By Steve Howell
The phrase that famously became Bill Clinton’s campaign slogan in 1992 – ‘it’s the economy stupid’ – may now have to be replaced with a new mantra – ‘it’s the electorate, stupid’.
Mitt Romney’s unguarded remarks dismissing 47 per cent of the electorate as welfare dependents who he will never convince has probably gifted Barack Obama a second term.
The two statements have in common the fact they were never intended to be made public. Clinton’s started life as a reminder notice to staff at his campaign HQ in Little Rock, Arkansas about the importance of the economy in an election fought in tough times.
It’s a shame for Romney, who made the gaffe at a private fund-raising dinner, that no one posted a warning in his office that you don’t win elections by insulting half the population.
“This is one of the all-time great election screw ups,” wrote Iain Martin, a UK commentator who had supported Romney, in his Telegraph blog earlier this week.
“A candidate stupid enough to say such a thing in an election year, or in any year, should be asking himself if politics is really the game for him. It will be astonishing if the release of this tape doesn’t signal the implosion of his campaign, sealing victory for Obama.”
In opinion polls prior to the Romney gaffe, Obama was already pulling away. A CBS News/New York Times poll last week had him enjoying a lead of 8 per cent after the Democrat Convention at which Clinton, Mr Economy, buried past differences and gave him an enthusiastic endorsement.
If Obama does win, he will become the first President to win re-election with unemployment at more than 8 per cent since Franklin Roosevelt in 1936. So what would it mean for the US economy, not to mention worldwide recovery and growth?
Obama’s strategy is to stimulate growth in much the same way as Roosevelt did in the New Deal, with an emphasis on major infrastructure investments and tax policies favouring middle and lower income workers.
Lawrence Summers, a former Harvard University president and a top economic adviser to Obama, told a recent seminar that the government must help fuel a recovery through additional stimulus to repair schools, hire teachers, and rebuild airports.
“How many of you have been to Kennedy Airport? How many of you are proud of Kennedy Airport?” Summers asked. “Government [could be] borrowing money in a currency we print at a time when interest rates are below 3 per cent and unemployment in the construction sector is high. Could there be a better time to fix Kennedy Airport?”
Summers said offering a tax break for middle-class Americans would be better for the economy than a tax break for the wealthiest, because middle-class families tend to spend extra money quickly, putting it back into the economy, while those earning $250,000 or more a year tend to save it.
An Obama administration will also invest heavily in his strategy of reducing US dependence on foreign oil and meeting greenhouse gas emission targets through a major investment in renewable energy.
His New Energy for America plan includes investing $150 billion over the next ten years in clean energy, putting one million Plug-In Hybrid 150-mile-per-gallon cars on the road by 2015 and ensuring 25 per cent of electricity comes from renewables by 2025.
Obama’s emphasis on growth rather than rapid deficit reduction carries with it some risks – not least inflationary pressures. But the positive stock market reaction to the latest round of Quantitative Easing by the Fed suggests that more pump priming in the world’s largest economy is seen on balance as good news.
And, for Welsh companies in key sectors such as renewables and engineering, big investments in infrastructure and green energy are bound to throw up some attractive opportunities.