The Romney–Obama Divide

Barring some minor changes  in domestic monetary policy, hopefully to stimulate economc growth, nothing really changes in America with the change of President. Yet, the whole world is watching with too much enthusiasm, sometimes bordering on perversion, the duel between the Republican contender for the President of the USA Mitt Romney and the Democratic incumbent Barrack Obama who is running for the second term, with denuded popular support and confidence as reflected in opinion polls. It matters little to the Americans as also to the people of the world at large whether a Republican wins or a Democrat loses. All are committed to the some foreign policy and strategic orientation though the media globally makes a case out of every bit of their move.

President George W Bush had provided tax cuts to American citizens to help them ward off the impact of global recession. These tax cuts are due to expire in December 2012. Obama wants to end tax cuts for the richer persons earning more than $250,000 per year. He also wants to continue with the present policy of providing generous unemployment compensation to the people. In contrast, Romney wants to reduce tax rates for all persons-poor as well as rich. And he wants to replace unemployment compensation with 'unemployment savings accounts' where individuals will deposit part of their incomes and which will then be used to pay unemployment compensation to them should such a need arise. This arrangement will be somewhat like the Provident Fund in India where a person deposits part of his salaries and gets certain benefits later. Romney does not want the Government to be burdened with the provision of unemployment compensation.

Indian expatriates living in the US appear to support Obama more than Romney. Perhaps this is due to the historically soft position of the Democrats on immigration. This may also be due to the race factor. Brown-skinned Indian NRIs may feel closer to black Obama. But Indian expatriates will have to make a difficult choice between their sentimental preference for Obama and the less-favourable position of Obama towards India.

But America's economic situation is still a concern for officials and economists. According to CIA and Eurostat data posted on Wikipedia, the United States now stands in the company of the major countries that have Government debt in excess of the GDP in 2011. The figures speak for themselves. Japanese Government debt was 208 percent of GDP, Greece's 165 percent, Italy's 120 percent and Ireland's 108 percent. All these countries are in economic crisis today. The United States is following the same trajectory with its debt at 103 percent of GDP. The US economy is fast sinking. It has already been downgraded by Standard and Poor's. The US has got into this unfortunate circumstance by continued borrowing and spending. Cheap loans were given in the early part of the last decade for housing. That led to the property bubble bursting in 2008. Then tax cuts, increased welfare spending and continued involvement with wars abroad have led to bloating budget deficit. Neither candidate is cognizant of this serious problem. Both want to continue with the basic policy of borrowing yet more. Difference is that Obama wants to borrow more for financing unemployment compensation and health benefits; while Romney wants to borrow for an aggressive foreign policy.

The strength of the United States in the last 100 years arose mainly from its military might and technological edge—assembly line, atomic reactors, jet airplane, space exploration, computers and internet have been all American inventions. America has lost that edge lately in the field of new innovation. The present high standards of living have been sustained by the monopoly profits made by companies working with these pioneering technologies. These profits are no longer coming in on expected lines. Therefore, the imperative is for the American people, to adjust to lower standards of living. Both of them are simply evading this hard reality. Neither will provide stable relief to the American people.

Vol. 45, No. 5, Aug 12-18, 2012