Getting Past the American Election

The pundits have now weighed in mightily in interpreting the American presidential election. Did the outcome - together with Republican gains in the Congress - represent an endorsement of Bush's positions? Has the American electorate swung to the right? Are Americans now more concerned about "values?"

Like price in economics, a single electoral choice compresses a lot of information. It is a summary of whether, taking everything into account, a citizen prefers one candidate to another. A host of surveys is required to figure out what it really means, for the United States - and for the world.

This much is clear, however: there is little confidence in Bush's economic policies. The typical American family knows that it is worse off today than it was four years ago, and appears unconvinced that the tax cuts targeted at upper-income Americans brought the benefits heralded by the Bush administration.

But while Bush was not held back four years ago by the lack of a popular mandate in pushing his agenda, he may be emboldened by the seeming ringing endorsement to push even harder - such as making the tax cuts permanent and partially privatizing social security. If adopted, these measures will further compound America's fiscal mess.