By: Jonathan Saxty
Recent polls suggest that incumbent US President Barack Obama would beat almost certain Republican challenger, businessman Mitt Romney. According to ABC News, “a majority of registered voters across 12 swing states for the first time backs President Obama.” Now the President “leads Romney by a 51 to 42 percent margin”.
This is a reversal of February, when “the president trailed Romney in the swing state match-up, 46 to 48 percent.” The support was driven by women under 50, fewer than half of whom supported the president in February. Over 60% of women under 50 said they preferred Obama, with Romney receiving 30% of support. That is a 14-point drop for Romney since February. Among women overall, Obama holds an 18-point lead over Romney. Romney has one vote more, in support, among men.
The swing states are all-important for the 2012 Presidential election. What is more worrying for Romney is that – according to Gallup – enthusiasm is waning among his supporters. Among pressing issues are relations with Iran; immigration; the geopolitical threat from China and, most of all, the debt America has (and its healthcare implications).
Both Obama and Romney have talked tough on Iran; immigration and China – although how different a Romney presidency would be, with regards to these issues, is debatable. Chances of military action against Iran will probably be greater once the election is over, although it carries huge risks.
Immigration has become tricky because the largest groups – Hispanics and Mexicans – are too large in number for any politician to appear to be unfairly targeting immigrants from Latin America. The intricate relationship with China – not least that country’s huge holding of US debt – makes the idea of a policy gear-change difficult to imagine.
America’s most dangerous problem remains its debt. The Committee for a Responsible Federal Budget found that of the four Republican candidates, only the elder statesman Ron Paul would significantly slash America’s deficit.
Romney – the almost certain winner – would add around $250bn. His reduction of federal workforce costs could trim around $530bn but his reductions on corporation tax could add a further $1 trillion. Romney would actually increase debt interest by $40bn.
His tax cutting plans – cutting marginal rates for individuals by 20% – could add $2.6 trillion to the debt. Romney plans to reduce the top rate paid on income from 35% to 28%. Americans in the lowest bracket would pay 8% not 10%. Americans closer to the middle would pay 20% not 25%.
Taxes would go on interest, dividends and capital gains for taxpayers who make less than $200,000 a year. Estate tax would go and there would be a reduction in the rate paid by corporations from 35% to 25%. Romney would cap spending at 20% of GDP, reduce non-security discretionary accounts by 5% and pursue a balanced budget amendment.
But while Romney’s spending caps are a step in the right direction, now is not the top for across the board tax cuts. But Barack Obama fairs even worse. Back in September, Obama set out his plans to find budget savings of $3 trillion, although he wants $1.5 trillion in new revenue.
While Obama goes for the tax cuts, unlike Romney he does not change spending. Social security remains unchanged and healthcare finds only $320bn in savings, with no raising of the Medicare eligibility age from 65 to 67. Obama has actually added to the deficit. Even his defence cuts have been called a “mirage” by the Financial Times.
In reality America needs a mix of a few tax rises, massive cuts to social spending and the federal government, and a trimming of defence. While national security should not be compromised, one wonders what eventuality will necessitate military bases in Norfolk, Heidelberg and Naples.
Obama’s Treasury Secretary Tim Geithner was chided by Head of the House Budget Committee Paul Ryan (a possible Romney running mate) for failing to cut America’s debt. While debt stabilises until 2020, it skyrockets thereafter and hits 400% of GDP by mid-century – a course which the Congressional Budget Office claims, would “shut down” the US economy in 15 years time.
As former US Comptroller General David Walker argues, it is the future social security and healthcare cost which – if nothing changes – will almost certainly bankrupt the United States. The US cannot inflate its way out of its debt, without dramatically pushing up the costs of social programmes and hiking up interest on its debt. To grow out of this financial vortex, America would need 10% or more annual GDP growth from here on in.
In reality, a Republican Congress could force either a Democrat or Republic president’s hand, while Paul Ryan would force Romney to make steeper cuts. But whoever is elected in 2012 has got to act quickly. The spotlight is now on Europe. But it will not be forever.