Can we ex­pect change?

The Pak Banker - - Front Page - Najmuddin A Shaikh

AF­TER his sur­pris­ingly con­vinc­ing vic­tory and the small but sig­nif­i­cant gains the Democrats made both in the Se­nate (two seats) and in the house (six seats), Pres­i­dent Barack Obama would seem to be well po­si­tioned to ef­fect the changes in the Amer­i­can sys­tem for which he had is­sued clar­ion calls dur­ing his 2008 cam­paign. That, how­ever, may be too much to ex­pect.

Even af­ter the losses they suf­fered, the Republicans re­tain a sig­nif­i­cant ma­jor­ity in the house and have al­ready in­di­cated that those of their mem­bers who have been re­turned to of­fice re­main com­mit­ted to not al­low­ing the rais­ing of taxes on the rich that is a car­di­nal part of the rev­enue-rais­ing and deficit-cut­ting plan that Obama wishes to pur­sue.

The Repub­li­can lead­ers have recog- nised that some com­pro­mise has to be worked out to avoid what is known as the ‘fis­cal cliff’. This is the law that man­dates a com­bi­na­tion of tax hikes and spend­ing cuts to­talling more than $500 bil­lion start­ing from Jan­uary 2013.

So far the so­lu­tion that the Repub­li­can ma­jor­ity leader in the house is pre­pared to con­cede is that the cur­rent lame-duck Congress — the term of which will ex­pire in Jan­uary 2013 when a new one will be sworn in — should pass as a first step a bill ex­tend­ing the cur­rent tax rates for a year against the prom­ise that in the next year, the new Congress, as the sec­ond step, would un­der­take a com­pre­hen­sive tax law re­form.

This would close many of the cur­rent loop­holes and raise rev­enues with­out re­quir­ing the Republicans to re­nege on their prom­ise to op­pose a tax rate in­crease.

For the mo­ment, Obama ap­pears in­tent on se­cur­ing some move­ment to­wards rais­ing the tax rate for the two per cent Amer­i­cans whose an­nual in­comes ex­ceed $250,000 and to main­tain the cur­rent tax rates for the oth­ers. Obama may ac­cept that avoid­ing the ‘fis­cal cliff’ will be a two-step process but he will in­sist on se­cur­ing some bind­ing guar­an­tees that one such el­e­ment in the sec­ond step would be rais­ing taxes on the rich.

This is go­ing to be Obama’s ma­jor pre­oc­cu­pa­tion for the last months of his first term as will be the ef­fort needed to en­sure that his pro­pos­als for Medi­care and a re­form of the med­i­cal in­sur­ance sys­tem that aroused so much Repub­li­can op­po­si­tion is now fully im­ple­mented.

The re­cov­ery of the econ­omy, which seems to be pro­ceed­ing more slowly than expected, will re­main the top pri­or­ity even while he re­alises that apart from the ef­forts to re­duce the fis­cal deficit there is lit­tle he can do to stim­u­late job cre­ation that was the prin­ci­pal con­cern of the vot­ers in the elec- tion. An­other mat­ter is the sur­prise res­ig­na­tion of Gen Pe­traeus as di­rec­tor of the CIA af­ter an in­ves­ti­ga­tion of an un­re­lated is­sue by the FBI re­vealed that he was hav­ing an af­fair with his 40-year-old bi­og­ra­pher.

Al­most all the pun­dits who were pick­ing Obama’s team for the sec­ond term seemed agreed that Pe­traeus should re­main the CIA chief. Now Obama has the headache of get­ting a new man in place to han­dle the cur­rent furore over who would be held re­spon­si­ble for the se­cu­rity lapses that led to the death of the Amer­i­can am­bas­sador and his col­leagues in Beng­hazi.

Mean­while, the res­ig­na­tion it­self and the de­lay by the FBI in in­form­ing the ex­ec­u­tive and se­lect in­tel­li­gence com­mit­tees of Congress of the pre­lim­i­nary re­sults of the in­ves­ti­ga­tion which started four months ago plus the re­lease of in­for­ma­tion af­ter the polls has fu­elled an­other con­tro­versy. This will not go away eas­ily if the Republicans have their way.

In re­count­ing all these pri­or­i­ties, the pur­pose is to em­pha­sise that at least now and dur­ing 2013 Obama will be fo­cused largely on do­mes­tic is­sues.

On the for­eign pol­icy front, how­ever, Obama is likely to have more lee­way par­tic­u­larly af­ter it ap­peared that the Repub­li­can can­di­date en­dorsed vir­tu­ally ev­ery el­e­ment of Obama’s for­eign pol­icy.

Equally im­por­tant, a sec­ond-term pres­i­dent who can­not seek re-elec­tion tra­di­tion­ally has more flex­i­bil­ity. This is, of course, of par­tic­u­lar rel­e­vance to the ques­tion of Pales­tine and to the use of the so-called dan­gers of the Ira­nian nu­clear pro­gramme by Is­raeli Prime Min­is­ter Ben­jamin Ne­tanyahu to block any progress on Is­raelPales­tine fi­nal sta­tus talks.

Clin­ton in the last year of his sec­ond term had made an ef­fort that seemed to cul­mi­nate in an Is­raeli of­fer to re­store 80 per cent plus of the West Bank to an in­de­pen­dent Pales­tine. Yasser Arafat and many Arab lead­ers were scep­ti­cal whether Ehud Barak, the then Is­raeli prime min­is­ter, would im­ple­ment such an agree­ment and feared that it would meet the fate of the Oslo talks. The ini­tia­tive died shortly af­ter.

Obama, too, is bound to make an ef­fort since he knows that Amer­ica’s un­ques­tion­ing sup­port of Is­rael and fail­ure to force the pace of Is­rael-Pales­tine talks has been the prin­ci­pal cause of anti-Amer­i­can­ism in the Arab and wider Is­lamic world.

A gen­uine open­ing has been cre­ated for such an ini­tia­tive by Pres­i­dent Mah­moud Ab­bas’s re­cent in­ter­view on Is­raeli tele­vi­sion in which he seemed to give up the long­stand­ing de­mand for the right of the Pales­tinian refugees to re­turn to their homes in what is now Is­rael.

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