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Yesterday I went to the local Barnes & Noble bookstore and bought The Economist’s double holiday issue, and a copy of their special report The World in 2014.   I wanted to make sure to read through them both this week in the time I have left before work starts up again next week.    I decided that it would be a good way to make sure I read the contents thoroughly by summarizing and commenting on the various articles in The World in 2014 that are devoted to the various regions of the world, starting today and continuing on through the weekend.    My regular posts on project management will start again next Monday, January 6th.

A.  United States

Here are some of the major events that will occur in the political and economic landscape of the United States in 2014.

1.   Obamacare Rollout

Although the first paragraph of the article deals with the mid-term elections in November 2014 (see paragraph below), there are two events that will effect these elections and I am going to comment on them first.   First of all, the Obamacare rollout.    The technical problems with the online enrollment onto the health exchanges, much hyped by the media and the Republican party, seem to have tapered off.     The problems will now come from the following areas:

• Health exchanges playing catch-up:   Republican governors refused to set up “health exchanges” in their states , so the federal government is now scrambling to fill in the gap.
• Uninsured remain:    Although the number of uninsured will fall from 55 to 44 million i 2014, one in eight Americans will remain uncovered by health insurance.    This is because the Supreme Court made Medicaid expansion optional, and Republican-controlled states are again refusing to do so.
• If enough young, healthy people do not buy insurance in 2014, it could create a “death spiral” where the insurance prices for the remaining pool of older, more sickly people jumps in 2015.

If those in Republican-controlled states blame their political leaders for denying them access to health insurance or Medicaid, then this may have an adverse reaction in the November 2014 mid-term election.

2.  Budget Negotiations

Although a budget compromise was reached before the holidays, the government will run out of money to pay its bills by late February or early March unless the debt ceiling is raised.    If a deal is not reached when Congress gets back in session, then this would delay progress on a variety of urgent matters such as

• finalizing a farm bill
• getting started on immigration reform
• potentially extending long-term unemployment benefits.

Failure to make progress on these issues would anger the American public and, if the Republicans try to hold the economy hostage to yet another futile attempt to destroy Obamacare (especially now that many million more Americans are actually enrolled in the system), that anger might be directed towards them in the mid-term elections.

2.  Mid-Term Elections

Since the Republican gerrymandering of districts has made a few dozen House seats “safe” from Democratic challengers, the challenge has come in many districts from the right, i.e., the so-called Tea Party activists.    If extreme right candidates win the primary challenges, the Republicans could end up throwing away some promising Senate seats.

3.  Fiscal Policy

Four years of job-cutting by state and local governments came to a halt in 2013 as revenues at last started to increase.    In 2014, some 40 states out of 50 are expected to boost outlays in fiscal 2014 which ends in June.   However, the ending of austerity measures at the state and local level was overshadowed by the ramping up of austerity measures at the federal level, with

• the expiration of payroll-tax cuts and other stimulus measure
• the implementation of spending cuts and tax increases
• the failure to extend long-term unemployment benefits

In 2013, the fiscal policy decreased 1.8% from growth in 2013.    The best political outcome in 2014 would be the slowing of long-term growth of spending on health care and other social programs in exchange for modestly higher near-term spending.   Either of these would difficult for one side to accept, and would require a bipartisan compromise to carry out.    It is possible that in the run-up to the mid-term election, the Republicans facing primary challenges would be less, rather than more, willing to compromise with the Democrats.

4.  Monetary Policy

The Fed has promised not to raise short-term interest rates so long as unemployment is at least 6.5%, which is a pretty safe bet.    So although GDP growth is not in danger from a raise in interest rates, there is another source of danger, which is the paring back of the “quantitative easing” which Ms. Yellen may seek to do when she takes over from Chairman Ben Bernanke in February.   However, just hinting at a “tapering” of QE back in mid-2013 created a global stampede out of bonds, so it is likely that this would happen again if the real thing were to occur.

5.   Mid-Term Elections

The primaries in the Spring will determine whether the Republicans are putting up extremists or moderates for election in November.    The Democrats will try to put together a coalition of young voters, blacks, college-educated women and Hispanics.    The Republicans would find it more difficult to penetrate this coalition if they

• do not support immigration reforms
• support legislative restrictions on women’s reproductive rights

The danger for Democrats is that his base may find Obama well-meaning but ineffective.   This is why the Republicans tried to capitalize on the problems with the Obamacare rollout, but as those problems start to fade, the Republicans will try to look for another angle of attack.

B.   CANADA

Canada is turning conservative in 2015 because of the government led by Stephen Harper.   This means the support of very “un-green” policies like promoting exports from Alberta’s tar sands, and foot-dragging on reducing carbon emissions which might adversely impact the oil industry.    It also means a retreat from policies which promote the welcoming of immigrants and the celebration of cultural diversity.

The Economist thinks that the support of the Canadian government for the oil industry may create a backlash in the United States and actually endanger the approval of the Keystone XL pipeline which would carry tar-sands bitumen from Alberta across the border.

C.  LATIN AMERICA

Here are a list of the elections that will be held in 2014 in chronological order, with the country, election month, the likely winner, and the political leaning that the country will remain under if that candidate or party wins.

In other countries, there are no elections but the main political concern will be the following:

• Mexico:   President Enrique Pena Nieto will continue his ambitious reforms, in particular his struggle to change the constitution to allow private investment in energy sources (oil, gas, and electricity)
• Argentina:   Power will ebb away from Cristina Fernandez
• Venezuela:   Opposition hopes that their strong performance in local elections in December 2013 will lay the foundation for victory in a legislative election in 2015, which would mean the beginning of the end of Hugo Chavez’s revolution in the hands of the current President Nicolas Maduro
• Cuba:   The National Assembly will meet in Havana for the first time since 1959, signaling Raul Castro’s desire to separate the institutions of state from the ruling Communist Party before he steps down in 2018.

It should prove to be an interesting year in North, Central and South America.

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