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President Barack Obama's first international trip after the election was to Asia, not Latin America (White House Photo).
Tuesday, November 20, 2012

The Status Quo Election

Latin America and the Caribbean should expect no big changes from the US elections.


Despite deep polarization and a sour mood, the U.S. electorate voted for the status quo on November 6.  After spending some $6 billion over two years and more, the elections herald little change for Washington.  President Obama was given a second term, while the House of Representatives and Senate remained Republican and Democrat-led, respectively.  The country remains almost perfectly divided based on the popular vote for president and, given the nature of the presidential campaign this time which focused on policy generalities and character denunciations, the new government has received no particular mandate to address the huge, difficult issues that are pressing on the nation.  Still, the elections did highlight several intriguing storylines.      

The first, as it often is, is money; more specifically, the role of money in politics and whether the business community's efforts to influence the elections paid off.  Arguably, as numerous analyses suggest, they did not, at least not anywhere near a level commensurate with the amount of support.  The primary electoral prize went to the Democrats, who also solidified their hold on the Senate and reduced their deficit of seats in the House.  Despite this, the day after the elections Republicans and their allies were already suggesting that they accomplished what had all along been their primary goal: to sustain the gains of the Republican take-over of the House in 2010.  This, of course, is preposterous, and business leaders and shareholders alike will increasingly be asking whether their sizable financial investment in the 2012 electoral cycle-funneled primarily through business associations and weighted hugely toward Republicans-achieved an acceptable rate of return, and whether financial resources can't be put to better use by job creators in investing in and expanding their businesses.  Boards will have to consider whether or not it is wise or fiducially responsible, even though it's now legal, to spend shareholder money on elections this way.         

The second great reveal from the elections was the growing clout of the Hispanic community.  Long rumored as the next great electoral wave, in 2012 the Hispanic vote finally hit shore.  Demographics are a difficult thing to deny; as the fastest growing group in the United States, the Hispanic community needed only to find its electoral voice and has now become a permanent part of the electoral map.  Despite this inevitability, the Republican candidate for president ran as a modern-day King Canute, allowing Democrats the opportunity to seize the advantage broadly across the Hispanic community.  With the exception of Cuban-Americans, whose votes this year nonetheless also show a growing accommodation to Democrats, the Hispanics community overwhelmingly supported the re-election of the president, aligning Hispanics in a broad based political coalition despite the natural affinity that many Hispanics have for Republican priorities especially with regard to social values.  In a phrase, Republicans blew it, as a number of party leaders including Florida's Jeb Bush suggested they would absent a more inclusive approach. 

Yet, ironically, this could have early, salutary effects on immigration reform, a debate with direct implications for U.S. policy in the Americas.  Having promised comprehensive immigration reform early in his first term, President Obama relied on symbolic actions including appointment of the first Latina to the Supreme Court and executive action to support the "Dreamers" to keep the community close.  Now, with an even larger Hispanic role in electing him in 2012 than in 2008, the president will have to deliver.  Republicans read the same polls.  They know that they cannot afford to continue to alienate the Hispanic community in the United States.  Immigration reform could very well become a reality in 2013.

At the same time, in the immediate term the United States faces the so-called "fiscal cliff," the confluence of some $500 billion in automatic tax increases and spending cuts that will go into effect early in the new year unless evasive action is taken.  More broadly, the nation will have to find a way to address its $14 trillion (and rising) debt load, just as the baby boom generation is set to retire and begins to draw upon the public pensions they have been promised, pensions that must be paid for by younger workers who are struggling to find jobs in a stagnant, high unemployment economy and whose long-term economic prospects are worse-for the first time in history-than their parents.  The economic and moral implications of this pending inter-generational wealth transfer are stunning.  

Other significant actions including a renewal of the farm bill and new foreign policy initiatives were shelved until after the elections, neither side wanting to take politically sensitive positions on any topic until the results of the elections were known.  As a result, barely a word was spoken about these issues during the campaign, and there is therefore no mandate for specific actions to address them.  Absolutism, particularly on taxes and spending, must be replaced by compromise, although interest groups are already lining up to preserve and protect their special privileges in anticipation of pending austerity actions by the government. 


A status quo election also means that there will be little change for US policy toward Latin America and the Caribbean.  The United States will continue to invest heavily in the Middle East and Europe even as it "pivots" toward Asia. 
The President's first international trip after the election was to Asia, while senior cabinet members including the Secretaries of State and Defense preceded him there.  The Western Hemisphere will continue to suffer from a deficit of political-level attention.  The administration will react to events in the region as may be required, including potential changes in Cuba or Venezuela given the health of their respective leaders, and may find ways to address discrete issues like trade disputes with Mexico on tomatoes or cotton with Brazil.  But a broader, more proactive policy, including trade, is regrettably unlikely. 

However, that is not to say that the election results are inconsequential for the region, albeit indirectly.  Arguably the best thing that the United States can do for Latin America and the Caribbean is to strengthen and grow our own economy.  As the largest economy in the world, the economic health of the United States is critically important to the nations of the region, even those like Brazil, Chile, and Peru where China has recently overtaken the United States as the top trade partner.  A robust US economy absorbs more imports from the region including tourism services, accepts more workers who send increased remittances back to the region, and builds wealth in the United States that is used to invest abroad. 

The bottom line for Latin America and the Caribbean is this: expect no big changes from the elections November 6.  Work to promote policies that are convenient including immigration reform, while working to bring about specific changes to policies that may not be convenient.  And do everything possible to support a reboot of the U.S. economy, which, even today, remains the primary engine of hemispheric growth. 

As the ancient Chinese might wish upon their enemies, these are interesting times in the United States.  After the status quo election, they are about to become even more interesting.  Latin America and the Caribbean will be along for the ride.

Eric Farnsworth is vice president of the Council of the Americas and the Americas Society, heading the Washington office since 2003. He wrote this column for Latinvex.

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