A Bahamian Reflection on the US Mid-term Elections

by Sir Arthur Foulkes

The mid-term elections in the United States did not go unnoticed in The Bahamas despite the frenetic activity on the local political stage. Some Bahamian political aficionados stayed up late into the night to get the results and from all accounts there were more than a few election night parties.

As it turned out, the polls produced dramatic results with the Democratic Party taking control of the Senate and the House of Representatives and thus changing the direction of American politics at a critical point.

The Republican administration of President George W. Bush suffered a serious setback and Democrats are already salivating at the prospect of taking the White House in 2008. One of the leading contenders to carry the Democratic Party’s standard in that contest is African-American Senator Barak Obama of Illinois who has roots in Kenya.

Other black Americans like Jesse Jackson and Al Sharpton have in the past thrown their hats into the presidential ring but nobody thought they had a chance of winning a nomination, much less the presidency.

Mr. Obama gained national prominence at the Democratic Party’s convention in 2003 and is regarded by many as a credible candidate for the nomination. He is the first black American since Senator Edward Brooke of Massachusetts to be considered a viable black presidential candidate.

Senator Brooke in 1966 became the first black American to be elected to the Senate by popular vote and he visited The Bahamas several times during his tenure. Unfortunately, he ran into ethical problems and in 1979 lost his seat and any hope of becoming president.

Deval Patrick became the first African-American to be elected Governor as the voters of Massachusetts sent him to their State House. Another African-American, Harold Ford, seemed to have a good chance of being elected Senator in Tennessee but was badly hurt by negative television advertising with strong racial and sexual overtones. Black Republican Michael Steele came close in the Maryland senatorial race.

American women also did well in the polls as their numbers increased in both the Senate and the House. Senator Hilary Clinton won a lop-sided victory in New York State and strengthened her prospects as a possible Democratic candidate for the presidency in 2008. And Democrat Nancy Pelosi of California became the first woman to be Speaker of the House.

Perhaps the most significant result of the election was that it seemed to break the back of the neoconservatives who had so profoundly influenced the Mr. Bush’s foreign policy for the last six years.

So an extensive realignment is taking place in the Republican Party with moderates like Senator John McCain as a major beneficiary. It seems Senator McCain stands a good chance of getting the Republican nomination for the presidential race in 2008.

It was the right wing excesses of the Bush administration that brought disaster to the Republicans. Their chief campaign strategist Karl Rove had forged a powerful alliance based primarily on conservative cultural and religious fundamentalist issues.

The administration cut taxes but has been accused of abandoning conservative principles by running up huge budget deficits and a skyrocketing national debt.

Democrats, moderate Republicans and independents were also deeply concerned about tax breaks for the rich, corporate influence in the political process and what some perceived to be a squeeze on middle class Americans.

The issue which played the most decisive role in the election was undoubtedly the Iraq war which has drained off hundreds of billions of dollars, further destabilized the Middle East, cost the lives of tens of thousands of Iraqis and nearly three thousand American service men and women, and maimed thousands more.

US unilateralism and the invasion of Iraq was the defining policy of the ideological neocon cabal, led by people like Richard Perle and Paul Wolfowitz, but it caused much distress and alienation among the nations of the world, including traditional allies of the US.

Despite predictions of a quick victory and a bright democratic future for Iraq, the war has dragged on with no end in sight and American and Iraqi casualties continue to mount. So the American people apparently decided they have had enough of these ideologues.

The neocons themselves are abandoning the White House. Some of them are admitting that they were wrong to promote the invasion of Iraq and others are trying to put the blame on the incompetence of the administration.

David Rose interviewed some of the neocons for the January issue of Vanity Fair and has posted some of their comments online. Mr. Rose recalls an interview with Mr. Perle in 2003 when he declared, “Iraq is a very good candidate for democratic reform.”

Now, Mr. Rose quotes Mr. Perle as saying that total defeat – an American withdrawal that leaves Iraq as an anarchic failed state – is not inevitable but becoming more likely. “And then,” says Mr. Perle, “you’ll get all the mayhem that the world is capable of creating.”

Like Robert McNamara and others in the case of Vietnam, Mr. Perle has come to the belated conclusion that those who opposed the war were right.

If he were asked whether the US should go into Iraq knowing what they know today, he now thinks he would have said:

“No, let’s consider other strategies for dealing with the thing that concerns us most, which is Saddam supplying weapons of mass destruction to terrorists. … Could we have managed that threat by means other than a direct military intervention? Well, maybe we could have.”

Such is the mind of the utterly convinced ideologues whose arrogance and folly has caused so much bloodshed, waste of treasure and world-wide alienation for America. Now others will have to clean up their mess.

The most promising comment from one of the neocons comes from Kenneth Adelman who tells Mr. Rose that neoconservatism itself is dead, at least for a generation. Much of the world will hope much longer than that, if not forever.

Bahamian politicians, perhaps reflecting accurately the thinking of most Bahamians, are ambivalent about the outcome of the US elections. They prefer the progressive policies of the Democrats and their generally multilateral approach to international affairs.

But they are aware that it was under a Democratic White House that the OECD turned the screws on our financial services industry and that Republican policies in this area are more to our benefit.

But there is another aspect of this political turnaround that we should be aware of. The Democrats are not likely to be rushing ahead with the FTAA or separate trade agreements with countries in the region. That gives The Bahamas some much-needed breathing space before having to consider dismantling our existing tax system to accommodate so-called free trade.

In his column in this newspaper yesterday, Sir Ronald Sanders reminded us of the experience of Mexico under NAFTA:

“Because Mexico had to drop its tariffs on goods imported from the US, the government’s tax revenue declined adversely affecting its public expenditure programme on education, housing and other social welfare programmes.”

“In the case of Antigua and Barbuda and The Bahamas whose economies are almost entirely reliant on services, particularly tourism and financial services,” says Sir Ronald, “they would hardly benefit from duty free entry to the US market for goods. Conversely, their governments would suffer a significant loss of revenue from lowering tariffs on imports from the US.”

The only way to avoid that loss of revenue would be to introduce other direct forms of taxation such as value added and even income tax. Clearly, we are not yet ready for a change like that and whenever we do negotiate trade agreements in the future we should try to retain control over our own methods of taxation.

Comments

[EB Christen]

Great article. One comment: You refer to government's retention of tax revenue in lieu of existing tax structures, but you make no mention of how lowering import duties may actually boost overall business in the country and thus lead to 'volume' driven increases in tax revenue. FTAA and changing the tax structure isn't the 'golden' solution, but smaller practically focused steps can achieve a great deal more. Revising and reforming to help Bahamian businesses should be a priority of government. It will enable greater entrepreneurism in Nassau and in the family islands. Import duties make the 'entrance bar' to starting a business in the Bahamas prohibitively high. Even if you can arrange a loan and credit from a supplier, you still need to pay the government up front to get your goods off the dock - high import duties mean that start ups are few and far between because the risk in cash up front is tremendous.

The term 'buy Bahamian' in a globalised world should mean, don't go to Miami and buy from US companies, stay in Nassau and buy from companies that are importing locally and thus employing Bahamians in the labour market. The fact is, we manufacture very little and with global trends, it doesn't look like we are going to be manufacturing much more any time soon. This myth of 'protection' is a massive chain dragging the neck of local businesses. The key word in this equation is competitiveness. Now that we all understand we are selling products made in South Asia - whether we are in the Bahamas or in the United States, the country needs to wake up to the reality that 'protectionism' is actually slowing the growth potential of Bahamian business. We compete directly with Miami and the internet now and our government is not seeing the BIG picture at all. We need a revolution in economic thinking and taxation - instead we get burdensome health care 'reform'. Government needs to start giving more money back to Bahamians and stop finding ingenius ways to increase the treasury - and thus, the possibility of fat cat spending. One big way is to consider ways that government can make the cost of DOING business in the Bahamas lower. Embrace the market and THINK proactive- don't react - that should be the mantra moving ahead. We are small and we should be dynamic, but our policies resemble long extinct dinosaurs caught in a time bubble.