October Surprise Arrives With Less Than a Week to Go

With the two candidates still locked in a dead heat as Hurricane Sandy enters stage left, anything could happen.
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In less than a week, Americans will go to the polls to vote for their next president. At stake: two starkly different visions of not only America, but the entire world. As the U.S. is the world's largest economy, the decisions taken by its next leader will affect us all.

According to a recent BBC World Service poll, 20 out of 21 nations surveyed would prefer President Barack Obama to win over his Republican challenger Mitt Romney.

Most elections get billed as the most important in a generation. But, with America teetering on a fiscal cliff in an era of climate change as the threat of another global recession still looms, this one really is.

Four years after the worst financial crisis since the Great Depression, the global economy is still on the ropes. And, according to Olivier Blanchard, the head economist at the IMF, the uncertainty surrounding America's fiscal future is part of the problem.

The U.S. fiscal cliff refers to a toxic combination of higher taxes and lower government spending which is scheduled to come into effect at the beginning of next year. Although reining in America's ballooning budget deficit is necessary, too sharp a cut while the economy is still weak "would be a serious mistake" says Martin Feldstein, professor of economics at Harvard University.

The economy has thus take centre stage in this election. And, the Republican challenger Mitt Romney has taken every opportunity to topple Barack Obama on this front: "This president can not tell you that you're better than you were four years ago." It's the same line Ronald Reagan used to rise into power in 1980.

But, last week's better than expected economic numbers threw cold water on Romney's central line of attack. The U.S. economy grew by 2 percent in the last quarter, marking 13 consecutive months of growth. And, although the recovery has been slow, America "is actually one of the brighter spots in the global economy, and the most likely outlook is for stronger growth ahead" says Robin Harding from the Financial Times.

In the words of Colin Powell, the former U.S. Secretary of State: "Generally we've come out of the dive and we're starting to gain altitude." Given that President Obama inherited the worst economy since the 1930s, he has done a fine job in turning it around. And, he has managed to achieve in the face of fierce opposition from the Republicans who have tried to block him every step of the way.

Moreover, according to HSBC, "recent developments point to a turnaround in the housing market." And, although the labour market has not completely recovered yet, "the job openings rate -- which measures the ratio of open jobs to total employment -- is back to normal pre-recession levels" says Robin Harding.

Cobbling all of this all together, it looks like the U.S. is finally on the mend. And, with all of these positive gains feeding into each other, it will create more jobs and more growth going forward.

Even with some fiscal tightening next year, the U.S. economy is still expected to grow. But, it will rely on robust support from the nation's central bank in terms of low interest rates.

According to Alan Beattie from the Financial Times: "If a Romney administration appointed a Federal Reserve chairman with less willingness to experiment with loose monetary policy than Ben Bernanke, the effect on American and thus global economic growth could be substantial."

Moreover, according to Moody's Analytics, Romney's economic plan will only drive the U.S. into another recession. The former governor of Masschussets has pledged to reduce the deficit, yet he has promised further tax cuts together with higher military spending. According to the Tax Policy Center, such a plan will only add trillions to the deficit.

But, with the two candidates still locked in a dead heat as Hurricane Sandy enters stage left, anything could happen. Both contenders have already had to cancel rallies in the coveted battleground states where just a handful of ballots could determine the fate of this race. The presidency in 2000 was shaped by a mere 560 votes in Florida.

At this stage, it is impossible to determine whether Sandy will have a decisive impact on the outcome this election. But, Romney may now be regretting his choice of words in September when he mocked the president's environmental concerns: "I'm not in this race to slow the rise of the oceans or to heal the planet." Sandy has not only raised sea levels across the north eastern seaboard, it has unleashed damage which is expected to cost over $20 billion.

If this super storm is a product of warmer weather caused by manmade climate change, Sandy may play into the president's hand. Obama is far more committed to renewable energy than his opponent whose position on the matter can be summed by the following: "You can't drive a car with a windmill on it". In fact, green energy has already doubled under Obama's stewardship.

With just a few days to go, each and every vote will count as much as the next one, but only if it is cast. Hurricane Sandy may stop some voters from getting out to the polls. And, as many states use electronic ballots, they cannot function without power which may still be out next Tuesday. Meanwhile, early voting has shut down in some areas owing to the storm.

With several cases of voter fraud and intimidation already reported, whatever happens on November 6, this may not just be the closest, but also the most contested election in U.S. history. The polls are too close to call, and not necessarily an accurate reflection of the state of play. It will most certainly be a photo finish. And, your one vote could have the power to shape the fate of this election. In the president's own words:

"When you pick up that ballot to vote -- you will face the clearest choice of any time in a generation. And, only you have the power to move us forward"

CORRECTION: A previous version of this post stated that Ronald Reagan was elected in 1988.

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