Every serious commentator on US politics is aware of the fact that if you want to know who is about to win the election you should take a close look at campaign funding. Follow the money and you'll separate the loser from the winner in no time. It is the norm in the US that the President is elected from the campaign that receives the most cash. The campaign to re-elect Obama has raised $86 million in the first quarter and the Republican nominees are still in a state of disarray. The GOP is still split between the rightist wing-nut of Bachmann and the unsellable Mormon 'moderatism' of Romney, neither candidate is a realistic contender and collectively the GOP candidates have raised $35 million. There is still time and we'll see if the Republicans can make any headway in coming months, but my guts see a second term for Obama. The current issue of the debt-ceiling has raised signs of what we might see on the campaign trail as well as from the prospective second term for the Democrats.
As pointed out by Shawn Whitney there is not much difference between Republicans and Democrats on this issue. It is only a minor dispute over the extent to which the rich should contribute to the debt reduction plan. Obama has insisted that there will be trillions of dollars in cuts, no doubt to health-care, welfare and social security without scathing the bloated military budget. The military-industrial complex is untouchable because it functions as corporate welfare, whereas 'handouts' for the poor and elderly is too costly for the state to maintain apparently. Obama has tried to win over the Republicans with a round of spending cuts that amount to $4 trillion, though that much could have been raised had the Bush tax-cuts never been renewed under Obama. The Bush tax-cuts which cost the Treasury trillions of dollars over the last 10 years, at first it benefited many Americans but the number dwindled under the Bushites until only the richest Americans reaped the rewards. That's a real sunset policy!
The coalition government of the UK is running with a ratio of 80:20 in spending cuts to taxes, whereas Republicans found a ratio of 85:15 optimal and then walked out of negotiations after the Democrats only conceded 83:17. The kind of changes needed to make up that 17% would mostly come in the form of closing loopholes in the system. There are Republicans who want 100% spending cuts and no tax increases at all. The stalemate raised the prospect of a forced default on America's debts. Even conservatives have criticised the GOP line on the debt-ceiling as childish and ridiculous because they recognise it is not in the interest of the Republican Party to push for an economic disaster. But it is not the first time that politicians have created fiscal crises in order to initiate a wave of market reforms and austerity measures. This is especially true of the "Starve the Beast" approach of conservative strategists, which is a way of increasing debt to provide a pretext for more cuts to services that assist the poor.
The fact that the Democrats conceded almost the entire plan and it wasn't enough for the Republicans is indicative of the dramatic shift in politics that has occurred in the US over the last 40 years. The Democrats are now what used to be considered moderate Republicans while the Republicans have become even more extreme. In the words of Bill Maher "The Democrats have moved to the Right and the Republicans have moved into a mental hospital." To be even more blunt the American political system is a lot like a plane with two right wings. Noam Chomsky once distinguished between the Republicans and Democrats by noting that the GOP represent the business community in general whilst the Democrats are for Big Business specifically. The White House is looking to gain a 'moderate' platform for 2012, meanwhile the Left and the social democrats can go hang. The Democrats are aware that there is nowhere for the 'moderates' to run and Obama's real problem is how to win over enough of the 'crazies' to prop up a platform crafted for the ultra-rich.