The Stars and Stripes flying in Beaufort, South Carolina. Photo: Toby Harnden

NEWS REVIEW: America’s deepening recession and widespread pessimism about the country’s prospects add a bitter note to Independence Day, reports Toby Harnden, US Editor.

Across America today, people will gather for barbecues in their backyards, parades through their towns and firework displays lighting up the night sky.

They’ll be celebrating Independence Day – the birthday of the United States and the 235th anniversary of shaking off the oppressive yoke of British rule.

On this day in 1776 a group of 13 colonies broke away to found a new nation free to govern itself as it saw fit, pledging that each citizen would have the unalienable right to “life, liberty and the pursuit of happiness”. A nation, as Americans are apt to declare without equivocation, which became the greatest on the face of the earth.

That’s the good news. On the flip side, however, a country whose hallmark has always been a sense of irrepressible optimism is in the grip of unprecedented uncertainty and self-doubt.

With the United States mired in three foreign wars, beaten down by an economy that shows few signs of emerging from deep recession and deeply disillusioned with President Barack Obama, his Republican challengers and Congress, the mood is dark.

The last comparable Fourth of July was probably in 1980, when there was a recession, skyrocketing petrol prices and an Iranian hostage crisis, with 53 Americans being held in Tehran.

Frank Luntz, perhaps America’s pre-eminent pollster, argues that his countrymen are much more downbeat now than in 1980. “The assumption with the Carter years was that it was a failure of the elites, not the system. We thought the people in charge screwed up. We didn’t blame ourselves.” Remarkably, many Americans think things will only get worse and the good times will never return.

A recent New York Times/CBS poll found that 39 per cent think that “the current economic downturn is part of a long-term permanent decline and the economy will never fully recover”. That was up from 28 per cent last October. Last month, a CNN poll found that 48 per cent of Americans believe another Great Depression is somewhat or very likely.

Luntz has found that 44 per cent of Americans believe their country’s best days are in the past, 57 per cent that their children will not achieve the same quality of life, and 53 per cent that they are less free than five years ago. So what is going on? How did the land of the free, the home of the brave, and a country that less than three years ago elected a young, untested black man as president on a platform of hope and change, get into this funk?

The parlous state of the economy is only part of the explanation. More significant is the recession’s length. Obama’s promise of a national transformation after the Bush years, moreover, means that the thud of coming back down to earth has been that much harder.

The intoxicating atmosphere of the 2008 election and Obama’s inauguration has given way to a hangover. Americans were promised that the $787 billion Obama stimulus package would cut unemployment by funding so-called “shovel-ready projects”. Instead, unemployment is at 9.1 per cent compared to the 7.8 per cent Obama inherited, while the national deficit has tripled from less than $500 billion to a staggering $1.5 trillion.

To add insult to injury, at a recent gathering of his Council on Jobs and Competitiveness, during a discussion about the length of time it took to get projects funded, a smiling Obama interjected: “Shovel-ready was not as shovel-ready as we expected.” Members of the council sitting around him tittered but most Americans were not amused.

There is gridlock in Washington over raising the national debt ceiling, with Democrats demanding tax increases as well as deficit reduction, and Republicans adamant that no taxes will be increased. In a characteristic illustration of a bipartisan assumption of bad faith in such debates, Democrats have accused Republicans of wanting to damage the economy as part of a plot to harm Obama’s re-election chances.

The US Treasury is warning of “catastrophic economic and market consequences” if no deal is reached in July and the country defaults on its debts, though there are signs that both sides would prefer this to political compromise. Obama summed up the Republican position as “Are you willing to compromise your kids’ safety so some corporate-jet owner can get a tax break?”

Six times, he mentioned the scourge of tax breaks for corporate jets. To the uninitiated, it might have appeared that eliminating these evil tax breaks might make a significant dent in the national debt. But it was quickly calculated that doing so would save about $3 billion over the next decade, or 0.03 per cent of the $9.5 trillion in cumulative new debt contained in Obama’s current budget plan.

On foreign policy, there was a brief spasm of celebration over the killing of Osama bin Laden in Pakistan. But Obama’s decision, against military advice, to capitalise on this by withdrawing 33,000 US troops from Afghanistan has been accompanied by a sense that the US is retreating, if not surrendering.

It was on the Fourth of July last year that General David Petraeus assumed command in Afghanistan and declared: “We are in this to win.” But in announcing his recent decision to withdraw troops, there was no mention by Obama of winning or victory – or, for that matter, of Petraeus, who is returning home to take over the CIA.

Futhermore, having cast doubt on American exceptionalism, Obama has allowed Europe to spearhead the Libya operation, prompting a White House aide to coin the term “leading from behind”.

But Americans do not just blame Obama; and the national malaise is to do with far more than one president. “Every institution in America has gone through a collapse,” says Luntz. “The Church is not what it was, thanks to all those religious scandals, the media is much less trusted today than it was 20 or 30 years ago. Big business does not have credibility.”

The growth of blogging, social media and cable TV together with the decline of the broadcast networks and papers like the New York Times means Americans have access to more news, but this is often partial and drowned out by opinion. Because there is greater choice, more and more Americans are choosing to read only things that reinforce their existing beliefs, shutting out the other side.

When Republican presidential candidates Sarah Palin and Michele Bachmann made assertions about historical events, their supporters rushed to Wikipedia to change entries about those events – altering reality to advance their argument.

“It means a lot more shouting,” says Luntz. “It means a much less unified America on the Fourth of July and a lot more division. You’ll hear a lot more political arguments while we’re watching the parades. While we will appreciate the celebration of tradition, there’s so much anxiety and anger that it makes it really unpleasant.”

One of the few news stories of recent months that prompted unanimity across the political divide was the arrest of Dominique Strauss-Kahn, then head of the International Monetary Fund, on suspicion of raping a chambermaid in a New York hotel.

Only in America, most people here agreed, could the rights of an African immigrant trump those of a powerful, arrogant politician. But even that illusion was shattered last week when it turned out that the accusing woman was a liar with criminal ties who allegedly hoped to profit from the incident. Now, the sleazy Frenchman is poised to resume his presidential quest, doubtless to be fuelled by Gallic anti-Americanism, back home.

The 2010 mid-term elections showed that the Tea Party movement, drawing its small-government, low-tax inspiration from the revolutionaries who overthrew the British, was a phenomenon that could turn American politics upside down.

Previous elections had been about choosing the lesser of two evils but 2010 was about throwing the bums out. Luntz, a Republican, predicts that 2012 will be a “none of the above” contest. What is needed above all is optimism: it is a prerequisite for the risk-taking needed to invest and start new businesses. Its absence could turn into a self-fulfilling prophecy as belief in American decline helps ensure that the halcyon years are indeed in the past.

The 1980 election was won by Ronald Reagan with his “Morning in America” message. Today, a 10ft bronze statue of Reagan will be unveiled outside the US Embassy in London’s Grosvenor Square, which, in another sign of the times, is due to move to Battersea next year because of concerns about its vulnerability to terrorists. Thus far, there is no sign of a new Reagan emerging.

More worryingly, the optimism he embraced and came to personify is all but absent in America this Fourth of July.