Battle royal for the White House

The World watches with expectations and concerns one of the closest electoral battles in the most powerful United States as President Barack Obama, seeking a second term, faces Mitt Romney. The Republicans are determined to limit Obama to a single term. The 6 November poll is too close to call, most pundits aver, while both the rivals look equally confident of outbidding the other.

At stake is the future direction of the economy – the hottest issue in this election along with healthcare; while foreign policy, where Romney, a former Governor of Massachusetts, has shown up his inexperience and been ridiculed, is marginal. The Democrat president is at his best asserting how his administration has progressed in bringing long wars to an end, blunting the Taliban momentum, strengthening old alliances and building new coalitions to stop the spread of nuclear weapons.

The traditional liberal-conservative divide is in full play as Obama, battling the aftermath of Great Recession that he inherited from his Republican predecessor George Bush, claims to have pulled the economy out from the brink of collapse, though recovery is painfully slow. Romney dangles before the president the poor job numbers and says that the president, having ‘failed’ to make good, is making even more hollow promises. The president, who managed, in bitter fights in Congress, to retain some tax cuts for the middle class, has made championing their cause a focal point for his campaign.

Republicans, using their House majority to block many of the president’s tax and spending proposals over four years, are out to shrink the federal reach, cut spending drastically and extend more tax cuts to the wealthy, contending these will help the economy to recover solidly and generate jobs. High on their agenda is repeal of the landmark health care law of Obama as well as the softening of the tough regulations put in place for Wall Street firms.

A political gridlock in Washington on deficit and debt points to a ‘fiscal cliff’ at the start of 2013 – a contingency viewed with alarm by the rest of the world – though the recession-hit European Zone mired in debt crisis poses more immediate risks of financial market turbulence spilling over to faster-growing emerging market economies and other developing countries.

China and India, global growth drivers currently going through a slowdown phase, are facing weakened world demand and uncertainty in capital flows. IMF and other institutions are pressing on these two major advanced economies to overcome political and other hurdles to strengthen their recovery as part of medium-term deficit and debt control to smoothen the path of global growth.

With some 52 days left, both candidates, duly endorsed at their respective conventions have stepped up the rhetoric across the seven or eight ‘swing’ states like Florida, Ohio and Virginia, and would face each other in presidential debates in October. Poor job numbers in August somewhat depressed the scenario for Democrats though the unemployment rate declined from 8.3 to 8.1 

per cent.

But Obama has picked up an edge in recent polls, especially after the Charlotte Convention, where his renomination got a passionate endorsement from former President Bill Clinton, who stoutly defended the economic record of the Obama Administration, saying no President could have fully repaired all the damage he had inherited in just four years.

In his acceptance speech, Obama provided a realistic portrayal of the tough challenges ahead and said Americans would have to make ‘the clearest choice of any time in a generation’, not just between two candidates or parties but, between ‘two fundamentally different versions of the future’. No matter his hopes had been ‘tested’ by the cost of war, the worst recession and political gridlock, ‘big decisions would be made over the next few years in Washington on jobs, economy, taxes and deficit, energy, education, war and peace’.

What Democrats fight for is ‘to restore the values that built the largest middle class and the strongest economy the world has ever known’, he said and reminded his cheering crowds of the cuts he secured for the middle class families and small businesses. But he has firmly rejected extending the Bush tax cuts for the wealthy beyond 2012. That would neither bring good jobs nor pay our deficit, he said, adding ‘We would reduce our deficit without sticking it to the middle class’.

He wanted to reform the tax code to make it simple and fair while the wealthier households have to pay higher taxes on incomes above 2,50,000 dollars. He was still eager to reach bipartisan agreement on his plan of balancing spending reductions with tax revenue, designed to cut deficit by four trillion dollars over a decade. But the rich must not be spared from paying a fair share for the fiscal burden.

Nor would he agree to turn Medicare into a voucher system, as Romney proposes, which would put senior Americans at the mercy of insurance companies and make them pay thousands of dollars more. Responsible steps would be taken to strengthen Social Security without turning it over to Wall Street, he said.

And the President candidly acknowledged the path he has laid out is long and hard but would lead to ‘a better place’. [IPA]