US 2016: Fight for Leadership Begins After the Election

US 2016: Fight for Leadership Begins After the Election

After the bizarre 2016 election, Washington faces a slate of investigations and a gridlock. Internationally, threats include new Cold War(s). Depending on the outcome, the election could even be contested.

If Hillary Clinton wins, she will flash her broad smile like Alice in the Wonderland, with Vice President Tim Kaine, Bill and Chelsea on her side. The conventional story will be that her victory built on her egalitarian economic policy, gender concerns, international relations, strong defense policy and good ties with Europe and Japan.

But that’s just the facade – a carefully orchestrated result of an estimated $6.6 billion elections, her $700 million campaign financing, good ties with super PACs, skillfully maneuvered electoral college, shrewd PR, collusion with nation’s leading media organizations, and a long series of political miscalculations by Donald Trump.

Americans will vote on November 8. However, the battle will ensue soon thereafter. The winner will face a split Congress, a divided Democratic Party , and badly-fragmented Republican party. To defuse their meltdown, Republicans are likely to challenge Clinton every step of the way. And the election could – and perhaps should – be contested.

Lawsuits, investigations, special prosecutors

Last July, FBI Director James Comey closed the Clinton probe and decided not to pursue charges, which resulted in broad criticism. Recently, Comey re-opened the case following a discovery of new emails. The disclosure allowed the FBI to reopen a criminal investigation only days before the election. It took place against the stated opposition of the Department of Justice (DOJ) but reflected the frustration of FBI agents over Comey’s previous decision not to prosecute Hillary Clinton. Ultimately, the debacle may undermine or boost the Clinton campaign.

Yet, the FBI activities are just the latest twist in a bizarre reality show, which has potential for a flood of lawsuits, congressional investigations and special prosecutors. In addition to the Benghazi and FBI debacles, these efforts are likely to include some 50,000 emails from Wikileaks, particularly those of John Podesta, Clinton campaign manager and chair of the Center of American Progress (CAP), which is very close to the White House.

The questions will center on Clinton’s private email server; her special assistant Huma Abedin and her ex-spouse (who is under FBI investigation for ‘sexting’ with underage girls); the many lucrative pay-for-play allegations about Hillary Clinton’s office and Bill Clintons’ speeches; the Clinton Foundation and the alleged coordination between the Democratic National Committee, the Clinton campaign and various big money lobby groups (super PACs), including mega financiers, such as George Soros – and recruited groups, such as the notorious ‘Democracy Partners,” to incite violence and chaos in Trump rallies.

These events were then recorded by mainstream media, which is now in trouble as well. As a CNN talking head, Donna Brazile, currently DNC chair (her predecessor was fired – though belatedly – for bias against presidential candidate Bernie Sanders and for Clinton), shared questions of the CNN town hall debate with Clinton in advance. Reportedly, her campaign also gave leaks to CNN before other media, which subtle collusion. In turn, Google had a strategic plan to help democrats win the election by tracking voters via smart phones. And other media debacles are under scrutiny as well.

The system has been effective. According to a recent Suffolk University/USA Today poll, most Americans believe that the media wants Clinton to win.

Washington’s post-election gridlock

Republicans want investigations about the role of the State Department, the DOJ and the FBI, even President Obama, due to a “cover-up to protect Hillary Clinton,” as the Republican National Committee (RNC) chairman Reince Priebus says. Speaker Paul Ryan has promised “aggressive oversight work” of a “quid pro quo” deal between the FBI and the State Department over emails. As chair of the House Oversight Committee, Jason Chaffetz is pushing for a slate of “new hearings.”

House Republicans are demanding a special prosecutor to investigate the Clinton Foundation for possible conflicts of interest. There is enough evidence, says former New York City mayor and Trump supporter Rudy Giuliani, for a RICO case against the Foundation as a “racketeering enterprise.” In the 1970s, RICO was used to prosecute the Mafia and organized crime figures. More recent cases range from Gambino and Lucchese crime families to the 80’s junk bond king Michael Milken, Catholic sex abuse cases and Los Angeles Police Department.

In the past three months, Republicans have issued some 20 subpoenas and over 50 letters of inquiry probing Clinton. New ones will be fueled by tens of thousands of Clinton emails courtesy of Wikileaks. It doesn’t really help that, as Secretary of State, Clinton wanted to silence both Julian Assange and Wikileaks and once stunned her colleagues by asking: “Can’t we just drone this guy?”

Assuming that markets perceive a Clinton victory as signal for continuity (which is no longer certain), the Fed is expected to hike rates in December. If not, the ultra-low rates will continue to pave way to asset bubbles. In order to overcome secular stagnation, America needs structural reforms that Clinton is neither willing nor able to execute. In the 1980s, the Congress legislated some 700 laws annually. After three decades of political polarization, that figure has plunged close to 300.

Currently, the Senate and the House are under Republican control. The Democrats have a good chance of taking over the Senate. If Congress remains divided after the election, Clinton must rely on limited legislation and executive action. But if Democrats could control the Senate and the House, She could push for immigration reform, and expansion of Social Security. A Democratic Senate could make Chuck Schumer the majority leader; in the House Nancy Pelosi could take over. The former is a trade hawk who favors retaliation; the latter is a human rights advocate who backs liberal social plans; and Hillary Clinton is the architect behind US pivot to Asia.

In Beijing, such political consolidation could mean triple pressures in defense, trade and US views of human rights; unless the Congress remains divided,or returns to Republican fold after the 2018 mid-term election. Or, what’s now likely, Clinton will fail to achieve any political consolidation and a gridlock is the benign scenario.

In economy, Clinton will push for infrastructure spending for some $275 billion in the course of a decade. But the bill should be paid with tax revenues, which could lead to Republican opposition. In the financial sector, Clinton will support greater oversight of ‘shadow banking,’ moderate enforcement of financial regulation and increasing attention to high drug prices. Since she is for tougher anti-trust policy, America has seen record mergers and acquisitions activities in the past few months – including a record level of Chinese M&As in the US.

Clinton’s economic program will resolve neither America’s income polarization nor its sovereign debt burden, which will soon exceed $20 trillion (107% of GDP). In the absence of bipartisan, credible and medium-term debt program, the challenges are likely to deteriorate in the coming years.

Trade policy is the real test of Clinton’s international engagement. During her campaign, she often said that she would block the US-led Trans-Pacific Partnership (TPP). “I oppose the TPP now, I’ll oppose it after the election, and I’ll oppose it as president.” If she sticks to her stance, it would alienate TPP allies in Asia, particularly Japan and Vietnam. If she could rely on a united Congress, she would be in a better position to flip-flop, again.

New sanctions, Cold War(s), nuclear threats

Historically, when the White House has failed to united America through economic policy, rearmament has been the second-best option. In Washington’s foreign policy establishment, President Obama’s replacement with the more hawkish Hillary Clinton would be welcomed with relief. In contrast to Obama, she has called for stepped-up military action to deter President al-Assad’s regime and Russian forces in Syria, whereas Obama’s advisers warn that “you can’t pretend you can go to war against Assad and not to go war against the Russians.”

Yet, Clinton wants new sanctions against Russia, despite increasing nuclear threats. According to Pew research, the confidence of Russians on American media has collapsed. It is now less than 1%. Strategic distrust between the two nations is now far lower than during the Cold War.

If Clinton would implement her geopolitical pledges, including a no-fly zone in Syria, it could require the use of 70,000 soldiers and a monthly cost of $1 billion. That would increase the probability of real, perceived or accidental US-Russian friction. Under Hillary Clinton,” warns Green Party candidate Jill Stein, “America could very quickly slide into nuclear war with Russia.”

In Southeast and East Asia, Clinton would talk more about currency manipulation, but hold on to existing US alliances, push harder for the US pivot, cooperate more with India and exhibit greater military assertiveness in the contested South China and East Asia seas.

Barely a week ago, the Center of American Progress hosted what some saw as a preview of Clinton’s Midde East policy, concluding that the next president should double down on support for the Gulf States, including Saudi Arabia, but ramp up action against Iran. Former acting CIA Director and Clinton foreign policy advisor Mike Morell called escalation of sanctions. That, in turn, would undermine the nuclear deal between Iran, Obama and the EU – but it would emulate neoconservative objectives that led to the Iraq War.

After years of military interventions, the last thing that the Middle East and North Africa need is more destabilization, which economist Jeffrey Sachs attributes in part to Clinton’s policies. The latter could endanger China-led economic development in the region, add to migration crises and terror threats in the EU and the US – and has already killed jobs and reduced remittance flows to South and Southeast Asia. To Sachs, Clinton “is the candidate of the war machine,” noting that she supported the regime change act in 1998 that paved way for the Iraq War in 2003, which she also supported. Her record extends from Libya to Syria, Ukraine and Georgia. The interventionism has also resulted in civil wars and famines in Africa.

Clinton supports hawkish security policies advocated by both the Democratic ‘liberal internationalists’ and the Republican ‘neoconservatives.’ Last summer, the Clintonites’ Center for a New American Security (CNAS) , a successor of the neoconservatives’ New Project for the American Century a decade ago, published its report on “Extending American Power,” as a kind of a transition memo for Clinton. The bipartisan panel of contributors include Victoria Nuland, former adviser of Dick Cheney and Clinton who had a key role in US efforts at regime change in Ukraine; Michele Flournoy, co-founder of CNAS and one potential candidate for the next Secretary of Defense; James Rubin, a Clinton States Department veteran; and Robert Kagan, Nuland’s husband, a neoconservative visionary and a proponent of a “New American Empire.”

As, the goal would be to rely increasingly on the use and threat of military force, it would require an increase in Pentagon spending of up to $1 trillion over the next decade. Unsurprisingly, the major CNAS donors feature the leading Pentagon contractors, including Lockheed Martin, Raytheon and Boeing, which also support Clinton’s campaign.

Global risk

Half a year ago, I warned that, in the absence of appropriate integrity and transparency, the US 2016 election is a global risk, which “could undermine US economic rebound and the lingering global economic recovery.” That risk prevails and has grown stronger – as evidenced by uneasy volatility indicators, declines of S&P 500 and other harbingers of financial instability.

For weeks, both Trump and Clinton have been building legal cases and armies of lawyers for the possibility of a contested election. In spring, this was still a distant theoretical option. Now it is one credible scenario.

Whatever happens after the US 2016 election, the struggle of Washington, by Washington and for Washington is about to lead to a new era that will be economically more uncertain, politically more divisive, and strategically risky.

 

Dr Steinbock is the founder of the Difference Group and has served as the research director at the India, China, and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more information, see http://www.differencegroup.net/

A short version of this commentary, which has been expanded and updated, was released by South China Morning Post on November 1, 2016.