America is screwed. Done. Finished as a superpower. Why, you ask?
Before you stop reading, hear me out. The international community hates President Bush. He has acted like he is General of the World and not president of the United States, and most foreign countries basically refuse to deal with him.
"So what?", you ask. "America doesn't need those losers. America Rocks!!!!"
To bad those losers are financing our asses
Most of the rest of the world said "We hate Bush, but America is okay. He didn't even win the popular vote there". That impression is gone. They will start to hate America itself now, which is very, very bad for us. The American economy relies on the good will of European, Middle Eastern and Chinese bankers who finance our national debt. I doubt the Chinese will pull the spending plug, but I think the odds are extremely good that we will start to see European investment pulled from the United States. Don't get me started on what the middle eastern bankers will do. The Saudis get along really well with Bush, but I think the rest will accelerate a gradual movement to Euros that has been going on since 2000.
These financial dealings allow the US to finance its 5% GDP deficit, a level of hemorrhaging that can't be maintained over the long run. I'm not any kind of economist, but from what I understand countries cannot maintain deficits that are larger then thier growth % rate + their inflation % rate. Right now the growth rate is -0.7% and the inflation rate is around 2% - which means one of three things has to happen. We have to start a massive economic boom, undergo massive inflation or default on our loans. The first option is the least painful but also the least likely. The second option would give us a late 1970s - early 1980s style economy and I think is the most likely. The third option would fix the debt problems but would probably start a second great depression.
"But we can just cut spending, right?"
Not really. The truth is most of our domestic spending is pretty threadbare already. The problem is that taxes are artificially low and can't be maintained at their current levels, although it seems that Bush will still force through more cuts despite reality. The other problem is that a massive amount of money is now flowing into Defense and the war in Iraq, which seems to be becoming a black hole of money that I can' see Bush closing up anytime soon.
Why can't Bush close the whole in Iraq? Because to do so he would need more international help, and the fact is the whole world hates him too much to help at all. Tony Blair is facing the possibility of a vote of no confidence if he increases troop levels in Iraq, Pro-Bush governments in Spain and Poland have been voted out, Australia doesn't have the resources to send more troops, and the Italian government is teetering on the brink.
Not only that, but Bush's "aggressive" foreign policy means we are almost certain to have more military commitments over the next 4 years. Commitments that can only realistically be met by a draft. Before yesterday I thought that a draft was inconceivable. But with Bush's popular vote victory as a mandate, I think it is a very real possibility.
It gets worse on the domestic front, though. For anyone who holds any sort of secular or liberal social viewpoint its game over. The Democrats will be able to barely stop a federal gay marriage amendment, but that might be moot with the Supreme court reaching retirement age in a big way.
Its clear that Rehnquist is going to retire in the coming months. That will not significantly affect the court. However, it is widely agreed that up to 3 more justices, including several moderates, will retire in the next 4 years. With the Democrats crushed in the Senate it is likely that Bush will be able to get extremely conservative justices appointed to the court. I think its is extremely likely that the next 4 years will see supreme court rulings banning gay marriage, abortion, Stem cell research and affirmative action.
To sum it up, I think America is going to become a social and economic backwater with a massively oversized military, much like the Soviet Union in the 1980s. I think this is the closing ring for the American superpower. At least we aren't going out with a whimper.