THE RACE for the White House is heating up. From all indications, this is likely to be a tight race even though opinion polls at this point in time seem to give an edge to incumbent President Barack Obama. The Republicans have given the nod to Mitt Romney as their presidential nominee who successfully defeated his rivals for the nomination which included former House Speaker Newt Gingrich and Rick Santorum. As to how Mitt Romney will fare in the presidential contest due in about two months time remains to be seen. The two contestants are campaigning on two contrasting platforms with the Republicans favouring no tax increases for the rich as opposed to the Democrats who are more disposed to raise taxes on those who could afford to pay, in particular the rich and the super rich. The thinking behind this approach by the Republicans is that taxing the rich would serve as a disincentive to the rich to invest which could adversely affect job creation and thereby result in high unemployment rates.
Democrats on the other hand argue that it is morally wrong to impose tax increases on middle and lower- income groups who can least afford to pay. This is tantamount to shifting the tax burden from the poor to the rich when the reverse is considered morally and justly correct.
The fact of the matter is that there is a dire social crisis engulfing the American society which is today experiencing high levels of unemployment which has now become a big electoral issue. Never before have so many Americans been forced into the breadline, a worrying factor for the Obama administration which has been putting significant sums of money to stimulate the economy, but without any perceptible improvements in terms of employment generation. Much of the money was spent to bail out the banking system and the automobile industry but not much has changed on the ground in terms of employment opportunities which has reached almost 10 percent.
It is true that many of the problems faced by the Obama administration were inherited from the former George Bush administration which diverted much resources to the military in the wake of the September 11 terrorist attacks on the World Trade Centre and which led to the so-called ‘’war on terrorism’ which saw the overthrow of two regimes in Iraq and Afghanistan, both of which were implicated by the United States as harbouring and facilitating terrorist attacks on the United States. It took a full decade before the alleged mastermind of the terrorist attacks on the United States, Osama bin Laden was eventually captured and killed but there has been little improvements in terms of peace and security with the most recent being the killing of the United States Ambassador in Libya.
In fact, there is today much higher levels of instability in the Middle East following the Arab Spring which saw a number of Arab leaders being forced out of power with the backing of the United States and other western powers. The situation in Syria is today cause for much concern as the country is torn apart due to clashes between government and anti-government forces. Tens of thousands of innocent lives have already been lost in the crossfire and there seems to be no letting up despite efforts by the United Nations and the Arab League.
The economic and social crises faced by the United States as indeed other western countries are structural in nature and is a derivative of the neo-liberal model of development based on unbridled capitalism and free-market enterprise. And even though both the Republicans and the Democrats are essentially pro-business, there are some fundamental diversions of views between the two regarding the role of government in the economy. Republicans are in favour of less governmental involvement in the economy as opposed to Democrats who are supportive of a bigger role for government, including greater regulatory mechanisms and financial and fiscal oversights.
In fact, it is precisely this failure on the part of the state to put in place the requisite oversight and regulatory mechanisms that led in the first place to the financial and banking crises in the United States and which has had a contagious effect on the rest of the world, more particularly western Europe. A recent survey found that 54% of young people between the ages of 18 and 25 are unable to find work in Spain, one of the countries hardest hit by the Eurozone crisis. This is a serious indictment against capitalism and the neo-liberal model of development which is the root cause of unemployment and poverty.
The truth of the matter is that there is no quick fix to the problems confronting the U.S. economy which is today faced with one of the highest fiscal deficits in history. The United States is forced to borrow in order to survive, a most untenable and unsustainable situation for any country to be in, especially a global superpower.
The way out of the crisis is not to reduce social spending but to redirect expenditures away from the military and increase taxes on the rich and those who could afford to pay. The trickle-down effect has not proven effective in terms of addressing the issue of poverty and unemployment not only in the United States, but the whole of Europe which is facing one of its worst economic and financial crises.