David Frum on the Ominous Surprises Coming Toward Obama

If the U.S. falls behind China on Barack Obama’s watch, it will rock his presidency. Jewel Samad / AFP-Getty Images

This is a good moment to be a Democrat. The economy shows signs of accelerating. The president visibly holds the upper hand in the “fiscal cliff” negotiations. Republicans look in disarray.

But the moment won’t last. A number of nasty surprises could be waiting just around the corner, ready to turn President Obama’s world upside down. Here are three of them.

Swan Dive Off the Fiscal Cliff. Optimism is building about some kind of resolution of the fiscal-cliff problem before the end of the year. House Speaker John Boehner and the president have been conferring. Treasury Secretary Timothy Geithner, after briefing Hill leaders on the dangers of failure, submitted a plan on Thursday involving revenue measures and Medicare cuts. Republicans predictably protested.

But it’s one thing to propose a deal, another to deliver it.

Many Republicans believe that the president is bluffing. As former Bush economic adviser (and now-influential economic blogger) Keith Hennessey argues: “The president cannot afford to veto a bill and have no compromise enacted ... 
[H]is veto would trigger a recession that 
would severely damage his agenda ...”

If congressional Republicans believe the president is bluffing, some will be tempted to call that bluff—especially politically ambitious congressional Republicans like House Budget Committee Chairman Paul Ryan. Ryan obviously wants to run for president in 2016. He must fear that any vote that can be defined as a deviation from conservative principle will be used against him in the GOP primaries.

It’s in Ryan’s interest to oppose a budget deal—and lose. The problem is that many other House Republicans share that interest. Which means they might win.

The Arab Spring Gets Wintry. If ever there were a misnamed event, the “Arab Spring” is it. Spring conjures up images of renewal, rebirth, lambs gamboling in fresh grass, young love, etc. But what we’re actually seeing in the Middle East is a seizure of power by political ­Islamists—and a new exploration of the oldest rule of Arab politics: “Things can always get worse.”

So far, the region’s disturbances have not much touched Gulf oil producers. (Although Bahrain, a non-oil-producing Gulf ally with a major U.S. naval base, had some touch-and-go moments.) What if that seeming stability comes to an end? The conditions that produced turmoil in Egypt—very large numbers of 
underemployed, unmarried young men—also prevail in Saudi Arabia. The ideologies that are driving Egypt away from the West also inspire enthusiasm in the Gulf. Except for Bill Clinton’s, every presidency since Richard Nixon’s has been convulsed by a Middle Eastern event. Will Obama’s second term confirm or defy the rule?

In purely economic terms, the Middle East may soon matter less to the United States. Canada has emerged as America’s top oil supplier. Over the course of the next decade, if natural-gas production continues to jump, this continent could achieve net energy independence.

Geopolitically, however, American allies in Europe and Japan will depend on the Middle East for a long time to come. So long as oil retains any value at all, those who take power in Middle Eastern oil-producing nations will have the resources to trouble the peace of the world.

The U.S. Falls to No. 2. If current economic trends con­tinue, China will emerge as the world’s largest economy sometime within the next decade (using the measure of purchasing power parity). It’s conceivable that China could surpass the United States as soon as Obama’s last year in office—bringing an end to almost 120 years of American world economic leadership.

It’s true that individual Americans will remain much richer, per person, than individual Chinese. It’s also true that individual Danes are richer, per person, than individual Americans. Income per person determines our lifestyle. Total national income determines national power. For the first time since America overtook Britain around 1900, the United States will drop to second place in the global power competition. If that moment of national decline occurs on Barack Obama’s watch, it will rock his presidency. If it is poised to happen soon after he leaves office, it will define the election of 2016.

Either way, the threatened transition to a Chinese-led world economy will hang over the next four years. It may be ironic that the most dangerous surprise awaiting President Obama—and the United States—grows out of economic decisions made years before he took office. But that doesn’t make it any less ominous.

David Frum is the author of the Newsweek e-book Why Romney Lost (And What the GOP Can Do About It).

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