This past week the USA has been throwing around a few misleading signals to the rest of the world.
Simultaneous growth and contraction of any economy would seem to be an impossibility, yet this is what the official US figures have dictated: GDP, a measure of economic growth, fell into negative (if effectively negligible) figures, while data on employment rose to reach a record high of the last year. All of this seems to point to a rather stagnant set of circumstances for President Obama 2.0, who, having spent only a fortnight in office since his second term inauguration, has a lot to be getting on with.
First and foremost there is the chronic and systemic threat of the fiscal cliff. This is what needs to be dealt with in order to guarantee the long-term security of the US and indeed global economy, as well as freedom of economic policy for successive US Governments to come. However, Obama has an exasperatingly short window of opportunity in which to correct this culture of fiscal irresponsibility.
Unless acted on, the ominous deadline now in March will trigger automatic budgetary cuts close to a value of 5% of the US economy, with the consequences of such a contraction in US GDP being felt globally for subsequent generations. Further reputational damage will be characterised in the US by defaults, minor crises and credit downgrades, and with Eastern powers fast on its tails, the coming few decades if not the next decade, will undoubtedly suggest a shift in the global axis of power. The opportunity to correct the persistent threat of the deficit, and to do it with the finality that is needed, would only act to cement Obama’s place in the history books.
Secondly, there exists the importance of “nation-building at home”. Societal failures are consistently one of the US’ greatest ailments and something that Obama himself has firmly earmarked to be a significant part of his second term policies. In the wake of the devastating events of Sandy Hook, gun control is a point of contention where he still holds the most impetus for change. Already Obama has signed off on numerous executive orders without the need for Congress’ approval, whilst also calling for sweeping reforms of current gun control laws.
…immigration reform, economic recovery and healthcare systems…
Improvements in immigration reform, economic recovery and healthcare systems are also amongst his priorities, reflecting a very deliberate decision to create his own lasting imprint on US domestic policy in particular, contrary to the second terms of his recent predecessors Bush, Clinton and Reagan. This more inward-looking US, however, could throw up a few roadblocks for what should be another equally important focus of the President: foreign policy.
Attitude towards this third issue has noticeably waned since election into his second term, through the appointment of anti-interventionist Chuck Hagel to head the Pentagon, and a diminishing military budget. Obvious crises in the MENA region, most recently seen in Mali, cannot simply be ignored, while the potential for resolution in the Israeli-Palestinian conflict versus increasing tensions between China and Japan will place further demands on his attention. Therefore, while a desire to pull away from international politics is not necessarily an ignoble one, it may be rather out of reach already.
…the strength of it’s domestic economy…
It is true that America’s great economic power stems from the strength of it’s domestic economy, but the legacy of one man can only be properly defined by the way in which he has dealt with his contemporaries: something Obama should take heed of as his second term gets underway.