Obama's disunited states

It would be a mistake to regard the result as a sweeping endorsement of the Obama presidency.

So what was all that fuss about? Voters and pundits wanting a good night's sleep should have double-checked the final opinion polls and the exits and gone to bed safe in the knowledge that Barack Obama would be re-elected by a surprisingly convincing margin.

That was one of the stories of a great night for the pollsters as well as for Democrats and liberal America. By extension, the President's decisive defeat of Mitt Romney was a stunning reverse to Republicans who had insisted that the polls underplayed their score. The GOP had confidently expected to at least take Florida and Virginia and to run Obama to the wire in Ohio. It didn't happen. The President swept the board of the key swing states. In the event, of the states that made up his total of 365 electoral college votes in 2008, Obama ceded only two - Indiana and North Carolina to Romney - romping home with narrow but clear victories in, amongst others, Virginia, Colorado and the ultimate bellwether states, Ohio. While Florida will be recounted after a mere 46,000 votes separated the two main candidates, Obama still holds the load and will probably claim the state.

It is also a personal triumph for Obama and for liberal America. The Obama-care health reforms are a political revolution that few thought a Democratic President could get through Congress against well-funded opposition determined. The rights of women, gay Americans and minorities have also been protected. The two Republican Senatorial candidates who became embroiled in scandal after making incendiary remarks opposing the termination of pregnancies resulting from rape were heavily defeated.

At the weekend, Victoria Yeroian, President of the Young Democrats at Virginia Commonwealth university, passionately described the importance of the Affordable Care Act and legislation on gender pay discrimination. By contrast, one Republican canvasser in St Petersburg told me on Monday that "Obama care forcing everybody to be equal is just wrong", arguing instead that she had been forced to sell her house to pay for her husband's healthcare and that others should do the same. It is huge breakthrough that healthcare in America will no longer be based on the ability to pay and in time opponents, as well as supporters of Obama-care, will recognise its value and justness

But it would be a mistake to regard this as a sweeping endorsement of the Obama presidency. It is not just that the two candidates were separated by a fraction over one per cent in the popular vote but the fact that the results reflect an America that is deeply divided politically, socially and economically. Obama's winning coalition was based on reaching out to latino voters. The President picked up 70 per cent of Latino voters, over 90 per cent of African-Americans, as well as a majority of women and university educated voters. However, most white Americans voted for Romney with a large majority of male voters backing the Republican.

In fact, after an election process in which the two camps have spent a combined $6bn including $700m on television adverts in the swing states alone, the reality is that little has changed. Indiana and North Carolina were the only two states to change hands compared to 2008. Meanwhile, the Democrats increased their majority in the Senate by picking up two seats but failed to make any inroads into the Republicans' 25 seat majority in the House of Representatives.

With the Republican hard-right indicating that they will continue to oppose anything and everything that the President touches the political deadlock that has paralysed Capitol Hill for over two years will not be broken if Obama does not reach out to the remaining moderate Republicans. If he can do this, the Democrats will reap the rewards. For all the animosity between Democrats and Republicans, most voters want a bipartisan approach that can break the legislative log-jam in Washington.

Without a radical change of mindset and culture, it is difficult to see how a Republican candidate will be able to secure the presidency. The Hispanic community, in particular, is increasing rapidly, now accounting for over 10 per cent of the population. On the basis of the current demographic trends, America will cease to be a majority white country between 2040 and 2050.

The division between white and black and brown America also created an unedifying spectacle in a number of counties in the likes of Florida, Ohio and Virginia, with a string of accusations and lawsuits against state Republicans over allegations that voters in predominantly African-American and hispanic communities were being blocked or delayed at polling stations. At precinct 135 on the outskirts of St Petersburg, Sharon Hodgson, Vice-Chair of Pinellas Democrats, was in no doubt that the tactics were a cynical attempt by state Republicans to stop black and hispanic people from voting. The undoubted attempts by Republicans to suppress voting were and are a shameful stain on American democracy.

After the polls closed, I spent about an hour at the post-election party of the St Petersburg Republican party. The several hundred campaigners and local candidates were polite, committed, and almost exclusively white and middle aged. Aside from two waiters there was only one black man in the room, while a handful of unhappy looking children behaving themselves in their Sunday best brought down the average age into the 50s. In a country of minorities, the GOP can simply no longer afford to be a white-person's party. The Republicans remind me of the Tory blue rinse brigade - their base support is simply too old and too white to win.

But, for the moment, who cares about the GOP's doomsday scenario and the tightness of the popular vote? Wednesday is a great day to be a liberal in America.

Ben Fox is a political reporter for EU Observer

Barack Obama, First Lady Michelle Obama and their daughters Mali and Shasa arrive to board Marine One in Chicago. Photograph: Getty Images.
Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR