The Race to the White House: Superpower changes clothes in (global) public

January 26th, 2008

by Rajan Philips

The candidates are off and running in the year long marathon that will determine the successor to George W. Bush and bring to an unremarkable end his beleaguered presidency of eight years. The 2008 presidential election is expected to be a decisive verdict against the incumbent Republican President, and the Democratic Party has to do something really stupid to lose this one. Even if a Republican victory were to materialize, although highly unlikely as things stand, it will not be because of President Bush but in spite of him. Such is his stock in the land that no Republican candidate is ready to risk the mention of President Bush in the campaign, let alone solicit his involvement.

Bush was a surprising and controversial winner in the 2000 election that was remarkable for the lackluster campaign of the then Vice President and Democratic candidate Al Gore, the Florida fiasco over voting chads, and the intervention of the Supreme Court to pick George Bush as the winner despite his losing the popular vote to Gore. Dismissed as a one term nondescript, President Bush found his moment nine months into his presidency, in the aftermath of 9/11, and transformed himself as a war President, first pummeling Afghanistan in retaliation for 9/11 and then invading Iraq without justification. Because of the war he easily won reelection in 2004, without it he would not have lasted beyond the first term. Bush would have also found it uncomplicated and easy to lead America into war than to manage the routine tasks of the world’s most complex administration. It is the same old story whether in the big US or little Lanka-war is elemental and elementally popular, but civil administration and making peace require cerebral stuff.

America is reaping the harvest of what Bush sowed. Afghanistan has flared up again and the fire is spreading to Pakistan, while the war in Iraq has proved every official prediction, including the Presidential declaration of victory, wrong. If the American people were ready to rebuke him just for that, they now have an even more pressing reason to punish their President. “It’s the economy, stupid”. That was Bill Clinton’s rallying message, crafted by his wily strategist, James Carville, for the 1996 election, but there is a difference now. It was then a message of empathy to the swing voters who wanted their President to feel their pain. Now the whole country wants someone to fix its pain.

Election and the economy

And the pain has spread globally causing stock markets to tumble from London to Sydney. America is heading towards a recession if it is not already in one, the pundits say, some of whom have also let out the ‘S’ word-stagflation, the scourge of the 1970s and 1980s. It is the deadly cocktail of economic stagnation and sustained inflation. The Administration is categorically dismissing stagflation warning as scaremongering and insists that the numbers (unemployment rate plus inflation rate) are nowhere as bad as they were in the 1970s. The price of oil was a major factor in the 1970s, while it is being brought down by the current downturn. There are new factors now, both local and global.

The immediate cause of the current crisis is the business of sub-prime mortgage loans in the US, a crisis that illustrates well the market madness and its global reach. The madness of mortgage lending targeted the have-less of American society-a majority of them African Americans, with lending agents inducing vulnerable homeowners to take a second mortgage or a home renovation loan on low start-up interest rates without explaining to them that the interest rates and the monthly payments will increase rapidly after one or two years. In many instances, lenders worked in collusion with corrupt and sometimes phoney building inspectors. The inspectors would first warn vulnerable homeowners that their dwellings were sub-standard and required fixing to avoid penalties, and were followed by lenders with the paperwork to sign up loans. When the mortgagees with fixed and limited incomes invariably fell back on their monthly payments as the interest rates went up, the banks called for foreclosures and the upshot has been a wildfire of diminishing property values, home evacuations and bankruptcies.

Home ownership is central to the “American Dream” and its realization throughout the twentieth century has been the result of America’s vast natural endowments of land and materials, a highly productive home-building technology, and the facility of financial credit as mortgage that home buyers are able to pay off during their working life. Housing construction starts and sales became a strong indicator of the state of the economy. During the housing booms before the depression and after the War, however, many African Americans and poor new immigrants were shut out of this dream because of their low income and lack of creditworthiness. The areas where they lived were notoriously ‘redlined’ (on maps) and disqualified for loans by banks and lenders. In a perversely historical irony, lending institutions have now been targeting low-income African Americans in the sub-prime loans swindle.

[Watching the volatile Sensex, on Mon Jan 21, 2008-Pic Courtesy NYTimes.com]

The global spread of this crisis was caused by the primary lenders repackaging their loans and selling them up as secure investments through the global chain of financial institutions and investors. As the housing loans started going bad in American towns and cities, the ramifications spread up as well causing share prices to fall and credits to be reduced. The traditionally cautious Indians who were lured into playing the Mumbai stock market for quick earnings have become bitter for the experience. The Bush Administration and its free market advisors saw the financial storm brewing but chose to leave the market alone to regularize itself. The logic that the market got screwed in the first place by unscrupulous lenders and needed state intervention, and not just the “hidden hand”, to stop the mess did not obviously appeal to the Administration.

The story would have been different if the crisis had originated in China or India, as indeed was the case during the Sars and Avian Flu pandemics when every relevant international agency was ordered to step in and do some thing. Bush finally acted a week ago when the hemorrhage in America became too serious to be ignored in an election year. However, his stimulus package of $150 billion has been criticized as too little, too late, and his economic performance is causing greater concern than his failure in Iraq. The onset of recession has made the economy more than a partisan issue, and the presidential candidates from both parties are challenged, not just to criticize Bush, but to show how they would lead America out of its difficulties.

The long way to the White House

Bush inherited a prospering economy from President Clinton, although as the Clinton Administration objectively acknowledged, it was (computer) technology more than presidential policy that was the main source of high economic growth and low unemployment, not to mention the hi-tech boom, of the 1990s. Early in the election year of 2000, before the first election of George Bush, technology gurus were confident that the computer revolution had enough steam left in it not to require a great man as President, but only someone who wouldn’t do too much damage. Paul Krugman, the Economist, called it “reassuring thought” given the likely choices at that time.

[President Bill Clinton and Sen. Hillary Clinton at a Campaign stop in Davenport, IA]

Eight years later, it is clear that Bush has belied that reassurance by being damagingly ordinary. He has presided over war-driven increases in debt and deficit, and implemented regressive tax breaks favouring the top 20% of Americans. Bush’s privatization agenda has worsened the problems of social security of aging Americans retiring from the workforce, and aggravated the health care and education concerns of more than half the Americans. By Krugman’s measure, America needs a great President now, and the question then is whether there are any among the aspiring candidates with the potential to be great. The next President, whether great or not, will have a plateful-not only pulling the nation’s economy out of a recession but also pulling its troops out of Iraq, not to mention the long list of priorities at home and the continuing challenge of defining America’s relationship to the ‘globalized’ world.

[Sen. John McCain was held captive in Vietnam-Pics: John McCain.com]

None of the candidates running to succeed George Bush has shown any outstanding potential for greatness, although most of them have greater qualifications than President Bush had when he won the presidency. On the Republican side, the field is still open as to who will be the eventual nominee for the Party, although the signs are that John McCain will win the Republican ticket. A longstanding Senator from the State of Arizona, son and grandson of two Navy Admirals, and a respected Vietnam war veteran, McCain is a socially progressive fiscal conservative and one of his more popular policy planks is his commitment to reform the opaque and corrupt system of financing political campaigns in the US. On the Iraq front, he was initially skeptical about the US going into war without a UN mandate, but he is now opposed to the US pulling out without finishing the job. His main hope and strength in the presidential campaign leading to the election in November will be his capacity to attract independent swing voters and form a winning coalition with the traditional Republican core voters.

The candidates to beat are of course on the Democratic side, with Senators Hillary Clinton (New York) and Barack Hussein Obama (Illinois) being the two clear contenders for the Democratic ticket. Senator Clinton, former First Lady and wife of President Bill Clinton, is eminently qualified to enter the White House in her own right, but having been the front runner for over an year, her campaign suffers from appearing to be a little too choreographed and managed. Senator Obama, on the other hand, is a fresh face on the political stage and capable of oratorical flights that are a fusion of Robert Kennedy’s inspiring idealism and Martin Luther King’s verbal cadences. Obama’s weakness is that his spontaneity comes with the sense of being a little too green and a little too much in a hurry for the big office.

[Barack Obama’s Candidacy Announcement, Springfield, IL, Feb 10, 2007]

The zeal and zest to their respective campaigns stem from Hillary Clinton’s gender-as the first woman to have a good shot at the presidency, and Obama’s race-the son of a Kenyan father and white middle-class American mother, and the first man of colour to have an equally good shot. Although both insist that the election is not about race or gender, it has overtones of both and in complex ways. Hillary Clinton was the first choice among African Americans, Hispanics and low-income Americans until Obama entered the fray. Her advantage of having the conjugal support of President Clinton whom many African Americans fondly consider to be the first Black President in American history, is being steadily diluted by the Obama campaign and the fillip it received from the endorsement by the popular African American talk-show hostess, Oprah Winfrey. Hillary has the endorsements of many other African American leaders, especially the Church ministers, although the congregations are leaning towards Obama. Among the Whites, Obama is attracting the support of more educated, young and high-income groups, while Hillary has the backing of the opposing cohorts. Hillary also has the bigger support among the Hispanics, the second largest minority groups after African Americans, and it is the split between these two groups that is the source of new racial tensions.

It is still early days in the long journey to the White House, and the candidates are vigorously campaigning in the primaries to win the nomination of their respective parties. The system of primaries is over hundred years old and was introduced to directly involve the voters in the selection of candidates rather than have them anointed by party bosses. Primaries or variations of them are held in each state to select the delegates who will ultimately vote for the candidate in the Party conventions held in July/August of the election year, three or four months before the main presidential election in November. However, candidates who win the early primaries gain momentum and seal their nomination long before the convention. The Clinton-Obama contest for the nomination is still evenly poised, and may go all the way to the wire at the Democratic Convention in late August, in Denver, Colorado. The last time the contest went to the convention floor was in 1976 when President Ford, the then incumbent, defeated his challenger Ronald Reagan. Ford eventually lost the election to Jimmy Carter, who was in turn defeated by Reagan in 1980. Reagan famously created the so called “Republican Democrats” and their votes ensured his two victories in 1980 and 1984. Barack Obama wants to repeat for the Democratic Party what Reagan did for the Republicans. But the Democratic Party establishment is not amused by his gate crashing what was meant to be Hillary Clinton’s nomination party.

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