Obama breaks with Reagan legacy - con-game persuading millions of Americans voting against their own economic interests could be over - by Eric Reguly

When Barack Obama was declared the victor in the U.S. presidential race, the immediate reaction of some was, so what has changed?

But when the voter breakdown trickled out, we realized that the Democratic incumbent’s rather thorough trouncing of Republican rival Mitt Romney was anything but trivial. Instead, it looks like a pivotal moment in U.S. electioneering. The Great Republican con game, which had persuaded millions of Americans to vote against their economic interests since the start of the Reagan era, in 1980, is finally breaking down.

It looks like Mr. Obama’s efforts to label Mr. Romney a bloodless plutocrat scored some points. This is bad news for the country’s richest 1 per cent, who had benefited enormously from the great warping of the U.S. economy, in which financial capitalism – speculation, to use another term – took precedence over efficient markets dominated by manufacturing. It saw the rigging of tax codes to benefit the rich more than the poor. It saw sweeping deregulation that gave birth to creative financial products, such as collateralized debt obligations, that mere mortals (Warren Buffett among them) could not understand and ultimately turned toxic and biblically destructive.

It now appears that the Democrats can rely on a broad, and broadening, coalition of voters who are not enthralled with the social and economic agenda of the Republicans. Mr. Romney wanted to drop taxes for “job creators.” Mr. Obama campaigned for higher taxes on the wealthy and vowed to veto any fiscal proposal that did not allow the top tax rate for those earning more than $250,000 (U.S.) to rise to 39.6 per cent from 35 per cent.

Republicans have spent decades telling Americans that the country can un-tax its way to endless prosperity. It didn’t quite work that way. The rich got very rich and the income gap between the wealthy and everyone else widened to obscene proportions. Infrastructure and schools fell apart. Budget deficits exploded in the Bush years and kept rising in the first Obama term, when spending to rescue the economy, financial institutions and the car makers became the necessary economic strategy.

It wasn’t as if the super-rich and the Wall Street bankers suffered in Mr. Obama’s first term, thanks in part to the rescues financed by the Troubled Asset Relief Program launched in the dying days of the Bush presidency. But they could suffer in Mr. Obama’s second term as his administration tries to re-balance the economy away from the Wall Street speculation-and-bubble machine.

If Mr. Obama had won a razor-thin victory, you could draw different conclusions, that Mr. Romney’s loss was the result of a few slip-ups or bad luck as opposed to something fundamental. But Mr. Obama won a convincing victory. The 1-per-centers and the social conservatives and the angry white guys who are still kicking have every reason to worry.

Note EU-Digest: Europe should also take good note of this new US political  environment and stop protecting the financial interests of those which need to be put under far more scrutiny than has been the case in the past. 


Read more: Obama win marks sharp break from Reagan legacy - The Globe and Mail