As the new year gets under way, we take a quick temperature check on some key areas to see what the prognosis might be. The topics: politics — domestic and global — and economics.
REBECCA SHEIR, HOST:
It's WEEKENDS on ALL THINGS CONSIDERED from NPR News. I'm Rebecca Sheir, in for Guy Raz.
So here we are, a brand-new year. And on today's show, we'll be exploring what 2012 might have in store - from foreign affairs, to films, to the economy. But first, we take a look at what's sure to be a memorable year in politics.
The presidential election is in full swing. And with me to predict, or at least take his best calculated guess, at what might happen down the campaign trail is NPR's senior Washington news editor Ron Elving. Ron, thanks for being here.
RON ELVING, BYLINE: Good to be with you, Rebecca.
SHEIR: So, Ron, you are the pro. Who's going to win?
ELVING: Two simple scenarios. In one, the country has an economy getting better and Obama gets re-elected pretty much regardless of whom the Republicans nominate. On the other scenario, the economy gets worse, Obama gets beaten, almost regardless of whom the Republicans nominate. But there's a third and more complicated and more likely scenario wherein the economy is still stagnating, the jobless rate is still high, it's not really getting worse or better, and the election is a toss-up.
In this case, the Republican nominee is going to matter a lot, and it's critical that the Republicans pick someone who can match up well in the debates, unite the party, and win a couple of the key swing states like Florida, Ohio, Wisconsin and Colorado. Obama needs at least three of those four states to win in November.
SHEIR: Well, on the Republican side, it seems there's a candidate to suit all different types of conservatives, but at this point, no one really stands out as a strong favorite. Do you think the Republicans will be able to effectively unite under one candidate?
ELVING: The Republicans will unite against one candidate, and that candidate will be Barack Obama. As far as enthusiasm for their own candidate, that's much more of a question mark. Now, we do know this about their process. In one sense, it's going to be long. The primary calendar and the delegate allocation rules have changed, and most of the delegates will now be chosen after mid-March instead of before.
So it's possible that two or three candidates could slug it out all the way to June. Or if Mitt Romney, the former Massachusetts governor, jumps out to a fast start and his rivals suddenly see their money dry up, the real suspense could be over early. If that happens, there's still plenty of time. There's still February and March. At least theoretically a new candidate could jump in.
If someone has the name recognition and money to make a plausible challenge, of course, if there's someone like that, why didn't they start running in 2011?
SHEIR: What about the chance of a third party? How likely is it that a third-party candidate will step in? And if that happens, what kind of impact might it have?
ELVING: Yes. I think there will be a third-party candidate, an independent candidate, and more than one. The question is whether that person will be on enough ballots to matter and popular enough to force his way or her way into the debates. Now, let's say if Ron Paul, for example, were to run as an independent or a libertarian, he could draw many votes, most of them probably from the Republican side. But it's possible that a more moderate candidate will run and wind up taking more votes from the president.
SHEIR: Moving then, though, from the presidential race to congressional elections, which party will come out on top in the Senate and in the House?
ELVING: The numbers are really stacked against the Democrats with respect to Congress, the Senate in particular. About a third of the seats in the Senate are up, six-year terms. And among those seats, two-thirds of them are currently held by Democrats and seven of their current incumbents have decided to retire. It's much more difficult to defend vacancies, and most of those seven seats are looking quite vulnerable for the Democrats. The Republicans have some, too, but they're in red states that they shouldn't have much trouble defending.
So with this narrow margin in the Senate right now, it would appear highly likely that the Republicans will take control of the Senate in 2012, barring some huge Democratic wave. Over on the House side, it's a little tougher to tell. A lot of district lines are still being drawn around the country, but that process, too, is favoring the Republicans. And while the Democrats may well pick up seats, it's a tough slog for them to pick up enough seats to get back into control of the House.
SHEIR: That's Ron Elving, NPR's senior Washington editor. Ron, thanks so much.
ELVING: Thank you, Rebecca.
SHEIR: As we've heard, a deciding factor of the election will be the economy and whether it'll start to improve. So are there any glimmers of hope, or are we in for more of the same this year? We put those questions to Annie Lowrey, economic policy reporter for The New York Times.
ANNIE LOWREY: So the fundamentals of the economy have absolutely been getting stronger. Economists see a lot of things to be happy about in things like industrial production, consumer spending, unemployment claims. Obviously, the actual unemployment rate has dropped pretty significantly, four-tenths of a point last month.
So folks are expecting a good year next year and nobody is really worried about a double-dip recession, but we had nearly 4 percent GDP growth in the fourth quarter. And for next year, total GDP growth is expected to be about 2 percent.
SHEIR: Are there particular sectors where we might see some especially promising growth?
LOWREY: Yeah. So the recovery has been actually pretty broad-based. It hasn't been, like, there's one sector that's been a real runaway that's really been supporting the recovery. But there's two things to look at. The first is that exports have been doing quite well. The U.S. is exporting more stuff and importing less stuff, so the trade deficit has narrowed, which is a good thing.
And then the second sector, which economists are kind of excited about, which is sort of surprising, is housing. Basically, what happened was we had a huge housing bubble and then a huge housing bust, and they now think that we've underinvested in housing for so long that actually there's some need for some new building, and especially in things like apartment complexes and condos, as opposed to the kind of single-family houses that we saw supporting the boom.
SHEIR: Looking across the pond over at Europe, obviously, the sovereign debt crisis has played a major role over the past few years, how might it fit into how our nation might fare economically in 2012?
LOWREY: There's definitely a lot to worry about with Europe. First, there's the threat of financial contagion. So weakness in European banks extends to U.S. banks. But the other thing to worry about is the strong dollar and trade. If the dollar is expensive relative to other world currencies, that makes our exports less competitive. A lot of people think that that's really going to weigh on us next year because investors are just fleeing to assets that are denominated in dollars.
And you can see that by just the massive prices that we're getting for U.S. treasuries and, in general, just a lot of strength in dollar-denominated investments.
SHEIR: Is there anything we can do to brace ourselves for what's happening in Europe?
LOWREY: One thing that's good is that the U.S. economy is not terribly dependent on trade. So I think that the issue is that it's going to just contribute to this kind of sluggish growth picture that we're seeing. Because the world economy is not going gangbusters, we're not going to go gangbusters either. But we might be sheltered from some of the problems in Europe. So it's kind of the same muddling through picture that we've seen where nobody expects, you know, anything dire to happen. Nobody expects a double-dip recession anymore. But we're not going to see anything great.
And, you know, I think that the other thing to think about is that unemployment is not expected to get that much better. You know, it could still be basically where it is now by the time of the election, by the end of next year, even if the economy is growing.
SHEIR: Your overall prognosis is not too dire, but we're not going to see sudden happy times?
LOWREY: Yeah. It's kind of a meh. It's like a B-minus.
(SOUNDBITE OF LAUGHTER)
LOWREY: It's not going to be very good, but it's also not going to be bad.
SHEIR: That's Annie Lowrey, economic policy reporter for The New York Times. Annie, thanks so much for coming in.
LOWREY: Thank you for having me.
SHEIR: Let's look beyond our shores now to the biggest foreign stories coming our way in 2012. David Rothkopf is a contributor to Foreign Policy magazine and a fellow at the Carnegie Endowment for International Peace. And he joins me now in the studio. Welcome.
DAVID ROTHKOPF: Pleasure to be here.
SHEIR: Now, obviously, here in the U.S., we have a major election coming up in November, but it looks like we might see some big leadership changes all over the world in the next year.
ROTHKOPF: Next year is going to be a year of change in China where you've got a leadership change. You've got elections in Mexico, you've got elections in Russia, you've got elections across Europe. And given the fact that the Chinese economy is rather precarious, the U.S. economy is precarious, the European economy is precarious, Russia's whole political state is precarious, and, of course, on top of that, we've also got Egyptian elections and other elections in the Arab world, which is almost always precarious, these votes take on even greater significance.
SHEIR: What do you see happening in the Middle East in the next 12 months, say?
ROTHKOPF: Well, you know, if you're predicting the weather and you say that the weather tomorrow is going to be the same as the weather today, you'll be right 85 percent of the time.
ROTHKOPF: With the Middle East, if you predict that next year is going to be tumultuous like this year was tumultuous, you'll also probably be right. We're halfway through just the initial wave of these revolutions, if that. So, you know, if you sort of look at the greater Middle East, there's no place that you can see that is likely to be more calm next year than it was this year.
SHEIR: And you mentioned China. Let's talk about that. Might there be any effect of the death of Kim Jong Il?
ROTHKOPF: Well, were North Korea to have a meltdown, were there to be a refugee crisis, it would be a Chinese problem. No other country has more influence on North Korea than the Chinese. And therefore, the United States and the other powers that have an interest in containing North Korea's nuclear program, avoiding conflict with the South, are going to rely increasingly heavily on the Chinese to take the lead in diplomatic issues.
SHEIR: You've written about the possibility of a major cyberattack, sort of a successor to last year's Stuxnet worm, which was the first computer worm to affect actual infrastructure. How likely is a sequel?
ROTHKOPF: First of all, I think a sequel is certain. I recently made a prediction that 2012 would be considered the year of cyberattacks until it was replaced by 2013 as the year of cyberattacks. I spoke to somebody who was very much involved in uncovering the Stuxnet story, which was the worm that the United States and others sent in to the Iranian program.
And he spoke to one of the scientists and the scientist said: This is just like Hiroshima when we hit the bomb and nobody else did. The only difference is that when the bomb drops on Hiroshima, it explodes and you can't put it back together. When you send a worm into a country, they have the worm. They can analyze it, rebuild it and send it out.
And so I think you're going to see a big escalation. And at some point in the next year or two, a piece of critical infrastructure in the United States or in Europe is going to be shut down by some kind of cyberattack, and we're going to really be tested in terms of how we respond to that in terms of civil liberties, in terms of how we protect ourselves. This is something to watch. It's going to be a game changer in the way countries relate to each other.
SHEIR: That's David Rothkopf. He's a fellow at the Carnegie Endowment for International Peace and author of the upcoming book "Power, Inc.: The Epic Rivalry Between Big Business and Government and the Reckoning that Lies Ahead." Thanks so much, David, for coming in.
ROTHKOPF: My pleasure. Transcript provided by NPR, Copyright NPR.