With President Barack Obama reelected there is
every reason to believe that he will continue the tax, regulatory, and
economic policies of his first term. That means the U.S. economy is
unlikely to improve quickly, steadily, or even at all during the next
four years. The problem is not just Obama’s own strategy on these issues
but also the lack of business confidence in his plans.
Those
doubts, along with even higher taxes, a complex and costly new health
care system, and uncertainty about what new costs Obama is going to
impose will keep investors, large corporations, and small businesses
from investing money. Thus, unemployment will remain high and recovery
slow or even non-existent.
The
strategy of higher taxes, high regulation, increasing government
intervention, and bigger government are already unattractive in Israel
and will be even more so. The Labor Party wants more effort on improving
social welfare and lowering the country's high prices yet knows the
Obama-European approach has been disastrous. .
Poor
performance by the U.S. economy will also have a negative effect on
Israel’s own growth and trade, reducing the prospects for exports to
America and by having a depressing effect on the global economy.
In
contrast, a victory for Romney would have encouraged businesspeople in
the United States to believe they woulf face policies more favorable to
their needs. With the possible repeal of Obama’s controversial health
care plan, quite costly to employers, and the likelihood of lower taxes
and reduced—or at least stable—regulation, there would have been an
incentive for them to invest and expand their businesses.
A
booming U.S. economy would benefit Israel’s economy both directly and
indirectly through its impact on the international economic situation as
well. Romney’s expertise on turning around failing businesses would
have provided the proper management. But that's not going to happen.
While
the similarities should not be exaggerated one could suggest that a
Romney presidency would have more closely paralleled Israel’s economic
strategy. After all, Israel has succeeded in recent years with an
approach favoring privatization, keeping unemployment low, and avoiding
large-scale governmental borrowing or debt. This policy, of course, also
has costs, as the social protests of last year showed.
Generally,
though no one in the United States thinks in these terms, the battle in
America is between the ideas governing Israel in two eras of its
history. Obama’s statism reflects the early policies of Israel. The
difference, of course, is that those positions were necessary for a
newly born country that had no alternatives but not for the United
States in the year 2013. Romney’s approach represented more of the
strategy of Israeli governments of all three ruling parties during the
last two decades.
At
any rate, Israel is going to have to deal with a weak American economy,
as well as a weak American foreign policy, for the next four
years.
The Hebrew version of this article was published in Kalkalist.
Professor Barry Rubin, Director, Global Research in International Affairs (GLORIA) Center http://www.gloria-center.org
The Rubin Report blog http://rubinreports.blogspot.com/
He is a featured columnist at PJM http://pajamasmedia.com/barryrubin/.
Editor, Middle East Review of International Affairs (MERIA) Journal http://www.gloria-center.org
Editor Turkish Studies,http://www.informaworld.com/smpp/title~db=all~content=t713636933%22
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