The World Series is over. The NHL is locked out and the NFL season is already half over. This fall’s real blood sport, however, was the American presidential election.

The polls were right. The verdict was narrow, a profound endorsement of the political status quo, reflecting the deep political divide in America and the political paralysis that has stymied action in Washington. The split in Congress persists with little change.

The trillion dollar question is whether any consensus will be possible to fix the fiscal mess in America, the consequences of which, of course, extend well beyond the United States.

Unless Obama can secure some kind of deal to restructure the tax code to head-off sequestration (a mandated $2.1 trillion in cuts to the federal budget, along with tax increases over the next 10 years), many are predicting that the U.S. will go into an economic tailspin that would see a 4 to 5 per cent contraction to its GDP.

The early signs are not good. Already the knives are out. American labor unions who helped return Obama to office have called on him to make no concessions to Republicans that would involve cuts to Social Security and Medicare. Backed by liberal groups, they have urged the president to make good on his campaign promise to raise taxes on the rich.

They also don’t want the president to make any kind of deal that smacks of the kind of “grand bargain” that Obama tried to pursue (but then backed out of) earlier this year with John Boehner, the Republican speaker of the House of Representatives.

President Obama’s legacy now hinges on his ability to govern. As Bob Woodward’s devastating portrait of the Obama presidency in his book The Price of Politics underscored, Obama’s winning campaign skills stand in stark contrast with his apparent inability to work and negotiate with others.

All other agenda items will be a distant second to the “fiscal cliff.” Health care will stick but will be persistently pummelled. Immigration reform depends on whether Republicans can read the demographic tea leaves more adroitly.

After ‘superstorm’ Sandy hammered the U.S. northeastern seaboard, climate change is back on the agenda (it didn’t even get a mention in the presidential debates). We should expect regulatory reform on climate change through executive orders, but little in the way of real action that would significantly curtail carbon emissions.

New Supreme Court appointments will give Obama chance to put a more liberal stamp on the judiciary.

Watch, too, for new cabinet appointments — notably State and Treasury, although Timothy Geithner has said he will stay on until his successor is picked. Obama would be wise to tap the bipartisan pool for both. A Republican choice for Treasury would go a long way to sending a message the president wants to work with the House on the budget and tax reform.

Canada’s overriding concern must be whether the U.S. gets its fiscal house in order and spurs solid recovery. Our scope for influence is limited on what is intrinsically a U.S. domestic matter, but our example of relative, fiscal prudence does give us a credible voice.

We should also press the administration to approve the Keystone pipeline once the new route through Nebraska is approved, later this year.

We also need a constructive dialogue on trade, notably the Trans-Pacific Partnership, and we need to put some flesh on the bones of the Beyond the Border initiative. But we will have to remain vigilant in defending ourselves against the constant threat of U.S. protectionism in hard times.

Infrastructure, security and cyberspace also merit attention. Global flashpoints, known and unknown, should complete the broader agenda.

It is important to stress that our dialogue should be with both the administration and congressional leaders, to safeguard and promote the complex web of our interests with the U.S. But it also may be time to move beyond desire for “special relations” with the U.S. and focus sharply as well on emerging markets for a healthier, more mature and balanced approach to global affairs. Such a focus should complement, not replace, our relationship with U.S. and actually help us better manage relations with U.S.

We also must remind ourselves that the 2016 race for presidency begins now and will be a wide-open affair. As former U.S. Secretary of State George Shultz once said, “It is never over ’til it is over but, in Washington, it is never over.” Amen.


Canada’s overriding concern must be whether the U.S. gets its fiscal house in order and spurs solid recovery.
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