What will the next four years of Bush bring?

by William Engdahl

There is an ominous mood in the United States over the recent US elections and what they might bring. There are two broad areas where events will be dramatic, namely in the domestic US policy area and in the area of foreign policy. It is worth citing the comment of Tim Adams, Bush policy director just after the vote. Using an image from horse racing, appropriately, Adams said, "We need to charge out of the box, with a mandate to be bold." Now the first Bush administration, failing a popular vote mandate, and with dubious Florida results hardly was a picture of "caution." So what is a "bold" Bush Presidency likely to bring?

First, as a result of the haste with which John Kerry conceded Ohio, and the claims of Bush to have won a convincing popular vote mandate, the world will never know the accuracy of the vote. Preliminary independent attempts at local audits in Florida, Ohio and other states indicate that the scale of vote manipulation exceeded that of a normal election in Ukraine or Nigeria in its level of fraud.

This we will never know. Alone the sudden shift from a strong pro-Kerry exit poll in Ohio and Florida to a dramatic Bush shift a few hours later, something US election experts say is impossible, suggest foul play. Election experts say the vote in key states like Florida was so statistically spectacular it is unbelievable that he scored huge gains across the state compared with 2000. His vote exceeded official Republican registration, which is itself almost impossible because of non-voters. In 2000 Bush got only 85% of Republicans registered. Exit polls after people voted showed Kerry won in Florida. Surprising jumps in Bush votes took place across the country, despite exit polls giving Kerry 51% to Bush 48%. The pattern in six key states election eve, according to former political strategist, Dick Morris-- in Florida, Ohio, New Mexico, Colorado, Nevada and Iowa – was inconceivable. Morris noted, "Exit polls are never wrong. So reliable are the surveys that actually tap voters as they leave polling places, that they are used as guides to the relative honesty of elections in Third World countries ... To screw up one exit poll is unheard of. To miss six of them is incredible." TV stopped citing the exit polls.

Second, the way the Republican Governor Bob Taft used his power. He installed thousands of Republican poll "watchers" in traditional poor Democrat areas, and made certain enough voting machines were in Republican areas and far too few in Democrat so people had to wait in line sometimes 8-10 hours to vote. There are some very disturbing indications of fraud, prima facie, in that under the new Help America Vote Act, at least 30 states have installed Diebold, ES&S or Sequoia touch-screen voting machines, which have no verifiable paper trail. For the first time there is no possibility of a vote recount in 30 states. This despite Congress hearings on the problem last year and major reports from numerous computer voting experts warning that the control of the vote would be "privatized" into the hands of 3 companies. Curiously, the ownership of these three is all Republican and is openly pro-Bush. The Diebold CEO is a major Bush contributor who has hosted Ohio Cheney campaign fundraisers. He controls the software codes to the machines. Sporadic reports in Ohio districts and elsewhere were that voters voted Kerry on such machines only to see the name Bush appear. They could only file a complaint. Once Kerry conceded Ohio, those complaints became worthless.

If we leave to the side for the moment the disturbing thought that the integrity of the American electoral process has become as debased, and even assume that Bush won the vote, however, we face a situation in which the Bush faction now controls 55 of 100 Senate seats, and a majority in the House of Representatives. Leadership is hand-picked to be loyal to Bush, from Frist in the Senate to Delay in the House. All candidates were chosen by Karl Rove and Bush who ran.

The new Bush Agenda?

So far Bush has been very careful to reveal Cabinet changes. Ashcroft, the Born Again Attorney General and religious fanatic of the far right has resigned for health reasons. This takes out an easy target, to put someone less known in place. Cheney is in the hospital with heart problems ... Is it possible he too will leave to create a different expectation?

The crucial point is that Bush now controls all Congress. In 2006 he is almost certain, especially with more Diebold e-voting, to gain 5 more Senate seats to give him 60 votes making any filibuster by Democrats impossible. At that point it becomes a total one party system. In the meantime, Bush is now likely to be able to name 4 Supreme Court justices giving his neo-conservative Born Again faction control of the Constitutional review process. This, in short, was no normal election in consequence. And Bush is no normal President subject to traditional checks and balances.

What then will be the policy agenda? First, Bush has given some indications to domestic economic policy. He is out to dismantle the entire Social Security government system, step-by-step. His several tax cuts have already turned a major surplus during Clinton into the worst deficit in US history. Now Bush demands making the tax cuts permanent, which will concentrate wealth into the top 10% even more.

The US family household debt is at record highs, with home mortgage loans in the past 3 years making the difference. Interest rates remain extremely low despite last Fed rate hike to 2%. If rates rise even 1-1.5% from here it will trigger a wave of home bankruptcy and mortgage loan defaults. Families are not saving, they are buying homes as a substitute. Household debt is 114% of disposable income. In 1980 it was 65%. That is near double debt burden. Only record low rates from the Greenspan Fed have managed to avoid a default bloodbath to date. Mortgage debt as share of disposable income has also doubled from 1980 at 40% to 85% today. Record low personal savings and record high debt creates huge risk of a depressed housing sector. The Fed claims home values have risen so the debt is manageable. In reality millions of Americans have taken too much debt to buy their homes, and that is unsustainable in a weaker economy. If the inflated home market begins to collapse as the economy worsens, inflated home assets suddenly become less and illiquid, as no one is buying and more try to sell. In 1980 home mortgage debt was 30% of home value. Now it is 45%. If housing prices fall back to normal levels it means an asset drop of 20%, hitting 25% of all families with unmanageable debt loads.

If the home bubble pops, what can the Fed do? At near alltime low rate levels it can cut very little more. Major rate rises are impossible without triggering a wave of bankruptcies. The Government is unable to use deficit spending very much more to create economic stimulus with deficits already at all time highs and the world warning it is unsustainable.

Yet this is just what Bush plans. His "privatization" of Social Security, allowing private investing in stocks instead of tax payment deduction to Social Security Trust Fund would cost an estimated $1-2 trillion to finance the transition from the present payment obligation.

Now that elections are past, Bush has no obligation to create an artificial economic recovery. With oil prices hovering near $50 a barrel, likely to rise in the near term to $60 or more, private debt at record highs, corporate debt manageable but high, and Government debt out of control, the amount of savings Bush must attract from outside the US simply to keep interest rates at present levels becomes staggering.

The foreign relations

The only reason US interest rates have not risen dramatically with such debt numbers in the past 3 years is because Japan, China and foreign central banks continue to "recycle" their record trade dollars into US Treasury bonds and such, despite the very low interest rates. Now, as the US Treasury is apparently deliberately trying to shock the world into continuing their dollar buying by letting the dollar fall freely in the past two weeks, the question is whether China or other Asian governments will continue to bow to Washington and buy Treasury bonds to finance the US deficit at a big loss. So far they have. It is a geopolitical calculation by them. They have not dared risk losing their economic lifeline and dollar investments. Now China is rapidly and quietly moving to build a regional economic trade zone in Asia, and moves to secure energy on its own. This insures a dramatic US-China confrontation in the coming year or so. Can Bush alienate his most important trade and dollar partner China? Will he now use he Big Stick not the trade carrot? What will China do?

China signed a major deal with Kazakhstan to build a $3.5 billion gas pipeline two months ago. Early this month she signed another gas deal this with Iran worth perhaps $100 billion initially to export 10 million tons LNG for 25 years to China in special Chinese LNG ships being built at a fever pace in China shipyards. Washington under Bush will regard these natural Chinese attempts to secure its vital energy supply as "against US national interest." The neo-conservatives like Feith and Frank Gaffney have been demanding a crackdown for several years on China as a potential threat. Now that will have added impetus as China threatens to become "energy independent" of US control. As Washington strategists have repeatedly said and as the Bush Doctrine makes explicit, no even "potential" rival or regional power can be tolerated to US global hegemony.

With Russia deeply engaged with Teheran in nuclear and other energy and military trade, and now China in Iran in energy, the coming together of an Eurasian bloc of substantial power begins to suggest itself, even if only embryonic.

This suggests that Bush II will accelerate its geopolitical attacks on the "Axis of evil". As Iran is a far more formidable military target that Iraq, it is likely to first come in major diplomatic pressure on Iran, isolation tactics that try to break their Russia and China cooperation. This might take the form of a military strike on Syria first, or increased military action in Iraq that threatens Iran stability. One possible route would be inciting Kurds in the area bordering Iran. Already large teams of Israeli intelligence special forces have flooded into Kurd areas to the dismay of Turkey. That is a potential for detonating conflict that Iran would have to respond to. So far Teheran has been cautious, knowing the game and trying to signal just enough compliance to Europeans, to keep the pressure at bay. Fallujah actions show Washington is not concerned about winning "friends" in Iraq for "democracy". This suggests what future plans might look like. In such a situation, it is increasingly clear that winning world opinion is the last thought in Washington.

A hint at the Bush II agenda has come from a leading neo-conservative, Frank Gaffney of the Center for Security Policy (CSP) in Washington, a think-tank tied to Richard Perle and friends. Gaffney wrote in the neo-conservative National Review on Nov. 5, that Bush will now use his mandate "for defeating our Islamofascist (sic) enemies and their State sponsors." The words are his and indicate the mindset. Gaffney then lists future targets: "the reduction in detail (sic) of Fallujah and other safe havens in Iraq;" Regime change one way or another in Iran and North Korea;" enough funds to complete transformation of US military and intelligence branches to "fight World War IV". The neo-cons call the war on Islam WW IV, and the Cold War WWIII.

Then after the usual remarks about "keeping faith with Israel" Gaffney details "contending with China's increasingly fascistic (sic) trade and military policies, Vladimir Putin's "accelerating authoritarianism ... the worldwide spread of Islamofascism and the emergence of a number of aggressive anti-American regimes in Latin America." Wow!

Washington optimists argue Bush is spread too thin in Iraq to risk further divide with key allies and that he will cut the power of the neocons now that he has won another 4 years and cannot be reelected. There is little evidence of that. No major neo-con has resigned during the enormous scandals of the Iraq debacle. All remain in place including Paul Wolfowitz, Doug Feith, John Bolton, Lewis Libby. Washington insiders now expect a purge of old State Department traditionalists who are tied to Arab détente by the neo-cons now that they can claim a "mandate".