In a democratic society, elections are won and lost based on several factors, but when such factors are synthesized, analyzed and then transmuted into quantitative expressions, it becomes a little bit easy to arrive at some algorithms. Nester Komolafe (Excerpt from Part 1)
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In a democratic society, elections are won and lost based on several factors, but when such factors are synthesized, analyzed and then transmuted into quantitative expressions, it becomes a little bit easy to arrive at some algorithms. Nester Komolafe (Excerpt from Part 1)
I have discussed 3 algorithms that may impact the U.S. Presidential election in part 1. The concluding part of this article will discuss the other two algorithms and then draw conclusions.
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The fourth algorithm is Economic Data. The current U.S. economy may be recovering as suggested by IMF but I can tell you that the U.S. fiscal health is in 3-D: Debt, Deficit and Debacle. The algorithms behind these “3-Ds” are strikingly troublesome and voters may not know the extent of looming economic disaster awaiting U.S. unless the next President and the next Congress get serious to avert an economic collapse. As the presidential election campaign reaches top gear, many voters are certainly carried away with the slug-fest between Obama and Romney on the campaign grounds and in the media, with little attention to the fact that America’s total national debts (public debt and Federal Reserve), which is about $16. 2 trillion as at the time of writing this article has surpassed the Gross Domestic Product (GDP) - the entire output of the U.S. economy. The U.S. GDP was $15.6 trillion in the second quarter (April-June) 2012. This means the debt-to-GDP ratio for the first time in America history has climbed over 100% mark. It is now 102%. Yes, you read it right, it is now 102%!
According to Congressional Budget Office (CBO), the budget deficits in each of the past five fiscal years is FY 2012, $1.1 trillion; FY 2011, $1.3 trillion; FY 2010 $1.3 trillion; FY 2009, $1.4 trillion; FY2008, $455 billion. From the White House’s Office of Management and Budget (OMB) projection, Table S-1, the U.S. Federal budget deficit is projected to be $901 billion in FY 2013. That's because U.S. government spending is budgeted at $3.803 trillion, while U.S. government revenue will only be $2.902 trillion. The fallout of the debts and deficits may not be felt now because the U.S. economy is globally trusted to be robust and for the fact that the U.S. dollar$ is still the world best trading currency, despite being devalued by the Federal Reserve Bank through Quantitative Easing (QE1, QE2 and QE3) in the past 3 years. Voters may be happy to see government play an ever-larger role in daily life and see no problem with the nation taking on increasing debt to meet real or perceived needs. For example, growth rates of the three big social programs (unfunded liabilities) – Social Security, Medicare and Medicaid - are projected to continue to increase rapidly unless they are reformed. If the debts keep increasing, it will reach a point where the creditors will start to demand their money back. At that time, it may be difficult for U.S. to pay the debts and pay interest on accrued national debts if there is no economic growth. Knowing the data above, what voters need to do is to elect a president they think has the best debt-cutting, pro-jobs and pro-growth strategies.
At the micro level, many Americans are currently feeling the debacle of the economy. Although, true for all administrations, the micro economic data under Obama administration is a mixed record of successes and failures. On one side, corporate profits are at an all-high as a percentage of GDP (companies have about $1.7 trillion in cash on their balance sheets), U.S. exports, mortgage rates, manufacturing index and the level of consumer debt are better today. On the flip side, gasoline prices, poverty rate, food stamp use up by 46% and family income are worse today than when the president took office. About 23 million Americans are still jobless, prices of household foods like milk, bread, sugar, are increasing. Click here to read Obama Scorecard and U.S. Treasury Report. The perspective you bring to all this data is all yours.
With all the economic data shown in this article, you can now see that this election will be critical to the future of the U.S. economy. If this current economic trend continues without a tough fix, at a time, all federal tax revenues collected by government would be spent on interests on debt, payouts to Social Security, Medicare and Medicaid, and thus nearly nothing would be left for vital national defense, education, and other federal expenses. So vote for the candidate you believe can best improve the economy not the candidate that will merely talk or give excuses about the economy, or else don't complain if things don't go the way you'd like. You may like or dislike a candidate but you may certainly not like the current U.S. 3-Ds.
Let me quickly say something about international economic data. The economic data from foreign countries will not impact the election but it will continue to impact the U.S. economy in years to come. Voters who wish to know where U.S. economy is heading if the 3-Ds continue can look at the current European economy. According to the IMF World Economic Outlook report released in October 2012, the projection for Europe is gloomy. IMF says: “The crisis in the euro area has deepened. Activity is contracting, mainly due to deep cutbacks in production in the periphery economies, because financial and fiscal conditions are very tight.” translation: despite bailouts, loans, spending cuts, austerity measures etc. They are still treating an obvious growth crisis as a liquidity problem, yet many European countries are fast running out of money, their credit ratings are already cut and are now on the course for bankruptcy. But there is no bankruptcy court to protect countries! Don’t get me wrong, I am not comparing U.S. with Europe; U.S. economy is stronger and can withstand shocks but the trends of spending money as if there is no tomorrow are just very similar. At least PIIGS was bailed out by European Union and in turn, European Union may soon need a bailout too. Who will bail out U.S. in times of collapse? Therefore, my annunciation to voters is: for God so loved America that He has revealed the downside of socialism in Europe to America, so that if America rejects it, America will not perish but have a booming economy.
Lastly, the fifth algorithm is Campaign Finance. Voters may have noticed that running a presidential campaign in the U.S. is very expensive. The candidates, national parties and super PACs spend the bulk of their campaign cash on advertising, mail, staff and fundraising. According to data collated by New York Times, Obama campaign, Democratic Party and their SuperPAC have raised a total of $934.0 million but spent $852.9 million. Mitt Romney, Republican Party and their SuperPac have raised $881.8 million but spent $752.3 million. As I noted in part 1 of this article, candidates will not campaign in a states they are certain to win or lose. Guess what, this rule does not apply when they need money! They can visit any state as many as possible as far as money comes from these states. Obama is from Illinois, he visited Chicago several times to raise money. Romney too visited Chicago to attend fundraisers – none held open campaign rally. I do not begrudge them for this strategy; I fully understand this is the way it should be, a la the Electoral College system.
Since the Supreme Court landmark ruling on Citizens United v. Federal Election Commission (2010) removed previous ban on corporations and organizations using their treasury funds for direct advocacy, both campaigns have raised a lot of money. The figures raised or spent are huge figures yet these candidates claim they are vying for office to help the middle class, really? Voters have heard much rhetoric about 1 % class (super rich), 99 % (non-rich) and 47% class (non-income tax payers). Where do you think the bulk of money raised came from? I will bet it is from the super-rich! Here are the facts. Three moneybags raise $10 million each for Romney, two raised $3.5 million each for Obama. 49% of money raised by Obama SuperPac came from those who donated at least $1 million, for Romney it is 38%. Also, 40% of money raised by Obama SuperPac came from those who donated at least $100k; it’s 48 % for Romney. How many middle class earn $100k per annum? In many of the campaign fundraisers attended by both candidates, each ticket sold was between $15k and $40k. You want me to believe that someone in the 47% class that does not pay income tax will even pay $1k to attend a fundraiser where pizza or pastas are served in order to listen to a candidate give speech? If you a voter who understands that the rich are able to afford to donate huge amount of money to help a candidate win an election, who do you think the candidate will first listen to when elected? So when a president says he is looking out for you, do you think so? Think of the algorithm of money; don’t just reduce yourself to a consumer of political speeches.
Conclusions
Democracy is a game of numbers. Many polls suggest the US. Presidential election is about economy, if voters do not really have idea about the past and current economic data, this article has at least shown voters five electoral algorithms in quantitative expressions. Voters can extrapolate facts from figures; figures from Electoral College “Ouija board”, Polls, Demography, Economic Data and Campaign Finance are the factual measures that truly make democracy a game of numbers. The perspective you bring to all this algorithms is all yours.
When dealing with a capitalist economy, two of the principles of economics are that rational people think at the margin and that people face tradeoffs. What these two principles teach is that people should make decisions by comparing costs and benefits at the margin, and face tradeoffs for efficiency (society gets the most that it can from its scare resources) and equity (benefits of those resources are distributed fairly among the members of society). Excessive taxing does not work so also runaway spending. The economic solution to the nation’s fiscal problems is simple: it is a trade-off between spend cuts and tax increases – all at the margin, for debt-cutting, pro-jobs and pro-growth recovery. The political solution is very complex because the political class would not apply sound economic solution to resolve economic problems, rather they would apply political solution to resolve economic problems and most times they run into gridlock due to ideological differences. The political class needs to work out a consensus to avert the looming fiscal cliff.
I can understand why people are so enamored with the two candidates. However, too much investment from the liberal media on Obama and religious conservatives on Romney is too fanatical. I am not sure the American media is trustworthy anymore. If a Cable or network TV anchor opens his or her mouth on the election, you will instantly know his/her candidate! This is not the time to invoke God to help any candidate win, after all, one of the political parties consciously excluded the mention of God in its platform before it latter struggled to include God. God is merciful, He already knows the winner; we are only waiting for the manifestation. Elections will always come; a win or loss does not mean the end of the world. Yes, I expect weeping and wailing and mourning and gnashing of teeth from the losing side but there should be no need for political riots – America is not a Third World country; we need to show humility at a loss and strength at a win. After all, voters need to show strength for the sake of their parties whose symbols are strong animals - elephant GOP and donkey Dems.
I know America needs a president but I don’t know if either of the candidates will actually solve the huge economic calamity of the country. After all, the incumbent president did not even operate on budget for the past 4 years and the closest period the challenger’s running mate projects for balanced budgets is in the 2030s! This is to tell you that whoever is elected will not operate on a balanced budget in the next four years – the next presidential term and beyond. If after 4 years of running deficits, the U.S. still continues to run budget deficits in the next four years, then it will be like the second stanza of the same hymn song.
Finally, having explained the five algorithms that may impact the U.S. Presidential election, voters should choose between a president they think may deliver recovery and not dependency. Either you see this presidential election as a choice between fiscal sustainability and economic collapse or about social justice and who will shoulder the economic burden; again it is your call. But if this election is truly about economy as elucidated by economists, political watchers and business leaders, then it suffices to say that America needs to elect a president that will communicate sustainable economic recovery to the citizens in simple arithmetic, and not in English.
Nester Komolafe monitors the U.S. Presidential elections from Chicago, IL.
The views expressed in this article are the author’s and do not necessarily reflect the editorial policy of SaharaReporters
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