<p>The Tea Party’s giant rally in Washington drew 3 lakh Americans protesting taxation, a government that is suffocating its citizens, and a marxist, Kenyan-born, Muslim Obama. These people are calling on the United States to be a world leader again and dispense with debate and vacillation.<br /><br />All of the above might seem like fiction if it weren’t for the elections coming up in November, when the Republicans will likely win back control of the legislature. Since early August Obama’s approval ratings have been negative. This is largely due to Americans’ idiosyncratic expectation that the government will solve all their problems while they excoriate its intrusion into their lives.<br /><br />The real problem is that the US has entered a profound crisis of growth and unemployment. The economy must grow by 2.5 per cent per year to maintain the present level of employment. The current growth rate of about 1.2 per cent is not enough to compensate for increases in unemployment, now officially at 9.6 per cent. There are 15 million jobless, but there is also an additional million who have stopped looking for work and are not counted in the unemployment figure. Then there are 5 million working part-time.<br /><br />No will to hire<br /><br />The situation for businesses is altogether different. ‘The Wall Street Journal’ calculates that corporate cash holdings are up 38 per cent over last year — and yet they have no plans to hire more workers. Rather, the plan is to continue shedding employees to cut costs and increase profits. During the crisis, from December 2007 to December 2009, the GDP dropped by 2.5 per cent while the job dismissal rate was 6 per cent.<br /><br />The financial sector is in even better shape. The injection of about $750 billion revived it, along with extremely low interest rates, which allowed it to borrow funds from the Federal Reserve and lend them for a healthy return. It is no accident that financial firms handed out $20 billion in bonuses at the end of 2009.<br /><br />Washington’s latest political neologism is ‘the new morality’. The implication is that the country will have to get used to the idea that the economy can be doing well without full employment. For optimistic economists (there are few) the end of the tunnel is 2014. For the pessimists (the majority) it is 2018.<br /><br />All of this has a political impact that is, if we can say so, very American. Obama has accomplished far more than his predecessor: health care reform, which was the ruin of presidents before him; reform of the financial sector; an economic stimulus package of more the $700 billion, without which economists agree unemployment would be worse; and the rescue of the automobile industry. In the international arena he has restored American credibility as a partner in global governance. Yet only 37 per cent whites and 47 per cent Hispanics say that he is doing better than Bush, while the most progressive sector of the country complains that Obama cheated them by not delivering the big changes that they wanted.<br /><br />True, Obama was not as audacious as some had hoped. He has consistently sought to bring Republicans along with him, despite the fact that their philosophy is simply to give him nothing, ever, no matter what he does. Not surprisingly they have succeeded in blocking many of his initiatives.<br /><br />It is hard to understand why Obama continues to pursue bipartisan politics when his opponents, in a country clearly in crisis, continue to propose policies that would set off popular uprisings in any other country. For example, they are now calling for a 10-year extension of the tax cuts for the rich passed by Bush.<br /><br />No doubt, Obama has had his share of bad luck. He has paid a high personal price for the oil disaster in the Gulf of Mexico, however implausible the logic may be. But the real problem is another altogether. Americans are characterised by their idiosyncratic belief in the country’s exceptionalism. The majority of Americans did not like health care reform, or the stimulus package, or the car industry rescue.<br /><br />A large part of the population never took to the election of a young intellectual black man as president. The primary accusation is that he is betraying the identity of the US by gradually introducing a European political model in which the government is the primary actor.<br /><br />Almost every state in the US is in crisis, police forces are being cut back, public services trimmed or eliminated, and yet at the mass rallies of the Tea Party, which calls for the purging of moderate Republican candidates in upcoming elections, are demanding an end to taxation while saying they want to restore the US to its former greatness and omnipotence.<br /></p>
<p>The Tea Party’s giant rally in Washington drew 3 lakh Americans protesting taxation, a government that is suffocating its citizens, and a marxist, Kenyan-born, Muslim Obama. These people are calling on the United States to be a world leader again and dispense with debate and vacillation.<br /><br />All of the above might seem like fiction if it weren’t for the elections coming up in November, when the Republicans will likely win back control of the legislature. Since early August Obama’s approval ratings have been negative. This is largely due to Americans’ idiosyncratic expectation that the government will solve all their problems while they excoriate its intrusion into their lives.<br /><br />The real problem is that the US has entered a profound crisis of growth and unemployment. The economy must grow by 2.5 per cent per year to maintain the present level of employment. The current growth rate of about 1.2 per cent is not enough to compensate for increases in unemployment, now officially at 9.6 per cent. There are 15 million jobless, but there is also an additional million who have stopped looking for work and are not counted in the unemployment figure. Then there are 5 million working part-time.<br /><br />No will to hire<br /><br />The situation for businesses is altogether different. ‘The Wall Street Journal’ calculates that corporate cash holdings are up 38 per cent over last year — and yet they have no plans to hire more workers. Rather, the plan is to continue shedding employees to cut costs and increase profits. During the crisis, from December 2007 to December 2009, the GDP dropped by 2.5 per cent while the job dismissal rate was 6 per cent.<br /><br />The financial sector is in even better shape. The injection of about $750 billion revived it, along with extremely low interest rates, which allowed it to borrow funds from the Federal Reserve and lend them for a healthy return. It is no accident that financial firms handed out $20 billion in bonuses at the end of 2009.<br /><br />Washington’s latest political neologism is ‘the new morality’. The implication is that the country will have to get used to the idea that the economy can be doing well without full employment. For optimistic economists (there are few) the end of the tunnel is 2014. For the pessimists (the majority) it is 2018.<br /><br />All of this has a political impact that is, if we can say so, very American. Obama has accomplished far more than his predecessor: health care reform, which was the ruin of presidents before him; reform of the financial sector; an economic stimulus package of more the $700 billion, without which economists agree unemployment would be worse; and the rescue of the automobile industry. In the international arena he has restored American credibility as a partner in global governance. Yet only 37 per cent whites and 47 per cent Hispanics say that he is doing better than Bush, while the most progressive sector of the country complains that Obama cheated them by not delivering the big changes that they wanted.<br /><br />True, Obama was not as audacious as some had hoped. He has consistently sought to bring Republicans along with him, despite the fact that their philosophy is simply to give him nothing, ever, no matter what he does. Not surprisingly they have succeeded in blocking many of his initiatives.<br /><br />It is hard to understand why Obama continues to pursue bipartisan politics when his opponents, in a country clearly in crisis, continue to propose policies that would set off popular uprisings in any other country. For example, they are now calling for a 10-year extension of the tax cuts for the rich passed by Bush.<br /><br />No doubt, Obama has had his share of bad luck. He has paid a high personal price for the oil disaster in the Gulf of Mexico, however implausible the logic may be. But the real problem is another altogether. Americans are characterised by their idiosyncratic belief in the country’s exceptionalism. The majority of Americans did not like health care reform, or the stimulus package, or the car industry rescue.<br /><br />A large part of the population never took to the election of a young intellectual black man as president. The primary accusation is that he is betraying the identity of the US by gradually introducing a European political model in which the government is the primary actor.<br /><br />Almost every state in the US is in crisis, police forces are being cut back, public services trimmed or eliminated, and yet at the mass rallies of the Tea Party, which calls for the purging of moderate Republican candidates in upcoming elections, are demanding an end to taxation while saying they want to restore the US to its former greatness and omnipotence.<br /></p>
