The past three debates have been dominated by the present state of the economy and strategies for its recovery. Yet, foreign policy rivals domestic policy in importance and the current economic situation is vitally linked to the global situation. It is of critical importance that the public carefully scrutinizes both candidates’ policies so as not to elect a president who will further worsen the global crisis.
Global economic concerns are heightening and have been expressed by the recent IMF warning that global growth projections have fallen 0.3% for 2013. The fiscal crises in Europe and the economic slowdown in East Asia have put increasing pressure on American companies as earnings continue to miss analysts’ expectations, reflected by the Dow Jones Industrial Average that shed just over 200 points on Friday. The darkening global outlook will have to be addressed by each candidate during tonight’s debate in order to win over those voters worried about their country’s prospects in a time of growing global uncertainty.
Despite the current outlook, the IMF is echoing Keynesian economists such as Paul Krugman in confirming that, “global efforts to slash deficits and debt may have hurt growth because they occurred too quickly and too widely.” In effect, the report criticizes the rush to austerity and its imposition on struggling countries such as Greece and Spain. Moreover, the report concludes that the deterioration of domestic conditions of these countries is contributing to a struggling global recovery. The problems are not restricted to Europe, as the report shows that China’s growth has fallen to 7.8% to 10% for a lack of stimulus spending. The obvious alternative then is greater fiscal stimulus, followed by reduction in budget deficits after spending has restored sustainable growth.
With this in mind it is important to critically assess the platforms of Barack Obama and Mitt Romney, whose economic policies reflect the global divide between fiscal stimulus and austerity. Obama has given commitments for more public investment during the debates, clarifying his strategy for economic recovery over the next four years through greater intervention. Romney has expressed his opposition to fiscal stimulus by reiterating his faith in free markets and the their ability to self-correct. However, America’s largest manufacturers remain skeptical of this position. While sharing the concerns over a global downturn, manufacturers are now worried about the pending ‘fiscal cliff’ or “the possibility of steep tax rises and spending cuts taking effect in the U.S. at the end of the year.” So much for free markets.
It is clear then, that a Romney presidency would seriously imperil the global economy. The next question is if Obama recognizes the necessary policies for fighting the global downturn as well as America’s role in implementing them. The public should watch closely and evaluate whether Obama is serious about his commitment to a global recovery and be careful to avoid getting caught in the rhetoric of Romney’s attacks.
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