The Future: Will America Decline or Prosper?
Print. January 6th, 2010The following article appeared in The Irish Independent on December 31, 2009. It was commissioned as part of a special supplement in which various writers chose particular moments from the 00’s — in my case, Barack Obama’s inauguration as President of the United States — and reflected upon their broader significance.
I remember two things above all: the cold and the crowds.
On January 20 2009, Barack Obama was inaugurated as the 44th president of the United States. The skies of Washington were clear and the air was frigid. People talked about how much it all meant to them, but they did so through chattering teeth.
In the American capital and around the world, the excitement was intermingled with relief. The US had suffered precipitously as the administration of George W Bush squandered the global sympathy that followed the terrorist attacks of September 11 2001.
The decline in the nation’s standing was not wholly attributable to an unpopular and poorly-executed war in Iraq. Bush’s overall approach mixed conceit and negligence in equal, disastrous measure. From the flagrant erosion of civil liberties to the dismal response to Hurricane Katrina, Bush had come to seem, to adapt Winston Churchill’s phrase, an immodest man who had much to be modest about.
Then, as the second term of his presidency wound down, something different began to stir. A little over a year before Obama’s inauguration, I stood in a hall in Des Moines, Iowa and watched American politics change before my eyes.
Iowa’s caucuses were the first contest in the Democratic primary process. The young and not-so-young, fired by an idealism that many people thought politics had lost forever, delivered a huge victory for Obama over Hillary Clinton.
Iowa’s population is largely rural-dwelling and white; African-Americans account for less than three per cent of the state’s people. But Iowa’s Democrats voted for a young, black first-term senator to be their standard-bearer. They tore down a racial wall that could never be re-erected. Obama’s first line to the ecstatic crowd that night was just about perfect: “They said this day would never come.”
The words echoed in my head as I watched him take the oath of office. During his speech, I turned around to look back down the National Mall. The crowd was two million-people strong. It stretched all the way to the Lincoln Memorial, about two miles in the distance. Cheers and applause rolled up the steps of the Capitol in great waves.
The national exuberance could not last, of course. So many problems were pressing that even Obama, in his inaugural address, talked about “this winter of our hardship.” Now, eleven months later, unemployment is over 10 per cent. The national debt is enormous and getting bigger. The battle to force change through a sclerotic and dysfunctional body politic is hard.
Yet, for all that, much of the current, increasingly pessimistic conventional wisdom about Obama is wrong. The critics point to the decline in his poll ratings since his inauguration. But they fail to mention that the proportion of Americans who approve of his performance in office remains almost identical to the number who handed him his convincing election win last year.
He has brought forth substantive change in some areas, and planted the seeds of it in others. The writer Jacob Weisberg took on the nay-sayers in the online magazine Slate late last month: “This conventional wisdom about Obama’s first year isn’t just premature — it’s sure to be flipped on its head by the anniversary of his inauguration on January 20.”
But what lies on the other side of that anniversary, and in the years farther ahead?
Many of the changes Obama has already put in train should come to fruition in the near-future, helping the US and its natural allies regain an even keel.
It is perhaps a mark of success for the new president that the war in Iraq, for so long the dominant story in the international sphere, has tumbled down the public agenda. The US withdrawal from the country, announced by Obama in February, is well underway.
All front-line US combat troops will be out of Iraq by the end of August next year. A total withdrawal will take place by the end of 2011. When that happens, it will end a conflict that has cost America dearly in lives lost (almost 4,500) and dollars spent (well over $700 billion).
The end of the Iraq war will also begin to close a sore that had festered since 2003, poisoning US relations with the rest of the world.
If Iraq has receded among public concerns, the economic malaise is as central as ever.
Experts continue to worry about underlying trends but, for now, the worst appears to be over. The US recession was brought to an official end during the third quarter of this year. Recessions are defined as two or more successive quarters of negative growth. The US economy grew by 2.8 per cent between July and the end of September. When Obama pushed his $787 billion stimulus package through Congress earlier this year, he took flak from both the right and the left. Next year should bring further vindication.
Just as vitally for America’s prospects in the medium-term, Obama is on the cusp of a truly historic achievement. The prize of universal health care has shimmered just out of the reach of every Democratic president of the past sixty years. Obama has already got further along the road than anyone in a generation — including Bill Clinton, whose efforts on the issue failed ignominiously in 1993.
The final details are still to be hammered out, but it seems a better-than-even-money bet that the New Year will see legislation passed that will bring health coverage to 94 per cent of America’s legal residents. That achievement alone would earn Obama a prominent place in the history books. It would be the biggest breakthrough since President Lyndon Johnson in 1965 created Medicare, the government program that provides health care to the elderly.
Setting Iraq aside, the outlook on foreign affairs remains hard to forecast. Part of Obama’s international appeal has always been rooted in the belief that he would change the tone of America’s engagement with the rest of the world. He has already done so — in his landmark speech to the Muslim world in Cairo in June, for example.
But he has also displayed a puzzling lack of sure-footedness on the specifics of the conflict between Israel and the Palestinians. It will be several more years before the effectiveness of his approach can be properly judged in relation to foes like North Korea and Iran.
There are some reasons for real foreboding as the US looks to the future. The view that Obama and his economic team adopted upon taking office — that major government intervention was required to avert a second Great Depression — is backed up by many analysts. But the bill for the crisis — covering not just the stimulus, but the bail-outs of various major firms and the consequences of years of financial irresponsibility — is of a scarcely-conceivable magnitude.
The US national debt is now in excess of $12 trillion. Approximately $2 trillion of that was added this year alone. The New York Times noted last month that the US will spend $202 billion — equivalent to about three-quarters of Ireland’s entire GDP — merely servicing its debt this year. Even if fiscally conservative policies are adopted from here on, these interest payments are projected to rise to $700 billion a year by 2019.
The historian Niall Ferguson wrote in a recent issue of Newsweek that a failure to get the nation’s finances back under control could ultimately pose a bigger peril than anything else.
“If the United States doesn’t come up with a credible plan to restore the federal budget to balance over the next five to ten years, the danger is very real that a debt crisis could lead to a major weakening of American power,” he wrote.
Not that military adventuring exactly lightens the load. Obama’s decision to significantly increase troop levels in Afghanistan — announced at a speech at the West Point military academy on December 1 — could yet come to determine his fate.
Obama has made a big wager that the war in Afghanistan can be won. Can it? What would such a victory look like? How will America succeed in a land that has consistently rebuffed outsiders, from the British in the 1840s to the Soviet Union’s Red Army in the 1980s? And, at a per annum cost of approximately $1 million per soldier, how will the economy take the strain?
To some, the biggest threat to American power in the medium-term does not come in the quasi-militaristic form of Al-Qaeda or the Taliban, but from economic competitors. None looms nearly so large as China.
China is by far America’s biggest creditor, its holdings amounting to around $1.5 trillion. The figure has risen vertiginously since the start of the decade when it was below $100 billion. The US may make noises about wanting China to improve its grim human rights record, but it is hard to stay on the moral high ground when you’re talking to your nation’s bank manager and your overdraft is sky-high.
China’s economic might continues to multiply at disconcerting speed. Its economy was one-eighth as large as that of the US in 2000. Now it is one-third of the size.
Not all of the growth is strictly indigenous. China’s advance has come in part because it has opened itself up as an outsourcing location after years of being effectively off-limits to international corporations. According to the Council on Foreign Relations, the share of China’s exports that came from foreign-owned companies rose from a mere 1.9 per cent to 58.2 per cent in the twenty years to 2006. It is still rising.
Some Americans may take a kind of lukewarm comfort from the fact that their companies — and their consumers — are so central to China’s fortunes. If nothing else, these factors make it much less likely that the Chinese will call in their debts and capsize the American economy.
But the ramifications for Ireland are potentially huge and negative. Our boom was enormously dependent upon inward investment. Corporations were lured to our shores by an educated, tech-savvy work force and low corporate tax rates.
How will Ireland compete with China and other emerging powers like India? Those nations increasingly boast everything that Ireland has to offer — together with dirt-cheap labour.
From a broader perspective, we Europeans have grown accustomed to a world where the US is at the epicentre of power and the transatlantic relationship is therefore all-important. Are we ready — economically, culturally and psychologically — for a scenario in which China is rapidly ascending and the US is in slow, sad decline?
As the nation that dominated the 20th century peers into the second decade of the 21st, many details of the picture look ominous.
The author David Rothkopf admitted in Foreign Policy magazine recently: “For the first time in my life…I can see how America could be entering a period of irreversible decline in terms of its relative influence in the world. The deficits are too great. Demographics are creating a headwind. The economics of the global era are different from those of the industrial era and they don’t favour us.”
Perhaps the fears are overblown. America’s decline has, after all, been predicted before. In the 1980s, Japan was spoken of in the same way as China is now. It was going to consign American dominance to history’s dustbin.
It never came close. The Japanese economy atrophied while the US underlined its hegemony.
Perhaps the Chinese challenge will implode in the same way Japan’s did. Perhaps, as happened during the tech boom under Bill Clinton, the US economy will bounce back with a muscularity that surprises even the most bullish analysts.
But perhaps not.
In Barack Obama, the American people at least have a man at the helm who is worthy of the myriad challenges that face them. In the short term, despite what his detractors say, he is well-placed to be an effective, successful president.
But it will take another decade, and possibly longer, before the biggest questions can be put to rest. Does it lie within the power of Obama — or any president — to pull the United States back onto an upward trajectory? Or will his political epitaph ultimately be a tragic one: that he was the right man, but that he arrived too late upon the stage?