IF a week is a long time in politics, then three must be an eternity. The US presidential elections, which will be held on 6 November, are now becoming truly spell-binding, with any outcome still possible after an almost unbelievably bitter campaign. Remarkably, Mitt Romney, the Republican candidate, now leads the overall vote in all of the recent polls, after dramatically overtaking President Barack Obama after the first debate.
The ten latest polls all show Romney ahead, with Gallup on 49-47 per cent of likely voters, and Rasmussen also on 49-47 per cent. As to the key swing states that will determine the election, Rasmussen reports Romney leading by four points in Florida, by three in North Carolina and two in Virginia – but Obama is ahead by one point in Ohio. The margins are too small to be able to call the election, and the penultimate candidates’ debate – held tomorrow – or just about anything else – another major blunder, a geopolitical crisis, economic data – could easily move the polls again.
But a few trends are clear. Americans are more ideologically polarised on nearly all central issues that most other Western electorates. Romney has been almost universally under-estimated in Britain, in part because of the stupid comments he made during his visit to the UK prior to the Olympics, but also because most Brits (and even most Tories) feel closer to Obama. But policy might change dramatically in a range of areas were Romney to be elected.
The first area is central banking: Romney has pledged to fire Ben Bernanke, the Fed’s boss, though this will probably just mean that his term won’t be renewed when it expires in 2014. While any successor may of course end up maintaining existing policies, many Republicans are interested in exploring alternative monetary arrangements, such as a return to a commodity-based non-fiat currency, or at the very least new monetary rules for the Fed. All of this would undoubtedly make the White House-Fed relationship extremely tense over the next year. We may even see politicians in other countries making the removal of central bankers a key election issue.
Financial regulation is another crucial area. Romney is not keen on Dodd-Frank, the 1,600-page financial regulation plan pushed through under Obama. The bill has already triggered 8,000 pages of regulations and created a powerful new bureaucracy. If he does repeal it, or at least radically reform it, the shockwaves in the City could be huge, as the new EU regulatory apparatus is being built on the assumption that Dodd-Frank will go ahead. The regulatory gulf between London and Wall Street could suddenly become huge. The Republicans feel Dodd-Frank entrenches bailouts and the myth of too big to fail; their reforms would be more market-orientated.
Energy policy could also change under Romney, with more exploration in the US, forcing down global prices. Last but not least, Paul Ryan, Romney’s impressive vice-presidential candidate, is a supply-sider who wants to tear up the tax system. The big question is whether a Romney presidency combined with a Republican Congress would only cut tax – or whether it would also restrain spending, and begin to reform the entitlement programmes that threaten to bankrupt America.
Political betting markets still suggest Obama will snatch victory from the jaws of defeat. US politics may feel like an alien contest to UK observers – but it is a battle that investors, business executives and policy-makers in Britain must begin to follow much more closely.
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