The Financial Crisis, the Economy, the Election, and the New President

Abstract

On 4 November 2008, Democrat Barack Obama, junior US senator from Illinois and a newcomer to national politics, won a decisive victory over Republican John McCain to become 44th president of United States. Political reform and domestic politics dominated a contest that turned, ultimately, on who could best effect change. In many ways, both campaign and outcome were dramatic and historic.United States elections are unique in that exercise takes better part of two years. In 2008, Democrats were favoured to win. As early as spring of 2007, pundits were arguing that election was the Democrats' to lose. The growing unpopularity of President Bush, coupled with a strong slate of Democratic candidates, suggested a serious challenge for eventual Republican nominee. Interestingly, Hillary Clinton held a significant lead in national opinion polls throughout 2007 and into 2008. The primaries were long, hard fought, and not without controversy. For Democrats, process was long and bitter. It was not until 3 June that Obama secured enough delegates to win Democratic nomination.The 2008 election was unique in many ways. Most obviously, Obama is first African American to be elected president and Joseph Biden is first Catholic to be elected vice president. It was first time since Dwight Eisenhower's 1952 victory that neither a sitting president nor a former vice president was on ballot. It is also first time that two sitting senators ran against one another. And, to make things even more interesting, voter turnout was higher than it has been in nearly 50 years.The 2008 presidential election was extraordinary in terms of how much money was generated through private donations. The Obama campaign raised an astounding US$660 million and revolutionized electoral politics by raising bulk of this money through small-donor contributions, largely via internet. This allowed Obama to renounce public funding and avoid spending limits that come with it - first presidential candidate to do so since system was established in 1976.The 2008 presidential election was also unique for fact that, more than in any recent election, both candidates (indeed, both parties) were running on a platform of reform. Both Obama and McCain ran campaigns that explicitly rejected politics and policies of Bush administration and offered alternatives that they felt would meet needs and capture imagination of electorate. Obama managed to do just that, and, in process, he succeeded in bringing a significant number of Americans into or back into - political process.During primaries, and, indeed, well into general election, Iraq was seen to be key campaign issue. McCain focused considerable attention and energy on his support for war, on his own record of service, on differences between his policies and those of Bush administration, and on his foreign policy experience more generally. He also made much of fact that he had devoted a lifetime to public service, highlighting Obama's relative inexperience.THE FINANCIAL CRISIS, THE ECONOMY, AND THE ELECTION: WHAT HAPPENED?The turning point in 2008 election can be traced to first few weeks of September, with collapse of a number of large financial institutions, a dramatic decline in value of equities, and, soon after, a global financial crisis of historic proportions. Literally overnight, financial crisis and, more generally, deteriorating state of economy came to preoccupy voters and dominate election. Economic reform quickly became issue that can and will define Obama administration.I will not offer a critique of economic policy of Bush administration or deal with microeconomic indicators, as these issues are addressed in detail by Francis Genereux in this issue of If.11 am in full accord with his conclusions. …