Medicare expenditure is forecast to grow quickly, to the extent that by the year 2024 the program will no longer be able to cover medical costs in full. This is clearly a cause for financial concern. Obama’s proposed reform is to reduce expenditure by cutting direct payments to doctors and hospitals, rather than rethink and adjust welfare provision. This situation has provoked a strong backlash, and a form of class warfare has broken out between opposite sides.
Obama won the presidential election, but there was only a 2.6 percentage point gap between the two candidates in the total popular vote. The Republican Party still has a majority of seats in the House of Representatives, showing the divided state of public opinion in the US.
The toughest challenge facing Obama in his second term is the question of whether his government can salvage the US economy. The annual US government deficit has exceeded US$1 trillion for the last four years, and the total national debt surpassed the US$16 trillion benchmark not long before the election.
Following on from the shock that financial services company Standard & Poor’s caused last year when it cut the US’ sovereign credit rating from “AAA” to “AA+,” Moody’s Investors Service is now warning that it will also downgrade the nation’s rating if the economic situation does not improve. If that happens, it will naturally have a big impact on investor confidence around the world, and that will not be a good thing for the US economy.
The problem is a thorny one. Former US Federal Reserve chairman Alan Greenspan says that reforms cannot be implemented without pain and that it is essential to raise taxes and cut expenditure. However, doing those things will not be good for economic growth.
There is still no consensus between the Democrats and Republicans on how to resolve the debt crisis. It is certainly going to be a big headache for Obama. Whatever happens in the US will inevitably influence the whole world, with Taiwan being no exception.
It is worth noting that US voters want Obama to be tough in pushing through economic reforms. Obama has declared that he will not allow the nation’s manufacturing industry to be handed over to other countries, and this of course refers principally to China. He wants to turn the US into a new-generation center of manufacturing and innovation, and this slogan is sure to appeal to the many US citizens who are unemploymed.
Obama has gone so far as to call for changing tax laws in such a way as to discourage businesses from moving jobs overseas. Instead, he wants to reward companies that create job opportunities within the US. If Obama can persuade Congress to pass the laws he is proposing, it will not just allow him to demonstrate his effectiveness in government, but also have a further effect around the world, even though Obama’s foreign policies are not as hard-line as Romney’s would have been.
We now know who will govern the US for the next four years. Taiwan only has one option, which is to strengthen its overall interaction and communication with the US.
The nation needs to increase the overlap between its own interests and those of the US so as to avoid being harmed by matters that are only in the interest of the US.