It has been election season in Europe recently. Incumbents of all political colours are feeling the backlash from electorates dissatisfied with stagnant living standards.  Merkozy has been replaced by the more frosty Merkollande; in German Lande and British local government voters have given the national incumbents a kicking and in Greece the up-coming rerun of the inconclusive recent ballot could be a defining moment for the eurozone crisis. Yet for all this, the most important election of 2012 may be across the pond, between Barack Obama and Mitt Romney.

As the US, along with much of the developed world, grapple with fundamental questions about which economic and social policies will best secure widely shared increases in prosperity, the outcome of Presidential election could be of profound importance.  Indeed, as Theda Skocpol – Harvard professor and formidable authority on US politics – puts it in IPPR’s new journal, Juncture:

“I think the 2012 election is going to be one of the most riveting, most hard-fought no-holds-barred elections in US political history – and that says something.”

Part of the excitement stems from how close the vote looks set to be.  Any casual observers in Britain who assumed the election would be straightforward for Obama need to think again. Yes Romney has been bruised by having to slug it out in the Republican primaries – and yes the Democrats will attempt to cast him as out of touch (he recently described $374,000 as “not very much” money). But the polls have been tightening recently and the outcome is far from certain. The economy, while growing, does not look set to take off any time soon. And to make matters worse, the benefits of what growth the US economy has experienced seem to be unevenly shared out.  It looks likely that Romney will seek to focus the election almost entirely on the economy in the hope that cold economic winds will blow Obama from power.

The election is also, in the view of Theda Skocpol, a “turning-point election”. As well as shaping up to be closer than you might think, the implications of this election could be felt by Americans for decades to come.

Why so? An Obama win could mean the entrenchment of progressive changes, however modest, in US politics: healthcare reform, a reappraisal of the principle that the wealthiest should contribute more through their taxes and support for state investment in promoting growth. Few expect a radical turn from a President who has become known for his caution more than his boldness. But in time, by defending these important progressive principles and institutions, the electoral base for further Democratic success could be considerably strengthened. Critically these gains could then be fused with and exploit underlying demographic changes which will see the emergence of a younger and more diverse electorate, potentially giving the Democrats a big long-term opportunity to shape US politics. As Skocpol puts it, a second term for Obama, would “allow a transition to incorporating younger people and a more racially diverse electorate to blow winds into a centre-left Democratic party.”

In contrast, were Romney to win the White House – carried there by the current old, white Republican base and more centrist voters dissatisfied with slow economic growth – he could destroy the institutions and policies which provide the bedrock for Democratic Party support, before looking to reform the Republication Party and broaden its electoral appeal. In the words of Skocpol:

“… there are forces on the right who understand that they are close to their last chance – to use an American football analogy, it’s in the final two minutes and they have got to get that ball down the field and score a touchdown. They understand the importance of this election much better than the befuddled people on my side. They understand that if they can destroy or eviscerate healthcare reform, if they can change Social Security and Medicare for future generations then they can turn afterwards to making an appeal to the growing Latino population and to the younger generation around somewhat more free-market principles. After this election they’ll have to change – they’ll have to give up some of their ‘dead-endism’ over their opposition to gay marriage for example. Republican elites already understand that. But by winning they could very well buy themselves five to 10 years to make this shift, because they’ll be associated with whatever economic recovery occurs and they will have destroyed policies that could have built political identities and coalitions which they understand would have been a threat.”

For many Democrats – and progressives around the world – Obama’s victory in 2008 pulled at the heart strings. But four years on, the optimism of “yes we can” will be hard – perhaps impossible – to revive. Yet 2012 looks set to be a more important election to win – with long-lasting and fundamental implications.

Guy Lodge and Will Paxton are the joint editors of Juncture, IPPR's new journal of centre-left thinking, the first edition of which is out this week. See www.ippr.org/juncture for full details.