Barack Obama was just re-elected as the President of the United States. Whether you know it or not, you are happy about this. Obama’s plan to raise taxes on the wealthy (actually just let the Bush era tax cut’s expire), increase capital gains taxes and tighten financial regulation, are all important for the overall stability of the economy. Believe it or not, Obama does not want to turn America into Soviet Russia. As of today federal employment at about the same levels as under Regan and H.W. Bush, and returning to a to tax rate of 39.6% is FAR from the highest this country has ever had. The painful deleveraging of the economy from lax financial accountability seems to be coming to an end, and unemployment is falling. Obama’s policies will not only ensure long term deficit reduction, but also provide for the investment needed to grow and the short term stimulus needed to help the recovery along.
All that being said, re-electing Obama just makes recovery possible, it does not ensure it. Obama will be immediately tested by the “Fiscal Cliff”. If congress and the president cannot work out a deal, an automatic mixture of tax increases (or expiration of the Bush-era tax breaks more specifically) and spending cuts will become effective early in 2013. People on both sides of the political spectrum believe this outcome would send the economy into a “double-dip recession”, and unemployment back above 9%.
This is the pivotal moment of the Barack Obama legacy, and more importantly the country as a whole. If he passes a deal, and works towards a recovery, he could go down as a very progressive president who saw this country through a difficult time. If the deal does not get done, and the fiscal cliff causes another recession, he will probably be remembered (perhaps unfairly) as an incompetent president.
The question is, to what lengths will the G.O.P go to hold onto their outdated belief in trickle-down economics? To what length will they go to paint president Obama in a negative light? Would they ride their principles till the wheels of the U.S. economy fall off? If a deal gets done or not, top tax rates will go up to 39.6%. Is the G.O.P. willing to hold the U.S. economy hostage so that when the fiscal cliff passes and taxes are raised, they can falsely clam “look! high taxes ruined the economy”, (even though contractionary austerity will be the underlying reason for a double dip recession). In Europe they are fighting and protesting daily against painful austerity measures, the G.O.P. wants the U.S. to take this same medicine despite not having too (the U.S. government can effectively borrow at 0% interest, while heavily indebted EU countries face “sovereign debt” crises with high interest, so the context of the two crises literally could not be any different).
The government is elected to represent the people. It is up to the people to put pressure on their elected representatives to make sure a deal gets done. Republican’s need to tell their party they will not tolerate another recession, and if they muff up the fiscal cliff issue, they will not be back in office after the 2014 midterm elections. Democrats have to be willing to compromise on certain issues, to show that there is a shared burden and we are all in this recovery together. It is precisely after a decisive election that an “olive branch” from the Democrats would have the greatest effect in breaking down the partisan walls that have gridlocked this country for the past 4 years and caused embarrassingly low congressional approval rating.
This is what should happen, what will actually happen only time will tell. However, it is in our collective power to influence the outcome, nothing yet is written in stone. Write to your local congressman or woman, and tell them to do their goddamn jobs!
Welcome to your first lesson in “normative narratives”