Obama and Europe Dancing with Wolves

On Jan. 21, Barack Obama will officially assume the presidency for a second term, in what promises to be a spectacular inauguration day. But we will hardly see him relaxed. These are hard days; the world is in no condition for parties. It needs big, tough mountain climbers who are capable of pushing through rocks on the way to the summit while still looking at the long term. They must also be keen hunters, able to dazzle and dance with wolves.

In Europe, we complain about the “political class” and the short-term outlook of our leaders. The United States does not fare much better, with a Congress determined to test Americans’ nerves, and ideological brawls about everything.

Obama has his own obstacles to overcome. The most pressing is the fiscal cliff, which just passed. Now, he must deal with the debt ceiling, immigration reform, energy policy, climate change and assault weapons. Both Democrats and Republicans have opened political potholes where anyone could tumble in. However, we should not underestimate the president’s negotiating ability: He has learned much in the last four years.

The public debt and the deficit are wreaking havoc in American politics. But at least here we see something that we wish to see in Europe: an increase in taxes on the highest incomes to offset the deficit in revenues. Following the agreement reached in extremis at the end of 2012 with John Boehner and Republican legislators, taxes will rise this year for those in the highest income brackets.

Now, this distrusting and divided Congress is having trouble approving an increase in the national debt limit to more than $16.4 trillion. In the past this was routine, but now it is a full-blown political fight. The debt ceiling was established during World War I precisely so that the government did not have to get Congress’ approval for each debt. Now it has become a tool for extortion on both sides. The long shadow of Standard & Poor’s, which downgraded the U.S. national credit rating in 2011 because of the uncompromising partisanship in Washington, threatens once again.

Meanwhile, the petulant Nancy Pelosi, who speaks for Democrats in the House of Representatives, bluffed. She declared that the president could force Congress to adhere to the 14th Amendment of the Constitution, which declares that the government has an unquestionable authority to service its debt. The White House itself has denied that it would do this, but who knows how far Republicans are willing to go?

They can produce this grand agreement, but it will happen in fits and starts. If Obama is lucky, the filibusterers and tea partiers will be drowned out by the voice of the majorities on both sides who demand an agreement to avoid the country being dragged through the mud. However, Republicans currently have more bargaining power in fiscal negotiations. In this case a brutal tax increase was imposed automatically, but from now on, raising the debt ceiling will require the Republican vote. The deadline for all this? March 1. Surely, from now on Republicans will push to cut costs in order to compensate for tax increases. Fights over the budget will go on for weeks. They are set to expire on another date to be feared: March 27.

From this has sprung forth the ridiculous idea that the U.S. Treasury exercise its power by minting a trillion-dollar coin! (Boehner has noted that this once happened in the Simpsons.) For great evils, great solutions? It may be silly, but just being able to entertain the notion makes European federalists very jealous. The federalists cry out for the use of the European Central Bank as a bazooka to scare away speculative wolves.

Against this background, many already take for granted that there will be less talk about foreign policy during this second term. But is it possible that Obama — confronted by his own obstacles — will intervene more in Europe during his second term since he must go all out anyway? It could happen.

One indication is that, political brawls aside, the United States is still relatively strong compared to the old continent. Roger Altman, former United States deputy secretary of the Treasury under Clinton, said in this month’s issue of Foreign Affairs that the U.S. crisis is coming to an end in the real estate sector, energy production, the banking system and the manufacturing industry. It’s obvious that, for example, the U.S. financial system has not been thoroughly reformed. However, the speed with which the banking system has reacted and the speed with which it is approaching credit flows from before the crisis is astonishing when compared to Europe. In contrast, it may be four or six more years before Europe gets back on track. This is in line with Organization for Economic Co-operation and Development and FMI predictions for the eurozone — they predict that it will continue on its current track, without improvement, until at least 2017.

Another indication: This week, Philip Gordon, assistant secretary of state for European and Eurasian Affairs, has said at the American Embassy in London that the United Kingdom is best off remaining a member of the European Union. That is clear. More reproofs of this kind could succeed in the coming months. After all, Europe is in the midst of the learning process; the U.S. has an advantage over Europe in that something similar happened in 1929. At that point, Europe was wrapped up in military alliances and was not yet a political and economic project.

Pay attention, then, to how Obama maneuvers in the coming months, compared to the austere Merkel. This Calvinist came from the cold and is further cooling the European and world economies. She has much to learn from the United States, lest Europe be devoured by wolves.