grand politically correct but very vague messages such as “the defense of the middle classes.”

The Fed maintains a slight economic increase by sustaining real interest rates at zero. This could not last forever; as such there is a slow but sure increase. Real estate is picking up. American optimism is at its highest since 2008. If Europe was not sinking, we could almost be optimistic ourselves. Alas, America and its president cannot afford to make difficult and politically risky decisions.