Impact of US Midterm Elections to Singapore

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Recently, the United States have completed their midterm elections on 7 Nov 2006. The Democrats has successfully recaptured the House of Representatives and the Senate from the Republicans [1]. From the exit polls (from CNN), the main reason for the Republicans to lose power in both houses is corruption and not Iraq (strangely, it’s the fourth most important issue). The first casualty of war in the aftermath of this election is the resignation of Donald Rumsfeld, the Secretary of Defense. It also leaves the likely scenario that George W Bush will be a lame duck president till 2008 when he completes his second term.

With a Democrat Congress and Senate and a Republican president, it is interesting to examine the dynamics and implications of the midterm elections towards Singapore. This article examines the impact of the US Midterm Elections on Singapore and splits the discussion into three parts: (i) a Singaporean’s perspective of this elections, (ii) the prelude towards the 2008 presidential elections and (iii) the impact of the midterms towards Singapore in the next two to five years.

A Singaporean’s Perspective towards this Elections

Since the beginning of Jan 2006, I have been following the US midterm elections closely. One spectacular incident is the defeat of Joe Lieberman (former Vice Presidential candidate in 2000 with Al Gore) in the Democratic Primary of Connecticut. The incident is interesting because the bloggers were touted to be responsible for his primary loss. I have argued earlier that it was a combination of factors (from the ground) rather than the internet that led to his defeat, and have speculated that Ned Lamont will not be able to win the general elections. I also reiterate that it is nearly impossible to replicate that kind of netroots activism in Singapore politics because the real translation to votes is from grassroots movement rather than netroots movement [2]. In the end, Joe Lieberman won the senate race as an independent and would caucus for the Democrats, leading them to have a senate majority of 51 to 49.

From the early indications from the various polls (Gallup, CNN and Fox), it is clear that the Republicans would lose the Congress. However, the loss of the upper house came as a surprise. How did the Republicans end up in such a “thumping” loss? Most pundits believed that the Democrats did not win the midterms, but rather the Republicans lost it. For example, former senator George Allen had the advantage of being the incumbent senator for Virginia (and possibly one of the major contenders for the US presidential race) but lost it with a mistake of making a racial slur on an naturalized indian American. That was the turning point of the Viriginia senate elections and brought his Democrat competitor, Webb to victory. One other reason that assist in the recapture of the Congress and Senate is that the Democratic Party did not field candidates which are on the far left, but the conservative Democrats. That explains why the Democrats is able to make headway in the swing states like Florida and Ohio because these Democrats champion the same kind of values in the American heartland.

In short, the entire Republican party was plagued with scandals, for example, the Jack Abramoff’ indian lobbying scandal, the Mark Foley scandal. The situation was made worse, where Bob Woodward’s “State of Denial” and David Kuo’s “Tempting Faith” showed the incompetency of the Bush administration in handling the war in Iraq and the manipulation of the Christian Right with faith-based initiatives in the 2004 elections. In the end, it was the corruption issue which turned the voters off. On top of that, the voters were sick of the endless tirade from the Republicans that if they vote for the Democrats, they will get their taxes raised.

What would be the impact of having a Democratic Congress on American politics? From reading the American blogs and mainstream media, the main consensus is that the Bush administration are now placed in a lame duck situation. Most likely, they cannot push through any major policy review. The dynamics adopted by the administration to deal with a left-leaning Speaker of the House, Nancy Pelosi will be one of the most watched political situations. Even so, in my own opinion, there will not be a few major changes because the Democrats do not want to lose the houses two years from now. The reason is simple because the Democrats need to show to the American people that they can govern in a bi-partisan way. If they do not co-operate with the Republicans and the Bush administration, they are on their way to lose the House of Representatives again (they lost the Congress to the Republicans in 1994).

The key issues that the new Democratic Congress will focus are: (i) Iraq war, (ii) roll back the tax cuts for the rich and wealthy and increase corporate taxes, (iii) passing legislation to protect American workers & block outsourcing of some jobs and (iv) approve federal funding in stem cell research (which both houses in the Congress passed and was vetoed by the executive branch of the government, namely the US President) .

Let’s look at the Iraq war first. Immediately after the defeat of the midterm elections, Donald Rumsfeld was made redundant from the Bush administration. A lot of attention is now placed on the Iraq Independent Study Group, led by James Baker (a trusted aide of George H Bush or Bush Senior). This is a key issue that can cut both ways for the Democrats and also for the candidates who are vying for the US Presidency in 2008. There are three options on the table for the Americans in the Iraq war: (i) they “cut and run”, (ii) they stay the course or (iii) they split the entire country into three parts for the Kurds, Sunnis and Shiites. It is likely that they will adopt a hybrid version of the “cut & run” and “stay the course” in order to save their own skin. The important part is to engage the other major players in the region to help, for example, Saudi Arabia, Iran and Syria. That will have a considerable effect in terms of security and stability for the oil rich region, and to Singapore on a lesser effect (which I come back at the third part of the article, given that Singapore is now seeking business partners with Middle East).

The next two issues are domestic in nature, relating to the US economy. Currently, the US government is running a trillion dollar deficit and the reason why their economy is not collapsing is because Japan, China, Saudi Arabia, India and many other countries (including Singapore) are buying into their treasury bonds. In order to prevent major American corporations from being bought over by foreign countries, they have to find the money like the way we raise GST to 7% to fund the safety nets for the poor. The most likely scenario is that they will raise corporate taxes and increase personal income taxes for the rich income group. It means that the foreign companies will face new challenges in bringing their companies to the US market in the next few years. Protectionism is also going to be an important issue because the low level jobs and even high level IT jobs are now outsourced to places like India and China. A few things are already in motion to help the American workers, for example, lobbying for a new minimum wage in the Congress and putting regulation on big American companies to hire locals rather than hire elsewhere.

The fourth issue is that the Democrat House of Representatives and Senate will approve federal funding for stem-cell research. This is an issue which has divided America, particularly, Bush vetoed the bill due to his support coming from the Christian right. In the past few years, US stem cell researchers have been poached to go to Asia, particularly Singapore to continue their work. The exodus of leading researchers alarmed the American law-makers and it is likely that they want to restore US as the beacon of scientific research.

Prelude to the 2008 Presidential Elections (& why it is important to Singapore)

If the economy and the war are the key challenges for the new incumbent Congress and Senate, the other issue which will take centre stage will be the coming US Presidential elections 2008. In this election, the Democrats have successfully captured Ohio, one of the swing states responsible for the defeat of John Kerry in 2004. This might provide interesting dynamics for the next elections. Since the sitting Vice President, Dick Cheney is not running for the presidency, the field is open for both Democrats and Republicans. The names of potential candidates for both Democrats and Republicans have already popped up in the mainstream media.

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So, what has the presidential race important to a small country? If you look at the history of Singapore, the two US Presidents who have visited Singapore, are Republicans and coincidentally, they both share the same surname Bush. This is telling about the relationship between the Singapore government and the US. Traditionally, given the political ideology, the ruling party in Singapore is closer to the Republican party than to the Democrat party. Recently, George W Bush spent two days in Singapore during his Asia visit. For the first time, he chose Singapore as a platform to make a foreign policy speech in the National University of Singapore. This indicates that the administration views Singapore as an important ally in the region. On an anecdotal note from a secondary source, the former US Secretary of State during the Nixon and Ford administration, Dr Henry Kissinger visited Singapore two years back and made this comment about Singapore that is paraphrased in the following lines, “I am interested in coming to Singapore because I want to know why such a tiny country with a population of 4.3 million can have a place in Washington politics.” (Photo of President Bush speaking in NUS, from ChannelNewsAsia)

However, that does not mean that Singapore might not gain any favour from a Democratic president. For example, the 2004 presidential Democrat candidate, John Kerry was once asked by the New York Times about his views of our Minister Mentor, Lee Kuan Yew. His remarks were cordial and he also sang praises about our Minister Mentor being an experienced statesman who offer valuable insight in Asia politics. During the selection for the city to be chosen for the 2012 Olympics, Hilary Clinton (who will be one of the possible candidates to watch in the coming 2008) was here in Singapore to lobby for the games to be held in New York.

Impact of the US Midterms to Singapore

The impact of the US midterms to Singapore will be minimal. There are worries among the establishment that the Democrat Congress (being traditionally left leaning and also against the idea of bilateral free trade agreements) might revoke the free trade agreement (FTA) between US and Singapore. There are criticisms on the agreement (See this one from the Public Citizen). Of course, such worries are unwarranted. The Singapore-US FTA is negotiated during the Clinton administration (Democrat) and then sorted out in the Bush administration. The voting records and the reports from the major committees in US indicate that both parties favour the free trade agreement. While the political situation will not change how the US-Singapore trade relations, the effects will likely be felt by the business community and government linked companies for example, Temasek Holdings. It is likely that government regulation and imposing tax onto foreign acquisitions will be placed into the system by a Democrat Congress.

The US foreign policy on the Middle East situation should be closely observed as well. As I have mentioned earlier, the Bush administration will have to find a way out of the current Iraq debacle. In essence, they will pick a strategy which will minimize the number of casualties and maximize the amount of “face”, and that will only be a situation where they will withdraw their troops and utilize the other neighbours around Iraq to help in dealing with the violence and problems of Iraq. Recently, our government has been promoting Middle East as a new location where our business leaders and government-linked companies should move to. In the world of business, the stability of the region is of a major concern. Most likely given Singapore’s risk adverse culture, their main trading partners will be the stable Arab countries with a strong economy, for example, Qatar, United Arab Emirates and Saudi Arabia.

That comes to the last issue. Since the Democrats are likely to pass the stem cell legislation to approve federal funding for research, does it mean that Singapore will lose those researchers which they spent millions to bring here? There is this view in Singapore that if US will approve funding for stem cell research, most American researchers stationed in Singapore will go back home, leaving us barren of foreign talent. In my personal opinion, I don’t think that this situation will happen because the researchers (who are lured here) are paid far better in enumeration than what they will earn in the US. It is also a misconception that US does not approve federal research. The legislation is about approving federal funding to stem cell research. Already Harvard University is pouring US$10B and California is rolling out a US$300M to fund such kinds of research.

In essence the impact of this elections towards Singapore is small. Perhaps, we should revisit this question in two years time.

Acknowledgments: The author thanks Hui Chieh and his American friends about the discussion on US politics. This piece originated from an email request from Paddy Chicken to Singapore Angle and we acknowledge him in this essay.

References and Endnotes:
[1] The figure is taken from the article US Midterm Elections 2006 in Wikipedia, and represent the new Senate composition, according to CNN results. The blue represent 2 Democrats, red represents 2 Republicans, purple represents 1 Democrat and 1 Republicans and grey represents either 1 Republican/Democrat and one independent.
[2] Kevin Lim, Theory.IsTheReason.com, “Today’s Links: Worldwide Internet Penetration = 15.7%” and Asia Internet Usage statistics. In 2006, there are 2.4 million users and that is about 56% internet usage in Singapore (based on 4.6 million population).
[3] More about US politics, Daily Kos: State of the Nation, Huffington Post, and RealClearPolitics. These sites are highly recommended.
[4] The article is edited on 12 pm, 30 Nov 2006.

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Bernard Leong

A Pragmatic Idealist