by Geoffrey Garrett
The spin wars over Barack Obama's healthcare victory are going to be fierce.
Democrats will claim their win constitutes the biggest improvement in the nation's healthcare system in half a century, delivering historic "change you can believe in".
Republicans will excoriate the change as a big-government initiative restricting choice, rationing care and worsening the US's parlous public finances.
The unstated bottom line will remain that Obamacare gives more than 30 million Americans access to regular healthcare by subsidising the cost of their private insurance premiums rather than by moving towards a universal public healthcare system.
But the effects of ending the debate will extend well beyond the US healthcare system.
Republicans are right that there are heroic cost-cutting and tax-increase assumptions built into Obamacare. The plan projects massive efficiency savings in the US public healthcare program for retirees, Medicare, new taxes on wealthy Americans, and reduction in tax deductions on expensive private health insurance plans.
The chances all this will happen are slim to none. As a result, the budget savings Obama projects his plan to generate will likely, in fact, turn into more red ink on the US's haemorrhaging public balance sheet.
This will only turn up the volume on the international whispers questioning the solvency of the US economy and the dollar's status as the world's reserve currency.
This is a price Obama was willing to pay because his healthcare win most likely saves his presidency from ignominious Jimmy Carter-like mediocrity, without guaranteeing a successful Ronald Reagan-like revolution from the centre-left. At minimum, the win will allow Obama and the Democrats to broaden their gaze after months of White House healthcare myopia and partisan paralysis in congress.
Don't expect the President's agenda to become internationally focused anytime soon. Even though the foreign policy docket continues to grow, from Islam, the Middle East and nuclear weapons to China, Japan and Asia-Pacific geopolitics, the Obama administration's focus this year must continue to be domestic.
Everything will point to November's congressional elections that will boil down to a referendum on what Obama and the Democrats have done to reduce double-digit unemployment in the US. For any big-ticket legislation to have a chance in this environment, it must shore up Obama and the Democrats' credentials as job creators who feel the pain of Middle America and as Main Street's defenders against the excesses of Wall Street.
Two issues potentially fit the bill: climate change and financial regulation.
John Kerry will launch in the Senate next week a new energy and climate change bill that will be very different from last year's Waxman-Markey version narrowly passed in the House of Representatives. Gone will be an ambitious Kevin Rudd-like emissions trading scheme. In its place will be an emphasis on green-collar job creation through targeted controls and incentives that will look similar to those proposed by Tony Abbott.
The odds are long against even this slimmed-down version of energy and climate change passing this year, with opposition coming not only from Republicans but also from Democrats in coal and heavy manufacturing-dependent states in the US heartland.
But if and when something like the new Kerry bill becomes law, it will rule out a global cap-and-trade deal and move the international action on to co-ordinated national targets and national mechanisms enforced by the threat of carbon tariffs against countries that do not step up to the plate.
Prospects are better for American financial reform that the world will like, for one simple reason. Americans, like people the world over, want Washington to take on the gargantuan excesses of Wall Street. Passing what will no doubt be billed as the biggest reform of American finance since the Great Depression is a massive ask. But financial reform makes very good political sense in today's America.
Obama and the Senate are mostly on the same page regarding the direction of reform. Hedge funds and private equity must be brought under the regulatory umbrella. A contemporary analogue of the old Glass-Steagall firewalls between the safe managing of deposits and risky proprietary trading should be re-created. Banks that are too big to fail have to be much more closely scrutinised. Consumers need protection from excessive risk-taking in the financial sector.
The G-20 wants all this, too, but US legislation was always going to be a precondition for global action. The finish line is more likely years rather than months away. But the US seems willing to take the first important steps towards it.