Let me state at the outset that my tea leaves are no more refined than anyone else’s. However, we are in the midst of potential earth shattering events that are worthy of speculation, events that are likely to shape our national destiny for decades.
I am persuaded Mitt Romney wins the next election in large part because there isn’t a victory narrative President Obama can develop. Thirty eight consecutive months of over 8 percent unemployment is in itself a scenario for defeat, notwithstanding all of the rationalizations the president will offer.
An Israeli air armada is likely to attack Iran in the next few months (before the November election). President Netanyahu has allowed President Obama to try negotiations and sanctions, but neither has offered sufficient pressure on Iran to forego its nuclear weapons ambitions. Since an Iran with nuclear weapons represents a potential holocaust too grim to imagine, the Israeli president is left with no other option.
Despite deflationary pressures that have kept prices in check, inflation is likely to rear its ugly head next year as the Europeans proceed to monetize their debt leading to a contagion that cannot be contained on the other side of the Atlantic. Moreover, the U.S. has amassed more than $5 trillion in debt since 2009 suggesting that currency increases may soon be coruscating through the financial bloodstream.
One of the first acts of the Romney administration will be an attempt to reverse Obamacare, arguably the most unpopular piece of legislation in decades. The new president will recommend a series of competitive measures, such as the ability to buy health insurance from any venue as a replacement for the unpopular act.
In addition, advisors to President Romney will go through a careful analysis of belt tightening measures including a structural change in Social Security eligibility. To be sure, each and every one of these proposals will be criticized in New York Times’ editorials and in the columns of Paul Krugman.
The new president will call for a public debate on the nation’s debt pointing out that the U.S. cannot sustain living beyond its means. At the present rate of growth, the national debt will approach $25 trillion by 2020. To finance a debt of this magnitude requires a payment equivalent to the size of the entire defense budget in 2012.
Threats from Islamists within the United States will increase as will actual terrorist activity throughout the globe after the Israeli attack on Iran’s nuclear sites. The determination of the American people will be tested in a far more profound way than the attack on 9/11.
Perhaps the most noteworthy economic event of the forthcoming year will be the collapse of the European financial markets. With Spain unable to refinance its faltering banks, the Greeks in free-fall resisting and the French insisting on August in the Riviera, the European Union will fail and even the euro will be hard-pressed to survive. German resolve to hold the union in place cannot succeed as long as fiscal plans vary from one of the 27 states to another.
As I see it, these events will place enormous pressure on President Romney. On the one hand, the pressure to maintain global equilibrium after our troop withdrawal from Iraq and Afghanistan will be palpable; on the other hand, allocating the necessary resources for the projection of American power in a Congress suffering from war fatigue will be very difficult to achieve.
During the campaign Romney will have spoken about restoring sanity to defense procurement policies and buying the ships that can restore U.S. sea dominance. My suspicion is the Congress will be inclined to give him whatever is needed to counter terrorism and violence externally and internally after the Israeli attack on Iran and the widespread belief the U.S. was complicit, even with budgetary pressure increasing.
The history of tomorrow offers turbulent seas against rocky shoals. There isn’t an easy or even predictable way to steer the ship of state to a safe harbor. In fact, navigation in this scenario means managing the unpleasant and unpredictable and hoping for the best. That may not be reassuring, but that is one man’s view of the future.
Herbert London is president emeritus of Hudson Institute and author of the book The Transformational Decade (University Press of America).
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