Business Times - 04 Nov 2008
By LEON HADAR
IN one of the famous scenes in the 1972 film The Candidate, Robert Redford who has just won a race for a Senate seat from California, surrounded by celebrating supporters during a victory party, pulls his press secretary into a room while throngs of journalists clamour outside, and then asks him: 'Marvin. . . What do we do now?'
It's quite clear that whoever wins this year's US presidential race today is not going to pose that question to his aide. Instead, he is more likely to ask his adviser: 'What do we do first?'
Indeed, after confronting what amounts to be an existential threat to US national interests - a devastating economic crisis and two long and costly wars - the next occupant of the White House might end up wondering whether his victory in the 2008 presidential race was such a good news. For all practical purposes, the winner, even before he is inaugurated as the next president on Jan 20, 2009, will be sucked immediately into perfect geo-strategic and economic storms.
Ask any good economist for an advice on how to contain the global financial crisis or discuss with any bright military strategist how the United States could win in Iraq and/or Afghanistan. In both cases the response would be very similar: 'I don't know.'
And that is clearly not the kind of answer that the new president expects to get from his advisers during the most difficult presidential transition period since Franklin D Roosevelt was preparing to replace president Herbert Hoover, in the midst of the post-1929 financial crash and the ensuing Great Depression.
Just as Americans are preparing to go to the polls today, the government reported that the US economy was officially in a recession after contracting from July through September. And it was also clear that the financial crisis was starting to affect the 'real economy'.
Consumer spending dipped for the first time in 17 years, and most economists expected the drop in economic activity to put added pressure on Main Street in the form of more bankruptcies, more layoffs and even less spending. More specifically, there are concerns that as credit card companies face a financial squeeze and continue raising their fees, consumers will further cut their spending to an all-time low, bringing economic activity to a near halt.
It was a combination of the 'wealth effect' that resulted from a bullish stock market, the appreciating value of homes and the availability of credit cards that had driven the spend-like-crazy mood of the American consumers in the past two decades and provided the country's economy with its powerful engine.
Now that engine is dead, creating a vicious downward economic circle of falling housing prices, shrinking credit, falling business orders and rising layoffs and bankruptcies, that lead to more shrinking in consumer spending.
As the new White House occupant deals with this depressing reality, he will realise the options available to him are few. The spread of the financial contagion to other parts of the world and the rise in the value of the US dollar make it difficult for the US economy to export its way out of the recession. That suggests that the next president would have no choice but to rely on fiscal policies, including huge increases in government spending, to try containing the crisis.
And if the troubles in the economy are not enough, the new president will be facing a vast array of geo-strategic crises at a time when the US military is overstretched in costly wars in Iraq and Afghanistan and as Congress is expected to press for major cuts in defence spending.
'After the new president-elect's excitement subsides after winning the election, it is going to be dampened somewhat when he begins to focus on the realities of the myriad challenges,' said Mike McConnell, the director of National Intelligence, in a speech last week. In addition to the expected threats, 'there is always surprise', he added, noting that the first months of a new presidency are a 'period of most vulnerability', pointing out that terrorist attacks occurred during the first year of the administrations of George W Bush and Bill Clinton.
In addition, Mr McConnell and other experts expect that the new president will also have to deal with the challenge posed to US global supremacy by the increasing economic and military power of China, India and Russia. And there is also a concern that the expanding global economic crisis combined with climate change could also exacerbate problems such as food shortages and civil unrest, and lead to more violence around the world, especially in sub-Saharan Africa and parts of Latin America.
In fact, when one considers it might be a mission impossible for anyone to resolve most of these problems, the next president may end up concluding that winning the election was actually the bad news.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.