With President Obama’s inaugural address, the stage is set and the priorities are clear for his second term. For any U.S. president the second term has about eighteen months to two years of real potential. Attention then shifts to the next election — and the candidates vying for the presidency in 2016.
Besides, the track record on second terms for many recent presidents is not encouraging. Nixon was obliged to resign. Reagan was hobbled by a scandal over arms shipments to Iran. Clinton was impeached and George W. Bush was buffeted by two nasty, unpopular wars and a collapsing financial system.
President Obama has signalled clearly and consistently that he intends to stare his Republican opponents down on fiscal issues — the next battle will be over the debt ceiling, followed closely by a major skirmish with Congress over budget resolutions. It is a debate that lurches from “cliffs” to “ceilings”, with little in the way of real structure or substance.
Obama’s argument is essentially that he won the election, has a mandate and is, therefore, not open to bipartisan dealmaking. So far, the administration and Congress have agreed only on the easy part — extending Bush-era tax cuts for 99 per cent of Americans without resolving in any way the yawning gap between spending and revenue.
This fiscal year, revenues are expected to reach $2.9T; expenditures will exceed $3.5T. The U.S. national debt now exceeds $16.4T and continues to grow.
Most agree that solutions can be found to the fiscal mess and that avoidance only compounds the problem later on. But the skill of dealmaking — in a system that relishes the “separation of power” — is in short supply. To date, hard-nosed ‘I will not negotiate’ rhetoric has been more evident than any spirit of consensus. Leadership requires more than rhetoric.
The Republicans, meanwhile, are divided and dispirited but show little inclination to cooperate. They have a weak hand and a fuzzy message.
Whether something constructive can emerge from a deeply-polarized political culture in Washington is, of course, fundamentally important to Americans and to the prospects for a strong economic recovery in the U.S. However, the global economy, including that of Canada, will also be affected by the result — even though we can do little more than encourage from the sidelines and hope that the example of relative fiscal prudence generates some inspiration.
Obama’s other objectives are gun control — in the wake of the most recent tragedy — immigration reform and energy. While some progress might be possible on each, continuing friction on the fundamental fiscal issues will not make the challenge easier for the president on any of them. He needs political traction to match his often compelling rhetoric.
The mood in Washington the second time around is sombre and fractious. Americans are a long way from the “audacity of hope”. The daily grind of party trench warfare, the sluggish economy and the fatigue of more traditional warfare is taking its toll on customary optimism and confidence.
The country as a whole seems subdued, dubious about whether anything good can come from Washington and concerned about the future.
For Canada, the best tonic of all would be anything that puts the U.S. economy on a more solid platform for economic growth. Beyond that, the tone and substance of the bilateral relationship hinges heavily on the president’s next decision regarding the Keystone XL pipeline. Now that the route through Nebraska has been altered to accommodate the president’s stated concerns, many expect approval. But in Washington, on any given day, nothing is a sure thing.
The Beyond the Border initiative, announced with great fanfare on February 4, 2011, is losing steam, falling behind schedule and, regrettably, more into the clutches of unyielding bureaucracies.
Similarly, the widely-acclaimed auto bailout which helped Obama win re-election is losing much of its lustre in Canada, particularly as General Motors marches more to the tune of its major — as opposed to its minor — benefactor and moves more production away from Canada. Cost factors are cited but, for companies armed with massive government subsidies, obligations should be honoured.
Canada commands very little priority in Washington these days but is by no means alone in that regard. Eternal vigilance, safeguarding all of our interests, must be the watchword guiding our actions. Day-to-day management of our most vital relationship will always be more of a priority for Ottawa than for Washington.
And there will always be scope for collaboration on pressing global issues. Witness Mali today. In what some describe as a G-zero world, as U.S. global leadership — economic and political — waxes and wanes in the shadow of more urgent domestic challenges, self-interest will be the primary concern for most, beginning with Washington. Leadership on Syria, North Africa or any other global flashpoint will be diluted by attention to more immediate pressures on the home front.
For all these reasons, it’s up to Canada to address and conclude trade negotiations that will reduce our reliance on the U.S. market, given that the percentage share of bilateral trade is likely to continue downward throughout this decade. Trade diversification is very much in Canada’s self-interest. By negotiating better access to more dynamic markets — particularly energy markets, as America moves closer to self-sufficiency — Canada will be in a better position to manage complex relations with our exclusive neighbour, in a more mature and balanced fashion.