Barack Obama’s victory in the Presidential election on 6 November makes him only the fourth Democrat since 1900 to win a second term in the White House. While he narrowly prevailed over the Republican Mitt Romney in the popular vote (50.6% to 47.9%), the President achieved victory by winning eight of the nine hard-fought ‘swing’ states, including Colorado, Ohio, Virginia and even Florida (where analysts had predicted a Romney victory). In the Senate election, the Democrats also triumphed, expanding their majority by four seats. They won 55 seats (including two independents expected to caucus with the Democrats) to the Republicans’ 45. The Republicans failed to regain the majority they last held in 2006. In the House of Representatives, however, there was better news for the Republicans. They won 233 seats to the Democrats’ 193, with nine seats not yet called. Despite the Democrats gaining seven seats and the Republicans losing two, the Republicans have an overall majority in the lower house of Congress. As a result, there is continuity – with no change in control of the White House or either part of Congress. This also means a divided government requiring compromise – or else gridlock. duck’ session will have real significance. European leaders welcomed President Obama’s re-election. Opinion polls have consistently demonstrated the President to be more popular in Europe than Governor Romney. For example, a YouGov poll taken just ahead of the election showed that more than 90 per cent of northern Europeans would vote for President Obama if they were able to cast ballots in the United States.
When US stock markets dropped significantly after the election, it was widely attributed to fears that the President and Congress would not find agreement on an alternative until the last possible moment. So far, however, both President Obama and the Republican Speaker of the House of Representatives, John Boehner, are sending signals that a compromise is possible.
The Obama administration has been closely involved in discussions surrounding the eurozone crisis and has also worked with the European Union on a number of foreign policy issues – in the Middle East in particular. The Prime Minister of Belgium, Elio Di Rupo was the first world leader to congratulate President Obama; the Presidents of the European Council and the European Commission, Herman Van Rompuy and José Manuel Barroso respectively, were also quick to congratulate the President on his victory and stated that they looked forward to growing ties with the United States and cooperating on global challenges.
A commitment by the President on tax reform could pave the way for a lower corporate tax rate (while also removing many loopholes that keep effective corporate tax rates low). However, President Obama has threatened to veto legislation that would maintain the current tax rates for wealthy individuals, the result of a cut during the presidency of George W Bush; he also says that he will raise capital gains taxes.
By far the most pressing concern will be ensuring economic recovery. President Obama will look to reduce unemployment from its current rate of 7.9 per cent and bring down the national debt, which stands at over $16 trillion. In the very short term, the President will have to find a speedy compromise with Congress to avoid the so-called ‘fiscal cliff’. This combination of tax increases and spending cuts would withdraw $7 trillion from the American economy and is due to take effect at midnight on 31 December.
Now that President Obama has been re-elected, the European Union is pushing for the launch of trade talks early next year to establish a transatlantic free trade area, which the EU sees as a good long-term driver of economic growth.
The positioning of all sides in this debate began immediately after the election. Congress is scheduled to return to Washington, DC from 13 November for a post-election legislative session and lawmakers will have just 49 days to reach consensus. This ‘lame
President Obama will also look to fulfill campaign promises to protect spending on infrastructure and clean-energy manufacturing with new oil and gas drilling projects in states such as North Dakota and Pennsylvania, making the United States more attractive for a number of new industrial investments.
The world's largest trading relationship already accounts for nearly a third of global trade, but slow growth prospects are encouraging Brussels and Washington to consider a deal that promises to unleash new sales and investments and reduce barriers to businesses. EU and US officials said in October that a group co-chaired by the EU’s Trade Commissioner, Karel De Gucht, and the US Trade Representative, Ron Kirk, would issue a report in December
recommending talks. While import tariffs between Europe and the US are already generally very low, the aim of the agreement would be to eliminate a variety of other barriers to trade and to establish a transatlantic single market. However, there are significant obstacles to a closer trading relationship in some areas, including agriculture, where the two sides disagree on the use of genetically modified crops. There are fears that Congress may also act as a barrier to the negotiations. President Obama has said that the United States needs to use every possible power source including renewables, oil and gas, nuclear and 'clean’ coal. He has talked of “freeing” the nation from imported sources with the prospect of energy selfsufficiency within a decade. American competitiveness has been boosted by cheap energy from shale gas. As a consequence, some manufacturing capacity moved overseas by American companies is being brought home to the United States. President Obama’s first big second-term decision will be on the controversial Keystone XL pipeline, a project designed to increase production of the Alberta oil sands by pumping crude oil and diluted bitumen to Texas refineries. The government is due to make its decision early next year and many believe that the President will approve the pipeline given that a new proposed route avoids sensitive ecological areas in the Nebraska Sandhills. Nearly all of the world's largest oil companies have a stake in the tar sands, including Britain's BP, Norway's Statoil, France's Total and the Anglo-Dutch company Shell. According to environmental activists in North America and Europe, falling American oil demand means that the pipeline may simply allow ‘tar sands’ oil currently landlocked in Canada to be exported to Europe. The topic of climate change was largely missing from both campaigns until the arrival of Hurricane Sandy, which highlighted the challenges posed by global warming. President Obama made a direct reference to climate change in his victory speech, to the relief of environmental lobby groups. He has pledged more support for development of renewable energy technologies like solar, biomass and wind, but he will need the support of Congress to extend or renew tax breaks that have
US elections
underpinned the growth of these industries. The President’s re-election is widely seen as a boost to the upcoming UN Climate Change Conference negotiations, which are due to start in Doha on 26 November. The summit faces a number of sizeable challenges, including the need to extend the Kyoto Protocol before it lapses at the end of the year and the requirement for officials to agree a roadmap to a new legallybinding climate change treaty to be agreed by 2015 and implemented from 2020. However, to date the US has been reluctant to support steps towards a legally binding agreement and stricter regulations on emissions. Such moves would face strong opposition from the Republican-controlled House of Representatives and would be unpopular among many Americans. Overall, there is unlikely to be a major change in position on the big foreign policy issues during President Obama’s second term. However, increased presidential attention to foreign policy challenges is expected. As the economy continues to improve – and with one eye on his legacy – President Obama is expected to increase his diplomatic efforts: evidence of this is the organization of a trip to Asia, including the first trip to Myanmar by a President of the United States, announced just two days after the election. The trip is scheduled to take place on 17-20 November. Anti-terrorism strategy will remain among the top priorities, as will Iran (where the White House announced new sanctions just after the elections), the pace of troop withdrawal from Afghanistan, the Middle East peace process, Syria and other Arab Spring countries, and Russia. The President will need to continue to manage an increasingly assertive China at a time when Beijing is facing a once-in-adecade leadership change. Both President Obama and Governor Romney were highly critical of the Chinese Government during the election campaign, condemning what they saw as increasingly unfair trade practices which could continue to harm a vital global diplomatic relationship. While on the campaign trail, President Obama took action against China: he put up tariffs on Chinesemade tyres and solar panels, and also filed a new case with the World Trade Organization against China for what he perceived to be unfair subsidies to the car industry. While this move did not harm his campaign, it was not necessarily a party political move: it is likely to be followed up with further ‘tough on China’ policies in the years to come.
President - Electoral College (538 electors)
The choice of personnel will be crucial to President Obama’s chances of achieving his domestic and international policy goals.
It is likely that the Secretary of State, Hillary Clinton, will leave her post, with the US Ambassador to the United Nations, Susan Rice, and the defeated 2004 presidential candidate, John Kerry, in the race to replace her. The Treasury Secretary, Timothy Geithner, is also likely to stand down, and the President will need to replace David Petraeus, who has quit his role as Director of the Central Intelligence Agency (CIA).
Senate (100 members)
House of Representatives (435 members)
The choice of replacements will be vital in setting the tone for the next four years and helping President Obama to achieve a lasting legacy. Nevertheless, the President’s hands will also be partially tied by a Republican House of Representatives, and the tone of the debate on the ‘fiscal cliff’ will be equally (if not more) important in determining the prospects of Mr Obama’s second term.