Obama riding on economic cycle

http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=333893

      By JAMAL KANJ*,  Posted on » Thursday, July 12, 2012

I'M writing from Oceanside California, where budget constraints forced the city to cancel July 4 fireworks for the third year in a row.

This is just one example of many US cities cutting back on essential and non-essential programmes during hard economic downturns.

The economy is the lead issue in the upcoming election between presumptive Republican candidate Mitt Romney and unopposed Democratic Party nominee Barack Obama.

Despite the long and rigorous primary process, the voters' choice is limited to two candidates who have surrendered their worth to large campaign contributors.

On election day, a sizeable number of Americans do not vote for the candidate they agree with, but against the contestant they do not like.

Many end up casting a protest vote, like this writer, for a third party candidate with no credible chance of winning.

According to recent polling and unless Obama commits a serious blunder, he is assured of another four years in the White House.

A Bloomberg national poll between June 15 and 18 showed Obama 13 per cent ahead of Romney.

In the same poll, one likely voter declared his support for Obama despite saying: "He hasn't fulfilled a lot of his campaign promises, but I would vote for him anyway because Romney would be extremely destructive for this country."

To the chagrin of Republican Party pundits, Obama has taken great strides to put the economic wheel back on track after it was derailed for eight years under George W Bush.

In a predictable cyclical trend, the economy is on the up, albeit slowly, following years of decline under a Republican administration.

After losing more than 500,000 jobs each month towards the end of the Bush and start of the Obama administrations, the economy is on the rebound - gaining on average more than 100,000 jobs a month, combined with a declining unemployment - which has dropped from more than 10pc to just over 8pc.

Every 10 years or so, the average life of an economic cycle, free market economies experience two extremes: boom and bust.

At least since the Great Depression, the US and the world economies have experienced identical lows and highs.

During economic expansions, kowtowing to their ideological base, the political right targets surplus funds - fuelling growth by reducing taxes on the rich and large corporations.

At the same time, the Federal Reserve moves to tighten money policies to tame inflationary tendencies.

In layman's terms, the boom turns into bust when the surplus fund is replaced with deficit, putting the national budget into the red.

The government then reduces public spending and services, businesses move into employment hibernation mood, circumspect consumers spend less and ultimately there is economic contraction.

In response, the government transfers the tax burden to the middle-class by raising funds under euphemistic nomenclatures called "fees", while curtailing spending on social programmes and education to bring the budget back into the black.

I can't figure out if the much anticipated boom and bust cycle is purely an inherent weakness or plain ingenuity in the capitalist system.

However, repeating the same alternations fits Albert Einstein's definition of insanity: "Doing the same thing over and over again and expecting different results."

*Jamal Kanj writes frequently on Arab World issues and is the author of Children of Catastrophe, Journey from a Palestinian Refugee Camp to America. He can be reached at [email protected].