The Tough Wake-up Call in Store for America

Every four years, the presidential elections, along with the Olympic Games, make up one of the big shows offered up to the planet’s public. The emerging result is not very surprising: all it takes is a failed debate to re-launch the media machine. Twelve days before the date of the election, the polls give the impression that the candidates are neck and neck. However, the current president retains the advantage in the swing states (the states without a strongly predicted political side in elections). A particularly important one is Ohio, but Iowa and New Hampshire are as well, and all of them are seemingly leaning toward Obama. He is making the most of the encouraging economic news: employment rates are higher than before the crisis; unemployment has gone down; the housing sector substantially progressed in September; shale gas is reawakening hope for a boom in the best American style. All of this is fragile, yet helps the president to avoid being disqualified at the end of his term due to pure and simple economic factors, as we have seen in the past.

That being said, the real question for America, and for the rest of the world — whoever wins — is what will happen after Nov. 7. The electoral page will then be turned, and America will immediately be plunged into the race to avoid the end-of-year trap — the ‘fiscal cliff.’ In Aug. 2011, Congress adopted measures that — in the event of non-resolution of the problem of deficit and debt — will be put into place on Dec. 31, 2012, if necessary. These measures include automatic spending cuts, and tax increases to the tune of $700 billion dollars, guaranteeing, if they go ahead, a severe recession in 2013. The preoccupation with this issue will become nagging in the coming weeks, and is a radical source of concern in economic terms. Additionally, it creates a feeling of total uncertainty regarding levels of demand as well as taxation. It is paralyzing investment decisions and worrying China, the USA’s main creditor. How can these dangers be avoided? This will be the only real question on election night. This is where things get complicated: American democracy, often said to be dysfunctional, doesn’t facilitate the search for a solution to the financial crisis.

On Nov. 6, the American people will elect the president and a new Congress. But they will only take up their roles in January. On Nov. 7, whatever happens, power will stay with Barack Obama, who will still be head of the executive, along with the current Congress. They’ve been brought to work cooperatively, but, as we’ve seen for the past four years, Congress remains an environment of sterile polarization. So — what can happen? If Mitt Romney wins, he’ll be in a situation comparable to that of his predecessor in 2008: elected, facing very difficult economic situations… and still just a spectator. His priority, thanks to the Republican chamber majority, will be to buy some time and push the deadline back, as he has announced, until Dec. 31, 2013. However, Barack Obama and the Senate will be able to negotiate hard, and threaten to oppose a veto until the end. If Barack Obama wins, he will, of course, stay in the White House. Yet, at the end of this much- struggled-over election, and without as many means of action as previously, there is only one solution: put those who refuse to compromise regarding taxes in the dock and appeal to the electorate’s support. In short, start campaigning again. The Republicans in Congress have fought tooth and nail against all compromises that have been proposed for the last eighteen months, and it is unlikely that their mindset, following a defeat (which would not be theirs, but “Romney’s”) would be any different. The optimists have concluded that, in either case, the political sparring is just the usual inevitable theatre and compromise, which will only end at the very last moment before reaching the cliff’s edge. It’s plausible, but even within this hypothetical optimism, one should anticipate an end to the year that is more than turbulent.