Presidential Election Week 2008 Weblog – Day 2

Day 2, Monday November 3, 2008: Looking for the American Dream

The delegation’s first meeting today was with the Albright Group, founded in 2001 by former Secretary of State Madeleine Albright. The Albright Group is an investment management firm which prides itself for being able to mix financial expertise with political insight. Despite being bipartisan, having been founded by Madeleine Albright has of course had its effect on the political preferences of its management. Some of the representatives we met with today are/were even advisors to Hillary Clinton and Barack Obama. They start by warning the group that McCain might still win; a Democratic victory is most definitely ‘not in the bag’. But it is looking good. We fantasized with the Albright representatives about what an Obama administration might look like, what would his key policies be? The financial and fiscal crisis will have first priority of course. With a more Democratic Congress (which is expected), he will have room to let the deficit grow. He has, after all, made expensive promises during the campaign: on healthcare, to withdraw from Iraq, and to execute the war in Afghanistan in a more efficient way. Furthermore, in his foreign policy he is expected to focus more on development, to strengthen certain states. Climate change and energy dependence will also play prominent roles in his administration; you will see an end to all torture; he will close Guantanamo Bay (which will be very difficult to do); he will focus more on the peace process in the Middle East; and he will be looking to collaborate more with other countries and ‘reach out to the world’. The group asks whether the financial crises would hinder Obama’s foreign policy. The Albright representatives do not believe so. The team around Obama realizes that they cannot just focus on America. The first Clinton Administration made the mistake of focusing too much on the economy and was criticized heavily for its failure e.g. in Somalia. Americans felt they no longer were a leader in the world, which has to be avoided now. Furthermore, they predict that the rules of politics will change following these elections. Congress will have an enormous amount of new, politically inexperienced members. The new Democratic members will not be anything like the current Democratic Congressmen.

We leave the Albright Group with the reminder that if Obama is elected President, we are witness to a momentous occasion out of which hope will emerge. Hope also for the African American community the excitement in which community is extremely high at the moment. The elections will be momentous for another reason also: the turnout is expected to be the largest in history.

There is a Chinese saying that goes: ‘may you live in interesting times’. Rebecca Rimel, President of the Pew Charitable Trust welcomes us by saying that we have indeed arrived in interesting times. But these are also important times in which change is needed. Pew is a nonpartisan non-profit research center that focuses on a wide variety of issues, issues as wide apart as foster care and the environment. They collect the facts first, then advocate for change. One of their projects focuses on economic mobility, also called ‘the American Dream Project’. This project is a collaborative effort of Pew with think-tanks such as The American Enterprise Institute, The Brookings Institution, The Heritage Foundation and The Urban Institute. One of the elements of this economic mobility is income inequality. The political right believes that these inequalities are inherent to a growing economy, and that they are okay as long as ‘everybody has a shot’. However, Pew research has shown that the American Dream is not as attainable as it once was. Something many Americans already suspected: only 50% of all Americans believe that their children will do better than they. A staggering 70% believes that the ‘rich get richer and the poor get poorer’. Perceptions are currently very negative due to economic anxiety which in turn is caused by things such as people losing jobs, the increase in household costs, etc. Compared to other countries, the U.S. has much less relative mobility, which means that children born in poor families find it very hard to reach a higher income scale, the so-called ‘stickiness’ at the bottom. This is especially so for women and African American families, who are even downwardly mobile. Further research has shown that 21% of children born in poor families are able to ‘reach the top’ provided to obtain a college degree, which is good news. However, 23% of children born in rich families are able to stay ‘at the top’ without that college degree. Inequality clearly exists, where a child is born, does dictate to a large extent where that child will end up. It is not so that the government does not spend any money on mobility; in fact $745 billion was spent on various mobility enhancement projects. However, most of it ends up with middle and upper income families and most is aimed at homeownership. This research has fortunately received a lot of interest but Pew has been careful in presenting this research ‘as a need to restore faith in the promise of the American Dream’, rather than as a poverty problem. Poverty is not seen as a problem, as long as everyone has the means to rise up from it. After all, 39% of all Americans believe they will one day end up or remain in the top 1% when it comes to household income. There will have to be some major changes for that to happen though.

Later in the afternoon we meet with Federal Reserve Vice Chairman Donald Kohn. After briefly informing us of the place of the Federal Reserve in the political structure in the U.S. he goes on to talk about the current financial crises and admits that we would not be in this situation if there weren’t some flaws in the way the market is regulated. The whole regulatory system is going to be called into question and to some extent already is. We are faced with a very soft economy and looking towards a period of mild economic decline at best with rising unemployment rates. To boost the economy the Federal Reserve has recently lowered its interest rate to 1%. However, the effect of the Federal Reserve rate cut doesn’t help as much as it used to, banks are just not lowering their rates as much. The cut is helpful nonetheless; if the rate had not been lowered banks would have increased their rates which would have undermined confidence. As confidence in the economy increases the rate cut will become more important. He does already see some hopeful signs though and is mildly optimistic: the stock markets seem to be a bit more stable; developments in the loans and credit market seem to be getting better; and, inflation seems to be going down. When it comes to the election, Vice Chairman Kohn has confidence in both campaigns; both campaigns have good advisors and have worked hard with the current administration. The transition operation that has already started is the biggest ever! We leave ‘the Fed’ slightly more optimistic than when we entered it and start preparing mentally for the big day ahead. Will we know by the end of Election Day who the next President will be? Time will tell…
(To read previous entries, please go to the News page)
Rick Bezemer
Program Manager
Atlantic & Pacific Exchange Program