In case you’ve been hiking in the mountains of Mongolia, here’s some interesting news you might have missed. This week, North Carolina voted against same-sex marriage. President Obama responded by taking a stand in support of same-sex marriage while the GOP candidate, Romney, reiterated his belief that the state/federal government should only recognize a union between a man and a woman.
Already politicians on each side have come out to support their candidate and condemn the opponent. The discussion over same-sex marriage will continue in the months and years to come, and will most certainly take the spotlight during the presidential debates, but will this be a central issue that brings voters to the polls in anger or support of the candidates? Will this issue, along with the other 3 distractions I mentioned in my previous post, be the main reason people come out to vote and drive the presidential election? I don’t think so. While the same-sex marriage debate- likely to be linked to the family values contest-as well as “the war on women” and the conflicts in Afghanistan and Iraq are all relevant topics that will get plenty of air-time, I think there are three crucial issues that will determine the votes in November.
1. The Economy
While there are plenty of indicators to prove that the economy is improving, overall growth is still sluggish. The US economy grew 3% during the last quarter of 2011, which is the healthiest we’ve been in years- but that number is estimated to decrease during the first quarter of 2012. Final results will be published on May 31, 2012. The unemployment rate in April remained at 8.1% the lowest since before 2009. However, this percentage does not count people who have been unemployed for 12 months but had not looked for work in the past 4 weeks; those who are unemployed but have stopped looking for work because they don’t believe there are any jobs for them; or people who are working part-time but want to work full-time. Taking all unemployed people into account including the above would raise the real unemployment rate to over 17%. In addition, of the people counted as unemployed, about 41% have been unemployed for 27 weeks or more.
While the market rallied during the first quarter of 2012, it has since become more erratic as fears of a European recession mounted and the crisis continued. The market rally itself had some investors nervous, wondering how sustainable it would be, or whether this was a random fluke. Many attribute a strong first quarter to an unusually warm winter which caused housing and spending to pick up momentarily. However, consumer spending is down from February, US workers are tightening their belts once again and employers are failing to award the necessary pay increases to get consumers confident to start spending again.
As the summer months heat up, it remains to be seen whether the economy will do the same. If, as many economists expect, the economy continues it’s sluggish growth, voters will keep in mind their employment status, bank account and investment portfolios when it’s time to vote.
As the election draws closer, it will be interesting to see whether, given French President Sarkozy’s defeat mainly because of his support of austerity measures–this rejection would extend to the US. President Obama and the Democrats want big businesses to help bail out the economy, while the Republicans believe in pro-growth policies, like allowing overseas profits of US companies to be repatriated at lower tax rates to encourage reinvestment in the US.
One of the major focuses during the 2008 Presidential election was what to do when the Bush tax cuts expire at the end of 2010. President Bush/Congress had passed bills in 2001 and 2003 that lowered income, capital gains and dividend taxes, and estate tax as well as raised the estate tax exemption. During Obama’s bid for president and throughout his tenure thus far, he has insisted that the Bush tax cuts should expire at the end of 2012 for American families who make $250,000 or more (the tax cuts were extended in 2010 and are set to expire at the end of this year). Now, as a result of a slightly improving economy, high deficit concerns and maybe even the Occupy Wall Street movement, it’s likely that he won’t back down.
In addition, Warren Buffett raised eyebrows when he wrote a letter to Congress a few months ago, admonishing the wealthy 1% like him to take more responsibility and pay more in taxes since they were in a position to do so. This concept became known as the “Buffett Rule” which has been included in various bills in Congress, requiring individuals who make $1 million or more to pay an extra %5- 30 tax (depending on which bill you’re reading.)
The Republicans have fought against any tax increase, arguing that this is bad for business and is an anti-growth measure for boosting the economy. The Democrats argue that with federal debt levels as high as they are (over $15 trillion currently) cutting spending is not enough, and taxes must go up on those who can afford it. The revelation that, because of certain loopholes in the tax system, Romney has been able to pay tax rate below 20% for the past few years also underscored the imbalance in the tax system and the need to institute changes.
3. Iran and Syria
Move over Iraq and Afghanistan, there are new troublemakers in town. After the Arab Spring of last year, the Middle East region has been grappling to steady itself as countries hold new elections, governments make changes and people try to adjust to new regimes. Egypt, Yemen and Bahrain are still experiencing painful changes as a result of the turmoil of last year and it will likely be a while before things settle down.
The more immediate danger–especially where the US is concerned–is with Iran and Syria. Both Obama and Romney will be asked their stance on Iran, and what they plan to do if Iran continues to develop nuclear weapons and refuse international oversight. Especially with pressure from Israel, the candidates must appear forceful and strong in responding to any direct or indirect aggression from Iran against the US or Israel.
Similarly, as the turmoil and apparent civil war in Syria continues, the world will turn to the US to intervene. The question will be whether to lead or participate in an alliance of several countries aiding the rebels as NATO did in Libya, or whether to directly intervene as the US and Allied forces did in Iraq. The civil unrest in Syria is a delicate matter for the US; Syria has been tied to Iran so dealing with the Syrian conflict could ignite a fire with Iran as well. On the other hand, after involving itself in Iraq as a “liberator,” capturing Saddam Hussein and trying to install democratic processes, it’s likely that the world will look at the lack of US involvement with Syria to be quite hypocritical and validate the theory that the conflict in Iraq was self-serving rather than to help liberate the Iraqi people. This could add to pressures for the US to become more directly involved, possibly for the long-term.
Like bad trailers before the feature film, many issues lead to hot political discussions, but then either fade away, come to a resolution or are replaced by another pressing matter. The real topics that will drive this election are not new or exciting; it’s just more fun to have a heated debate about the so-called ‘war on women’ or same-sex marriage. Unfortunately with so many Americans still struggling to keep their head above water in this economy, and with so much continued uncertainty with taxes and danger brewing in the Middle East, we’ll be back to the same old stories come November.