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Obama 2.0: Who will crash the party?
Samir Saran and Dr. John C. Hulsman*
01 December 2012

Second term presidencies, like second marriages, can be seen as the triumph of hope over experience. George W. Bush met with calamity in Iraq, Bill Clinton was impeached over the Lewinsky scandal, Ronald Reagan suffered through Iran-Contra, Richard Nixon perpetrated Watergate and resigned, and LBJ was engulfed and then devoured by the Vietnam War. Given this doleful record, what can realistically be hoped for in a second Obama term? This time around, will chronically dysfunctional West Asia be a slow bleed that will drain the momentum of the new presidency?

Two major over-arching priorities immediately head the to-do list of President Obama; the first a great danger, while the second presents almost unparalleled political opportunity. The fiscal cliff--and insane joint suicide pact agreed to by the outgoing Congress-promises automatic tax increases and spending cuts totaling $600 billion coming to pass on January 1, 2013. The only way to avoid this contraction to the American economy, which it is estimated would amount to a full 4% of American GDP, thereby casting a feebly recovering American back into recession, would be for the Republican House and the President to reach a broader budget deal amounting to around $1.2 trillion in savings over the next 10 years. So, at least on paper, it is hard choices quickly arrived at or...Armageddon.

Given the stakes (and both parties desire to avoid the wrath of the American people at their persistent inability to behave as grown-ups) it is still more than even money that a patched-up compromise will be reached, a temporary deal which kicks the fiscal can down the road, without actually solving America's long-term deficit and debt crisis. However, failure to reach such a deal (and it is important not to underestimate how politically divided Washington has become) would practically doom the president's second term from the start.

Obama's tremendous opportunity, also best done quickly while the Republican Party is still reeling from its electoral defeat, is to, in terms of policy, lock in the gains made by the creation of his new and seemingly enduring Democratic majority. The President's winning political coalition for the past two presidential election cycles has led to nothing less than the rejuvenation of the Democratic Party itself. Women, African-Americans, the Professional Classes, the Young, and Hispanics are the basis of the evolving power of the Democrats, who have carried the popular vote in five of the last six presidential contests.

Locking in Hispanics, the fastest growing segment of the American electorate, is a particularly tempting prize. Now comprising a full 10% of the voting public, Hispanics gave the president 71% of their votes this November; the main reason for this is the administration's efforts to offer amnesty and an ultimate path to citizenship for the roughly 11 million undocumented workers now living in America, and the Republicans' suicidal desire to punish both them and their children.

In his immediate post-election remarks, the president gave the game away by stressing the need for immigration reform, truly a win-win proposition if ever there was one in politics. If Republicans balk at reaching a compromise over immigration, they will have lost the chance to win over the fastest growing segment of the American electorate for at least the next generation. If they go along with Obama's proposals, there will be civil war in the GOP, and President Obama will get the lion's share of the credit anyway. Look for moves to introduce such a policy very early in 2013.

If this is what the White House will do, the great White Whale of the next four years is a simple fiscal question: Can America arrest its trajectory of rather steep decline and enact a Bowles-Simpson style compromise that both raises taxes (as the Democrats dream about) while engaging in entitlement reform of Medicare, Medicaid and Social Security (the Republican's fondest wish).

In the Bowles-Simpson plan--a bipartisan compromise reached by the president's own appointed committee in the latter days of his first term-there is a durable blueprint to do this. There would be three dollars in spending cuts for every dollar in tax increases, entitlements would be means tested, and benefits would be cut and doled out slightly later in life, taxes would be simplified, with loopholes and deductions would be curtailed. Such a grand plan would stabilize the American debt rate at around 60% of GDP, thus preserving American economic power for the next generation.

There are two fundamental problems in reaching for the Bowles-Simpson Holy Grail. The first is that it presumes that people in both parties are less ideological than they currently are. It is not just the right-wing Tea Party that is the problem here; House Minority Leader Nancy Pelosi and her left-wing followers have also shown no sign of being able to make the significant compromises that would be necessary to make this whole process work. Without the left agreeing to entitlement reform and the right agreeing to tax rises, the deal will never be done. It is an open question as to whether this level of compromise is now possible in a Washington more ideologically divided than at any time in memory.

The final problem in nailing down this ambitious domestic agenda is that it assumes the world will simply not intrude while America tries to sort itself out. History simply does not work like this. While it is highly unlikely there will be simultaneous: War with Iran, tensions between China and Japan over the Senkakus, the euro-crisis going septic, and Syria's civil war leading to regional instability or even regional war in the Middle East, there is a very good chance that some of this happens. Any foreign distractions could well doom the domestic-only focus the president is banking on.

Given this highly ambitious domestic agenda, Obama the second time around is likely to disappoint both the Wilsonian liberals who seek American intervention in troubled regions around the world to promote liberty and protect human rights (think Libya) and the neoconservative hawks who seek greater U.S. commitment to lead the 21st century world through the preponderance and use of its military might (think Iraq). If the first term is any indication, U.S. foreign policy will to continue to develop in a cautious, limited, pragmatic, yet largely reactive manner. There will be few American efforts to order the new multipolar world, or respond proactively to much of anything.

And therein lies the danger. Reactive agendas may result in hasty interventions and unintended outcomes. For one thing, the hurriedly brokered ceasefire between the Hamas and Israel is one that will surely need a revisit sooner rather than later. And this time around who (if anyone) will script the agenda remains the million-dollar question.


* Samir Saran is Vice-President at the Observer Research Foundation and John C Hulsman is the President of a strategic consultancy firm