USA

State laws set conditions for ballot access, such as specifying filing deadlines and the number of signatures required for nominating petitions. The requirements may be a burden for smaller third parties or independent candidates in general elections; or for weaker or late-starting candidates in primary elections (to determine party nominations). But parties and candidates that are otherwise able to win seats, or even symbolically significant vote shares, rarely have difficulty with ballot access. There have been no claims of patterns of discrimination on the basis of party, race, or other factors. Ballot access has not been controversial, and no major problems were reported in the last election cycle.

In a formal sense, media access is fair. When it comes to posting election ads, however, access is a function of money, as the overwhelmingly private electronic media charge for election commercials, and competitive races require heavy expenditures. The major parties have never had difficulty in raising generous amounts of money for media advertising, although one party (most often the Republicans) sometimes has a sizable advantage. At the level of individual candidates, incumbents often have a very large fund-raising advantage over their challengers. But otherwise strong challengers can usually raise enough money to compete effectively. Some candidates for the Senate have been able to spend $10-$50 million from their personal fortunes, giving them very large advertising advantages. Increasingly, Internet-based information media play a role. In the most recent election cycle since the 2008 national elections, candidates have linked themselves to voters and supporters through social media networks.

Voter registration is administered by the states, subject to regulation by the federal government. Racial and other discriminatory practices – rampant in the Southern states a half century ago – have been essentially eliminated through federal regulation and enforcement. However, in most states, registration requires a separate act; it does not come automatically with residency. Some observers link requiring active registration to lower voter turnout rates, in particular among minorities and lower income voters. The states and the federal government have made efforts to facilitate registration. Many states now link driver’s license records with voter registration and social security card information. Nine states permit same-day registration, in which the voter registers at the polling place just before voting. The Help America Vote Act of 2002 seeks to establish minimum election standards ( including procedures for voter identification), mandates the replacement of punch-card voting equipment (which sometimes fails to record individual votes accurately), sets up an Election Assistance Commission, and makes available to the states grants for modernizing their voting systems. The act sets standards for voter identification (which can be as minimal as presentation of a utility bill with a valid address). The Supreme Court in 2008 upheld an Indiana law that required an official photo ID for registration. In the 2008 elections, which saw a great expansion of voter registration, particularly among first-time voters, youth and minorities, only occasional problems with voter registration were reported.

Transparency is not a problem in American party financing. Indeed, one can enter a name in a search engine and find out how much an individual or organization has contributed to a party (outright corporation and union contributions to individual candidates are barred in the United States). Parties and candidates also must account regularly and in detail for their receipts and expenditures, and are subject to auditing. However, much of political fundraising and spending occurs outside this system, by means of independent political advertising by private groups. Efforts to regulate independent spending have run afoul of judicial policies concerning the freedom-of-speech guarantee of the Constitution, with the Supreme Court ruling that political spending is in effect a form of protected speech. A recent Supreme Court decision (January 21, 2010) rejected limits on private advertising in favor of or against candidates, which the McCain-Feingold Act of 2002 had applied to the period leading up to an election. The consequence is that corporations and unions (as well as other private organizations) can raise and spend unlimited amounts of money for political advertising, even during the “hot” phase of an election. The decision is shifting the balance toward private influence in election campaigns in ways that could have a major impact on such issues as climate change, and is removing a larger part of campaign spending from the potential for public scrutiny.

The media sector in the United States is overwhelmingly private; the public sector on the national level (TV and radio) is small, and its public funding base is shrinking. There were isolated scandals involving government agencies secretly paying certain local news commentators for favorable stories during the George W. Bush administration. The Obama White House briefly attempted to punish the blatantly biased and often inaccurate Fox News network as an “illegitimate” news organization by providing inferior access to the president. But in general, government interference in the media sector has been nearly non-existent. The Internet is increasingly becoming the source of information for many citizens. Not only do traditional print and electronic media go online, but there are a number of high-quality Internet-based publications such as the Huffington Post, Politico and Slate. Television and radio broadcasters are regulated by an independent commission, the Federal Communications Commission, on the basis of public interest and market concentration considerations.

The media market is overwhelmingly private, and pluralism and diversity characterize the American media scene. Only the over-the-air electronic media are regulated by the Federal Communications Commission. The Commission has a mandate to oversee ownership concentration and, to a slight extent, program diversity. Since the mid-1990s, ownership restrictions have been relaxed, with consolidation in the radio market increasing as a result. But there are few signs that diversity has suffered. There are well over 1,500 TV stations in the United States, most of which (1,409) are affiliated with one of the national networks. The traditional major networks pursue a policy of pluralism, while the more recent entrant, Fox News, in its political programming, takes an openly conservative point of view. There are additional outlets that tend to serve educated viewers. Non-advertisement-revenue based stations include affiliates of National Public Radio and the Public Broadcasting Corporation. Public funding has been decreasing steadily and has had to be replaced by contributions from listeners or viewers and by sponsorship funds. In some cable networks, international news outlets such as BBC World and Deutsche Welle are available. The network of public stations is available in all parts of the country.
The digital revolution has drastically changed the ways in which the cable market is regulated, as regulations have decreased and the delivery of services (cable, TV) converged. The market is characterized by growing competition, a process that the FCC currently supports. Internet media services are becoming important sources of information, particularly among the elite segments of public opinion. The dominance of a local newspaper over larger metropolitan areas has been broken by the availability of national newspapers (New York Times, Washington Post, Los Angeles Times, Wall Street Journal) ever since the introduction of satellite transmission. The larger metropolitan newspapers are characterized by an internal pluralism, particularly on the commentary pages.
Economically, newspapers have come under pressure. Readership among adults has dropped by 10 percentage points in this decade. Advertising revenues are falling, consumers are increasingly turning to the Internet, and many newspaper chains are burdened by debt. Between 2007 and 2010, there have been eight major newspaper bankruptcies, including well-established papers such as the Los Angeles Times, the Chicago Tribune, and the Philadelphia Inquirer. Some of these papers have been taken over by private equity funds. Newspapers have reduced reporting and editorial staff as well as the space available for news coverage. During the same period, 10 papers closed altogether or went exclusively online. How these developments will affect media pluralism and the volume and quality of information available remains unknown. The quality of Internet-based sources varies and exposes readers to large amounts of unreliable information.

On the federal level, the Freedom of Information Act allows citizens a high degree of access to documents and files held by the federal government and its agencies. Various categories of information are exempt, such as information related to national defense, personnel rules and practices, ongoing criminal investigations, and participation in legal cases. A formal request is required and appeals to courts possible. An Obama administration executive order has authorized the retroactive reclassification of information on national security grounds. The Patriot Act of 2001, renewed with Obama’s support in 2010, has allowed some additional restrictions to be placed on disclosure. The Obama administration, however, has not continued the Bush administration’s frequent appeals to executive privilege as a means of limiting access to information.

The emphasis on civil rights has been somewhat compromised by U.S. anti-terror legislation following the events of 9/11. There has been a basic clash between two very important goals of U.S. politics: strengthening national security versus the protection of civil liberties. The Obama administration, in one of its first actions, signed an executive order barring unlawful interrogation practices to ensure compliance with the treaty obligations of the United States, including the Geneva Conventions. But it has refrained from prosecuting or revealing the identity of CIA officials involved in illegal interrogations under the Bush administration. The administration reversed the Bush policy of denying access of the Guantanamo prisoners to civil courts, but failed to get Congressional authority to close the Guantanamo base, a move that President Obama had envisaged when he assumed office. Emergency legislation making NSA wiretapping legal, as long as it involves foreign suspects, remains on the books. Under the impact of recent terrorist attacks such as the Fort Hood shooting, the Obama administration has basically continued the policies of the Bush administration and signed the extension of the Patriot Act, allowing controversial measures such as secret searches, which had been of concern to privacy advocates and liberal Democrats in the House.

Political liberties are well protected in the United States. The protection includes all of the recognized political and religious freedoms of speech, association, voting, and pursuit of public office, and extends almost unconditionally, even to freedom of speech for extreme groups such as neo-Nazis. Religious freedoms are protected even for religious fringe groups. In contrast with most of the developed democracies, the freedom of speech provision of the U.S. Constitution has been held to invalidate laws proscribing hate speech. In one significant limitation of political rights, convicted felons are barred from voting in nearly all states, although usually not permanently. Local police sometimes confine demonstrators to locations far removed from the target events (e.g., G-8, G-20, or WTO meetings), which is arguably an infringement of freedoms of speech and assembly. But these episodes are irregular and fairly marginal, and are connected with genuine risks of property damage, disruption of international meetings, and the like.

The legal framework protecting against discrimination has been extended since the 1960s and nowadays covers not only racial minorities and gender cases, but also the aged and disabled, and in some state and local contexts, homosexuals. It not only applies to the public sector, but plays an enormous role in labor and contract law, giving extraordinary protection to minorities or groups threatened by discriminatory behavior. It has practically rendered ineffective any mandatory retirement age limits. The penalties, including job protection guarantees, are substantial. Nevertheless, in view of persisting social and economic disadvantage among minorities and women, the prevalence and importance of current discrimination in education, labor markets, and various social contexts is highly controversial. Affirmative action policies seem to be in decline. There were some expectations among minority civil rights groups that President Obama, as the first black president, would deliver renewed emphasis on issues of racial discrimination. But he deliberately chose not to place racial discrimination near the top of his agenda which was dominated by other concerns such as health care and the financial crisis. According to recent polls, black Americans feel race relations have not improved under Obama. In a 2009 CNN poll, 55% of respondents said that discrimination is still a problem, up from 38% in 2008, and a return to the levels before Obama appeared on the political scene. The deterioration may represent disappointment over weak job prospects. White Americans saw a greater improvement in race relations than blacks during the same period.

Administrative and executive action has generally been firmly and often narrowly bound by law. It is subject to judicial review, with courts having broad authority to overrule executive action on statutory or constitutional grounds. In areas of controversy, such as environmental regulation, all major administrative actions are appealed by various affected parties and thus are extensively reviewed by courts. In addition, because of the separation of powers and the independence of the legislature, Congress has closely monitored executive behavior. It has also tended to enact massively detailed statutes, leaving relatively few matters to agency discretion. The extensive monitoring and review arguably does not provide a high level of legal certainty, however, because procedural requirements and judicial appeals routinely take several years to complete. Once appeals in a rule-making process are completed, agency decisions in individual cases are highly predictable. In the years since 2001, a particular source of uncertainty has been the scope of presidential power, particularly in matters of national security. The Bush administration asserted extraordinary unilateral authority, under the novel constitutional doctrine of the “unitary executive.” It also ordered major expansions of surveillance policies, secretly, without statutory authority. The increasingly partisan Congress has been less aggressive in monitoring executive action during periods of unified party control of the government. Although generally more committed to the separation of powers, the Obama administration has maintained some of the Bush administration’s claims of executive privilege with respect to information and issues of national security.

Judicial review of administrative action is well established in the U.S. system, either through the general court system or special administrative courts. All decisions are subject to review by the U.S. Supreme Court. Court decisions are accepted as authoritative, including critical decisions such as the highly controversial decision of the Supreme Court that handed George W. Bush the victory in the 2000 presidential election. Decisions that are reached on statutory grounds can be reversed by amending the relevant statutes; decisions that are reached on constitutional grounds can be reversed only by amendment to the Constitution, almost never a feasible option. The statutes establishing programs and agencies generally specify some standards for judicial review – calling for greater or lesser deference to the agency, and on the other hand, requiring greater or lesser justification for the agency decisions. The standards often require elaborate showings of fact, resulting in lengthy, data-intensive decision processes. Because of their considerable policy-making authority, the process of appointing and confirming federal judges is politically highly contentious, and deep ideological division among the Supreme Court judges creates controversial decisions such as the recent decision on the role of corporations and unions in campaign finance, a decision that President Obama criticized sharply in his State of the Union Address. But such divisions do not seem to hamper the general acceptance of Supreme Court decisions, even in such cases as Bush vs. Gore, which was accepted with equanimity among the population at large.

Judicial appointments and Senate confirmation processes are now highly politicized affairs able to mobilizes elites and ordinary citizens alike. They are occasions for intense political maneuvering and debate, and have become considerable factors in election campaigns and electoral calculations. These appointments now influence political fundraising and spending as well as plays of intrigue and power politics. Professional considerations play an important role, with nominees generally having prior judicial experience (especially for Supreme Court appointments) or extensive legal experience. Each of the nine current Supreme Court justices (including Elena Kagan, confirmed August 2010) attended either Harvard or Yale law school. And both sides of the ideological divide can muster enough judicial talent. Until 2001, however, presidents submitted their nominations to the American Bar Association’s (ABA) Standing Committee on Federal Judiciary. The Bush administration in 2001 dispensed with this practice, arguing that the ABA had become too liberal in their assessments. The Obama administration returned to the established practice with the nomination of Sonia Sotomayor to the Supreme Court, thus reintroducing an element of professional review. With Elena Kagan, currently the solicitor general, who replaced outgoing liberal Justice John Paul Stevens, President Obama had his second chance to leave an imprint on the court. The appointment will not immediately alter the ideological balance of the court. Kagan, an eminently qualified jurist, previously was dean of the Harvard Law School, but never served as a judge.
The politicization of the appointment process is not due to a malfunctioning institutional design, but to the powerful political role of the Supreme Court. A de-politicization of the appointment system along the lines of the Missouri Plan, where a bipartisan commission would present the president with a list of candidates to choose from, would be blocked by any president. In recent years, the presidential-opposition party in the Senate (e.g., the Republicans during the Democratic Obama administration) has demonstrated a willingness to filibuster judicial appointments, resulting in an effective requirement for 60 (out of 100) positive votes to achieve confirmation. Although the filibuster produces some pressure for relatively moderate appointments, the main factor moderating recent Supreme Court decisions has been the frequency of highly contentious 5-4 decisions, with the moderate conservative Anthony Kennedy casting the pivotal vote. Depending on the timing of deaths and retirements on the Court and election results, the Supreme Court could swing very sharply, either to the left or the right, in the near future.

In general, the U.S. political system is fairly responsive to narrowly based private interests, but this influence results mostly from decentralization of decision-making and the influence of lobbying, and is not appropriately identified as abuse of office. The large number of political appointees leads to a large number of private sector actors filling senior executive positions. While strict conflict of interest laws exist, including provisions demanding a separation from one’s own assets and bars on contact, private influence in decision-making cannot be fully precluded. Auditing of state spending is well established through congressional oversight of agencies’ spending decisions as well as through independent control agencies such as the General Accountability Office (GAO). The GAO also oversees public procurement in the United States and recently played a big role in reversing a U.S. Air Force contract to build tanker aircraft. The GAO, however, is powerless to control spending directed at special projects in congressional representatives’ districts or states, so-called pork-and-barrel-spending, which is deeply engrained in the U.S. political system and enshrined in legislation.
An apparent weakness in containing the improper influence of private interest is the nature and state of election finance. Because of the needs for election fundraising, incentives for members of Congress to be responsive to private interests would seem to be strong. However, dozens of carefully designed political science studies have failed to demonstrate a significant effect of campaign contributions on legislative behavior. Flagrant cases of corrupt influence of lawmakers, including outright bribery, are quite rare. There have been no high-level corruption cases.

In spring 2008, the Bush administration implemented a modest stimulus program, based on tax credits, and then undertook measures to bail out financial institutions to stem the financial panic. The major plank involved was the Troubled Asset Relief Program, which was to ring-fence toxic assets or to re-capitalize banks. The Obama administration continued the bail-out policy, and coupled this with a stress test for banks. In addition, the Obama administration in the spring of 2009 passed a comprehensive fiscal stimulus package, which consisted of government spending and tax cuts. In unprecedented industrial policy action, it also restructured major parts of the auto industry and became shareholder in General Motors and Chrysler. The stimulus program did not stop the downturn, but helped cushion against an even more severe slump. It largely helped to avert worse outcomes. According to Congressional Budget Office (CBO) estimates, the stimulus program helped stabilize the economy and boosted output by between 1.5% and 3.5%. As spending in state governments was contractionary, an even greater package would have been justified. Since the summer of 2009, growth has picked up, but there have been signs of weakness. Growth was at 3.7% on an annual basis in the first quarter of 2010, but slowed to 2.4% in the second quarter, prompting fears of an impending stall in the recovery.
While the ultimate success of the stimulus package will be debated for years, there are many indications that the general structure of the plan was constructive. The stimulus plan clearly needed to be large because the economic problem was enormous. A diversified plan was required because it was not clear exactly what would work. And finally, it had to be prolonged, because estimates showed the economy to remain weak for several years. The Obama administration acted quickly and boldly in combating the economic downturn with a fiscal stimulus, sending a message that it would actively use policy to get the economy on the right track. The administration deserves credit for getting the economic priorities right and for stimulus design.

The U.S. continues to have one of the least regulated and least unionized labor markets, with union membership having declined in recent years to constitute only about 13% of the labor force. However, the Obama administration may try to tilt the balance somewhat towards more regulation and union rights. The stimulus program, enacted in February 2009, increased the level and duration of unemployment benefits. In addition, the earned-income tax credit was increased. However, all these measures could only ease the unemployment situation. Unemployment remains stubbornly high, at 9.7% in March 2010. There has been a silver-lining, namely that non-farm payroll employment has increased by 570,000 jobs in the first two months of 2010, mostly in health care and government. Most worrisome is the doubling of long-term unemployment (i.e., those unemployed for more than six months) from 3.2 million in March 2009 to 6.5 million in March 2010. In that month, 44% of all unemployed were in that status for more than half a year and are thus classified as long-term unemployed. Unemployment rates among young workers have also reached unprecedented levels of near 20% in April 2010 – the highest rate recorded since 1947. The labor market problems are mostly due to severe permanent job cuts in the real estate, construction and financial sectors, which were the backbone of the U.S. economic model. In short, it is a post-real-estate bubble phenomenon. There are no quick fixes, but the numbers state that the United States is having a long-term unemployment problem similar to European proportions. Most experts reckon that it will take a prolonged upturn to rectify the situation. Basically, there has been little private job creation during the period under review. Most new jobs were due to the stimulus program. There is very little fiscal leeway for public employment programs. As a matter of fact, public employment in state and local governments continues to be under pressure.

There has been very little impact of the recession on the ability of the United States to foster innovation, entrepreneurship and competitiveness in the most advanced sectors of the U.S. economy. The downturn primarily hit the real estate and financial sectors. The high-tech sector was less affected, and the largest technology companies have been doing well. Evidence for this is a massive build-up of liquidity, having increased by more than 40% over the past year, led by Apple. The 10 largest tech companies including Apple, Microsoft, Dell and Intel added more than $65 billion since the recession. This will enable such companies to strengthen their technological base by acquisition of smaller companies. The expected shake-out in the industry did not take place.
The other factor that has strengthened a significant portion of large American corporations is the strength of their brands. According to the BrandZ ranking, 17 of the top 20 global brands were American. There has been a clear shift among these top brands toward technology companies, at the expense of consumer groups. Top brands also emerged from the recession much stronger than their rivals. The strengthening of American brands is due to vigorous international property rights (IPR) protection, particularly trademark and patent protection, in the United States (and abroad).
The stimulus package of February 2009 is expected to foster innovation and entrepreneurship in the energy sector with positive implications for existing companies and startups in this sector. The Obama administration also decided to stabilize the automobile industry and prevented the possible liquidation of Chrysler and General Motors. Since these companies have been restructured, the United States Treasury is now GM’s largest shareholder (61%) and also holds 10% of Chrysler shares. Total assistance to the automobile industry amounted to $81 billion, of which 50% were outright subsidies. This is the most extended industrial policy action in U.S. history and is based on the assessment of the administration that, barring such action, employment and income in the Midwest would have collapsed.

During the election campaign, candidate Obama promised to reverse the Bush income tax cuts and reintroduce tax brackets of 36% and 39.6% as well as an increase in the capital gains tax for households with an income of more than $250,000, which would have increased vertical equity. Other proposed measures included reversing the abolition of the estate tax and tax deductions for social security contributions. But political pressures prevented the inclusion of these changes, as the administration wanted to pass the stimulus bill with the support of Republicans. The Obama administration is committed to greater tax equity, but with the Republicans being able to sustain a filibuster, any return to Clinton-era income tax rates is currently unlikely. This constellation blocked any attempts to restore greater equity to the tax system. The Make-Work-Pay tax credit in the stimulus package did help lower income households. The argument has been that it was important to stabilize the economy, before consolidation would have to set in. Tax revenues are clearly not sufficient to ensure that public services are financed in the long term. The gap between public revenues and expenditures remains a major challenge. In the fiscal year 2009, the gap between revenues and outlays is $1.4 trillion or 9.8% of GDP. The focus on the recession has prevented the pursuit of systematic tax reform and fiscal sustainability. The administration and the Congress have temporarily extended the Bush tax cuts during a period of fiscal stimulus and massively reduced the Alternative Minimum Tax, without indicating how to pay for it. What the U.S. system is lacking is an effective consumption or turnover tax such as a value-added-tax on the federal level. Many experts see the introduction of such a tax as inevitable, but there is little political support for it. Hopes of the administration that a cap-and-trade climate change regime would generate additional income have been dashed, as most pending legislation allocates almost all emission allowances for free, and passage of a final bill remains uncertain.

There is now a clear consensus emerging that the Great Recession has led to a fiscal crisis in the United States that needs a sustained response and a concerted effort to bring down burgeoning deficits. In fiscal 2009, the budget deficit was $1.4 trillion or 9.9% of GDP, the largest ever since the end of World War II. For FY 2010, a deficit of $1.3 trillion or 9.2% of GDP is expected – representing only a slight improvement. These deficits are the result of sharply lower revenues due to the recession, spending associated with the downturn (economic stabilizers) and the cost of programs to combat the downturn. In addition the budget deficit is in large part caused by Bush era policies, with tax reductions, especially for upper income groups, along with spending increases, especially for Medicare (prescription drug coverage) and the wars in Iraq and Afghanistan.
The Obama administration’s fiscal and budgetary policies may have been fully justified given the severity of the downturn. But whether the United States can converge on a path of long-term fiscal consolidation appears doubtful: both parties have ruled out broad tax increases, the bulk of spending occurs in untouchable programs such as health programs, pensions and defense and net interest payments. The politics of such adjustment processes are unpredictable. The Great Recession had made the need to impose fiscal discipline a less urgent problem, but it will need immediate consideration once the economy fully recovers. Whether the U.S. political system can deliver the necessary actions remains doubtful. In addition, some economist have argued for postponing the actual imposition of tax increases or spending cuts until the economic recovery is firmly established.

In March 2010, Congress enacted a major plank of the Obama administration’s reform program when it passed a historic health care reform package, the Patient Protection and Affordable Care Act, which was the result of a protracted and complicated legislative struggle lacking broad consensus. It was enacted over the concerted opposition of Republicans in Congress, thus laying out in the open a deep societal discord over the direction that health care policy should take. Public opinion is divided, and it remains to be seen whether long-term majority support or a sustainable consensus for the reform can be achieved. Many provisions of the bill are not well defined and will only become clear in the process of implementation. The most important provisions will not take effect until 2014, others not until 2019. This leaves time to water down the reform or even reverse the major provisions, although Democrats will be able to defend their handiwork while in control of the White House and potentially longer through the Senate filibuster. The bill’s effect consists basically of filling the many gaps of coverage in the existing system, although it does not eliminate all the gaps. Outside the health care system for the elderly (i.e., Medicare) the bill succeeds in expanding coverage to 94% of legal residents (up from 83%), adding about 34 million people.
Because of its magnitude and complexity and the uncertainty of its effects, the new law can be expected to create winners and losers, and it will surely have unintended consequences. This explains the polarized discussion about the reform that is not settled with its passage. Public opinion has been sharply divided, with a modest majority disapproving it. A good deal of opposition centers on the requirement for individuals who are otherwise not covered to purchase health insurance under threat of penalty. The big-ticket items of the reform such as employer mandate or insurance market reform will not start until 2014, giving opponents an incentive to reverse the reforms. Because of the Republicans’ united opposition and their anger about the legislative process, it can be expected that the reform will remain on the agenda beyond the 2010 congressional election and in the 2012 presidential contest. Constitutional challenges against important provisions of the reform package will ultimately be resolved by the Supreme Court.

The United States ranked 24th among 25 countries in economic equality, measured in terms of the proportion of the population below 50 percent of median income. Inequality has reached record highs. The richest one percent of Americans in 2005 claimed since 1929 the largest share of the nation’s income (19%). At the same time, the poorest 20% of Americans had only 3.4% of the nation’s income. In international comparison, particularly cash benefits for working age people and children are dramatically lower than in most OECD countries. Based on 2008 data, 39.8 million people in the United States lived below the poverty line. In 2008 the poverty rate increased for the first time since 2004 when it rose to 13.2%, up from 12.5% in 2007. This was the highest rate since 1997. Most of the increase fell on non-Hispanic Whites (8.6% in 2008, up from 8.2% in 2007), Asians (11.8% in 2008, up from 10.2% in 2007) and Hispanics (23.2% in 2008, up from 21.5% in 2007). For Blacks, the rate remained unchanged (24%). These numbers lend support to the assumption that the increase was mostly due to a severe recession and the downturn in the construction and real estate markets. The greatest increases occurred in the states of California, Connecticut, Florida, Hawaii, Indiana, Oregon, Michigan and Pennsylvania. Many elements of the stimulus package (the American Recovery and Reinvestment Act, or ARRA) tried to address the hardship caused by the recession. ARRA contained several measures, including: the extension of employment benefits and increases in benefits; transfers to the states for Medicaid, education and housing; increasing benefits for families with children; increasing food stamp benefits and expanding tax credits for the working poor. ARRA contributed measurably to the attempt to increase social inclusion during a serious economic downturn, but did not dramatically reduce the number of people falling under the poverty line. The expansion of health care coverage should make a significant contribution to social cohesion. The Earned Income Tax Credit was, in the past, a significant factor in lifting families out of poverty. Currently, it fails to help workers without children. Providing help to such workers would lift up to two million out of poverty. There is no sign that the Obama administration plans to pursue this. The Obama administration pursues a piecemeal approach that does not drastically reverse the course in social policy. It continues to be less generous to the non-working poor, and much more generous to working poor households. This state of affairs probably reflects societal consensus.

Government family support programs in the United States are far less generous than those in other industrial countries. The Family and Medical Leave Act, which requires employers with at least fifty workers to allow twelve weeks of unpaid leave for child care, is not a very ambitious program. In order to make child care available to low- and moderate-income families and thereby facilitate entry into the labor market, the Obama administration has increased by $2 billion support through the Child Care and Development Fund (CCDF), a block grant going to state governments. In its 2011 budget proposal, the Obama administration has also proposed to double the child and dependent care tax credit, which could reach up to $6,000 per household. In addition to federal tax breaks, there are myriad state and local programs helping women to make work and raising children compatible. In addition, private and public employers who want to retain female workers have increased flex-time and part-time working arrangements. But in reality, the compatibility of work and family for women is greatly facilitated by flexible private arrangements based on the availability of immigrant women for child care services. Despite this very patchy picture, the United States enjoys an exceptional birth rate among industrial countries–close to the replacement level, at 2.04 births per woman for the current decade–a circumstance that is not accounted for exclusively by the higher birth rates among immigrants.

No major changes have been made to the U.S. Social Security system during the Obama administration. The system, which is funded by mandatory employee and employer contributions, serves as only one prop of the pension system, complementing a private system of company-based saving plans (so-called 401k plans) that receive tax subsidies, and a variety of private retirement accounts. The wage replacement rate of the public system is at 45%, below the OECD average, but benefits from company-based and private accounts raise the rate to 80% for those who participated in these programs. However, 78 million Americans have no access to company-based insurance schemes. Particularly small companies do not offer any or only incomplete plans. The financial crisis has hit the asset base of pension funds, which primarily invested in stocks and investment funds, with losses of up to 25%, a trend that is being reversed with the recovery. Obama rejects the efforts by the Bush administration to partly privatize the system and instead favors incremental reforms, such as raising the ceiling on an employee’s earnings subject to the social security tax. For company-based plans, the administration favors automatic participation in private plans if participation is below average or no plans are offered. Subsidies would provide the necessary incentives.

The main issues concerning the status of immigrants in the United States are less about cultural, education and social policies that either succeed or fail in integrating immigrants, and more about the ways in which immigration is managed and the handling of illegal immigrants, who account for nearly one-third of all current immigrants (roughly 12 million, though some studies estimate up to 15 million). The issue of the status of illegal migrants is closely connected to the issue of improved border security. Increased immigration in the last decade has created competition among ethnic groups for resources relating to housing, jobs and health care, a trend that predates the recession, particularly in states heavily affected by illegal immigration.
The issue was put on the agenda in late April 2010 by a controversial bill passed in Arizona that will make it a state crime to be in the country illegally. Interestingly, a federal law requires non-citizens to carry papers at all times, but it is not enforced. The Arizona measure would require migrants to produce papers verifying their status when asked to do so by a police officer. If found to be in violation of the law, these individuals are subject to fines and deportation. Critics fear that such action will lead to racial profiling. Arizona has been heavily affected by immigration, with the Latino population having grown by 180% in the past two decades and the share of the white population having dropped from 72% to 58%. There are strong anti-immigrant, anti-Latino sentiments among many senior citizens and retiring baby-boomers. Polls show that Arizona residents favor the law by wide margins. Democratic Party politicians, including President Obama, have come out against the law, and a federal district court judge in July 2010 issued a temporary injunction blocking enforcement of the most important provisions of the law. The state of affairs in Arizona can be attributed to a tradition of incoherent and ineffective policy-making on immigration. On one level, the federal government commits to exerting tight control on immigration, but then is unwilling to enforce it. Effective enforcement would require, most likely, a vastly enhanced infrastructure capable of monitoring and enforcing the requirements set for employers to verify immigration status. But such measures are opposed by business, and in fact, would disrupt production in various sectors, especially agriculture. As Washington lacks credibility in its commitment to enforcement, voter distrust grows. It is difficult to achieve a grand bargain based on a three-pronged strategy of improving the enforcement imposed on employers, developing behind the border, expanded legal immigration (perhaps through a guest worker program), and establishing conditional amnesty for those already in the United States. Given the role of Latinos as a decisive swing-vote, immigration reform will have to be dealt with, leading to difficult choices for Republicans and Democrats alike. If there are no credible solutions, unilateral attempts at the state level will continue. The fact remains that the U.S. political system has been unable to come up with credible immigration reform.

The Obama administration has changed the tone of American foreign and security policy by emphasizing that the Muslim world is not the enemy in crucial world conflicts and that the war on terror does not define American policy objectives. President Obama has also stressed the U.S. role in the Middle East conflict as an honest broker and has stated that diplomacy should be the means of dealing with Iran. With regard to Afghanistan, a neutralization of the conflict with the Taliban is probably the greatest challenge for the Obama administration. The administration has articulated a comprehensive approach to the region, based on the relationship between the security threats posed by the Taliban in Afghanistan and Al Qaida in Pakistan. The administration has pursued a policy of military escalation in Afghanistan, increasing troop levels by more than one third. It favors a counter-insurgency strategy coupled with nation-building. In Pakistan, the administration has focused on defeating Al Qaida and engaging the Pakistani government in preventing the Islamic threat from spilling from the border regions into the Pakistani mainland.
The situation in Iraq was characterized by election-related infighting and violence, evidenced most notably by major bombings in Baghdad. The results of the March elections are inconclusive, but they do not seem to jeopardize the Obama administration’s announced reduction of the U.S. troop presence to about 50,000 by August 2010. Under the United States-Iraq Security Agreement that took effect January 1, 2009, and which President Obama has said would be followed, all U.S. forces are to be out of Iraq by the end of 2011. On Iraq, there are continuities with the Bush administration’s approach in its second term.
Although the turmoil associated with the Iranian elections did affect the prospect for a new diplomacy toward Iran, the Obama administration has exercised caution and demonstrated toughness vis-a-vis Iran, also exploring the use of an enhanced sanctions regime. It has made some progress in bringing Russia and above all China along without reaching a final common position. The administration has not taken any options off the table. But it is clearly aware of the serious risks that an outright confrontation would entail.

Home-grown terrorism and organized crime have become the major challenges for law enforcement during the period under review. Recent cases, such as the assassination of 13 people by an Army major of Arab descent and the attempt to blow up an airliner approaching Detroit, have shown that the heightened security measures are not waterproof. It is unclear whether these cases indicate failed coordination and communication within the sprawling U.S. intelligence community. Sometimes, as in the case of a Nigerian national who tried to blow up an airplane in December 2009, the failure of reasonable visa screening betrayed a lack of common sense on the part of operating-level officials, rather than a lack of sophisticated bureaucratic procedure.
An additional question is whether the organizational resources and structures of law enforcement and anti-terrorism agencies are up to the challenge presented by criminal syndicates and terrorist groups that have expanded their size, scope and ambitions. These groups employ global networks for technological capability, financing and information. Of particular concern is the growing confluence of organized crime with terrorist groups (in a drug-terrorism link), although the extent of this cooperation is disputed. Measuring success in combating terrorism is extremely difficult as reliable quantitative indicators are lacking or may be highly misleading. One problem is that the terrorist threat is diffuse and based on dispersed autonomous cells, rather than a defined unitary organization. Some observers have noted that the emphasis on anti-terrorism has weakened efforts in fighting more traditional crimes, particularly organized crimes. Transnational organized crime from Russia, the Balkans, Italy, the Middle East and Africa continues to be a problem. One of the greatest threats is coming from drug-related crime and extreme violence in the border region with Mexico that threatens to spill over into the southwestern United States, as a recent spate of killings on both sides of the border has demonstrated.

The Obama administration came into office pledging to fundamentally reform environmental and energy policies. Together with health care reform, these policies promised the clearest break with those of the Bush administration. First steps were taken in February 2009’s stimulus package, which included roughly $100 billion for environmental and energy efficiency measures, ranging from support for building insulation to incentives for renewable energies and the construction of a smart grid. The Obama administration indicated its intention to push for climate change policy in its first budget message to Congress, but left most specifics to the legislative process. In June 2009, the House of Representatives passed the American Clean Energy and Security Act (ACES), which mandated the introduction of a cap-and-trade system with a binding ceiling for greenhouse gas (GHG) emissions. The cap would reduce emissions by 17% below 2005 levels by 2020 and by 83% by 2050. Initially, only 17% of certificates would be auctioned, while the rest would be distributed for free, primarily to regulated public utilities to soften the impact on electricity prices for consumers. By 2030, 70% of certificates would be auctioned. The bill also includes off-setting and other cost containment mechanisms, as well as a border tax adjustment mechanism to deal with carbon leakage and competitiveness issues. In addition, the law requires new targets for the use of renewables by utilities. The bill would impact most significantly the energy sector, which would comprise 80% of GHG reductions, but the final effect would depend on the efficacy of carbon capture and sequestration, and the extent to which atomic energy use can be expanded.
In the Senate, there are various bills in discussion which need to be consolidated in one measure. The Clean Energy Jobs and American Power Act of 2009, which draws heavily from the ACES Act and establishes a cap-and-trade system, has been reported out of committee, but final passage is uncertain as Republican support is dwindling and 14 Democratic senators from coal and industrial states are pushing for much weaker GHG-reduction levels and special treatment for coal through CCS-support. The Senate bill, introduced by Senators John Kerry and Joe Liebermann in early May 2010, is also based on reductions of 17% and 80% for 2020 and 2050 respectively, but seeks carbon reductions from separate sectors of the economy rather than imposing a nationwide limit. It also provides greater support for nuclear energy (regulatory insurance) and for off-shore drilling, with an opt-out for states. The measure died in the Senate in July 2010.
In international climate diplomacy, the Obama administration has made it clear that it will not sign the Kyoto Protocol, but will look for a new treaty architecture that entails legally binding commitments for emerging market countries. The administration is also not wholly wedded to the U.N. process, but would consider alternatives such as a forum of the largest 18-20 emitters. This represents a continuation of Bush administration policies.

The basic research and development base of the United States remains strong due to a good mix of private and public institutions. Among public institutions, the National Science Foundation, the various federal laboratories, the National Institute of Health, and various research institutions attached to federal agencies stand out. In addition, there is a vast array of federally supported military research, whose spill-over benefits are hard to pin down. According to the most recent figures, total U.S. R&D stood at roughly $400 billion, or 2.75% of GDP, of which about one-third ($147.3 billion) was direct federal R&D funding. President Obama has put forward the goal of raising total R&D spending to 3% of GDP. Quite notable is also the sustained public investment in nanotechnology. Since the launch of the National Nano Technology Initiative in 2000, Congress has appropriated more than $10 billion through 2009. The Obama administration budget for FY 2010 added another $1.6 billion Most available data point out that this level of support has made the United States the overall global leader in nanotechnology. However, studies point out that commercially productive nano-manufacturing is still a long way off and will require major advances in technology, process tools and instruments as well as safety standards. But there are clear indications that the United States is taking up the nanotechnology challenge.

The quality of primary and secondary education in the United States is often judged mediocre. High school graduation rates, although rising from 1996 to 2006, remain low, at about 70%, in an education system that largely lacks vocationally oriented alternatives to high school. High students’ performance in science, math and reading is below average compared with other OECD countries. The shortcomings cannot be attributed to a lack of resources, as per pupil expenditures have been growing in real terms, and student/teacher ratios have declined since the 1960s. The problems of the U.S. educational system are primarily the result of cultural and social change, the impact of unionization and collective bargaining on teacher performance, and deficiencies in the home environments of many children in low-income, minority neighborhoods. The excellence movement in education has brought some changes through accountability checks and test measures to identify good schools and sound methods to motivate higher teacher and student performance. But no reliable measuring sticks have been developed. Reform of the teaching profession has encountered intense union opposition. School vouchers play a marginal role, while charter schools, which are exempt from some state regulation and operate under more parent involvement, are the most dynamic institutions in the system. They enroll only 2% of the student population and have had only a small impact on the system. The impact of student testing on teacher performance is unclear.
Federal involvement in education has increased under the Obama administration. The American Recovery and Reinvestment Act of 2009 (ARRA) provided additional funds for stabilizing the education budgets of state governments in order to restore displaced education spending in K-12 schools and higher education institutions, as well as to make funds available for school construction and modernization. Altogether, $73 billion was provided for education and training. But this has to be taken in the context of substantial cuts in state education budgets. The Obama administration continued the most ambitious effort at educational standard-setting by reauthorizing the No Child Left Behind Act initiated by the Bush administration, which mandates testing, teacher evaluations tied to test scores and sanctions (closing nonperforming schools or turning them into charter schools). Under Obama, the terms were somewhat modified, but the goal is still quite ambitious: to prepare all students for college and careers. How this is to be measured is left to the states.