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America after the vote. Taxation and representation

    • Rome
    • 14 November 2012

          The starting premise for this talk-debate was that the outcome of the recent US presidential elections confirms that social and demographic factors are instrumental in shaping the political atmosphere of the country. In particular, the Democrats were able to tap into support from segments of the electorate that are more dynamic in both an ethno-cultural and generational sense, owing to their deftness in exploiting new communications technologies. At the same time, the Republicans at least succeeded in putting up a competitive presidential campaign, though in the final analysis they unquestionably had difficulties adapting to the country’s overall social evolution. Seen as somewhat surprising was the Democrats’ ability to compensate for the apparent advantage enjoyed by their opponents in terms of funding for this very expensive campaign. For the Republican Party, on the other hand, it was observed that the result has immediately ushered in a difficult period of soul-searching and analysis of the factors (especially those in the medium to long term) that have determined the outcome of the last two presidential elections.

          The second Obama administration still faces a problematic scenario, both as regards the state of the American economy (starting with the issue of public debt), as well as the return of a split majority in Congress (Republican in the House and Democratic – albeit narrow – in the Senate). At the top of the list of issues to be addressed is the so-called “fiscal cliff”, which requires a delicate compromise to be reached between the Administration and Congress by January 2013. According to some observers, this represents such a decisive step for the future of the country for it to be considered imperative that all parties fall into line on the issue, willingly or unwillingly. Others, however, maintain that even if an agreement is reached, it will be incomplete, temporary, and in any case insufficient to resolve the underlying problems of the relationship between federal spending, the taxation system (including the need for some degree of income redistribution), and demographic trends. It was felt that certain well-known structural imbalances in the US economy can be expected to persist regardless of immediate measures that will be taken to address the fiscal emergency and which will therefore put their stamp on Barack Obama’s second term.

          The United States will at any rate play a crucial role in shaping the international economic order, not just through steps taken by the Administration and Congress (primarily to manage debt), but also through the actions of the Federal Reserve and the country’s overall business climate. It was further suggested that relations with Europe would be marked by ongoing reciprocal concerns on the economic front. This was seen as particularly applying to the monetary and financial spheres, but also to trade, in view of the possible creation of a regulatory framework and agreements to facilitate already intensive levels of exchange even further, and perhaps enabling a greater integration of other regions of the world in a dynamic of mutual growth.

          Turning to foreign policy and security matters, it was acknowledged that the cases of Syria and Iran represent definite priorities in the Middle East, whilst uncertainties regarding how balances will unfold in the Asia-Pacific region (where Obama has already partially shifted the American strategic focus with his so-called “pivot to Asia” approach). The relationship with China – even after the top leadership handover underway in Beijing – would in any case seem destined to continue along the lines of conditional cooperation and controlled competition, based on a mutual recognition of the high degree of economic interdependence.

          It was observed, lastly, that Europe needs to be able to present a more coherent and united front in a number of decision-making forums (including on matters of security and defense), at the risk of otherwise losing further negotiating power. This is the case notwithstanding the continuance of close and in some respects “special” relations with the United States. Indeed, as regards the latter, a progressive adaptation of traditional transatlantic links could lead to more inclusive arrangements, such as a possible “pan-Atlantic” area that extends to Latin American countries, thus facilitating integration at various levels with one of the regions of the world exhibiting high growth rates and potential.

          • David Thorne and Giulio Tremonti
          • Giulio Tremonti and Marta Dassù
          • America after the vote. Taxation and representation, Rome, November 14, 2012
          • Monica Maggioni and David Thorne
          • Marco Fortis and Federico Romero