The American Dream and harsh realities

US President Barack Obama was back to his best form when he made a teary-eyed victory speech to his supporters last week and promised that the best was yet to come, and he would fight for all Americans to create the land of their dreams and of the American Dream.

But there is a growing cataclysmic chasm between the promise that he was offering and the tough reality that he and America face today. "We want our children to live in an America that isn't burdened by debt, that isn't weakened by inequality, that isn't threatened by the destructive power of a warming planet," he declared.

It is tempting to say, "Dream on". There can be no doubt of Obama's good intentions, but his first four years in office proved that fine words and promises don't get you far. He proved singularly inept at the politicking and infighting necessary to get things through an obstructionist Congress.

The reality of the past decade is that America's underclass has been growing. The richest 1 per cent, and particularly the richest 0.1 per cent, have continued to enrich themselves, while the 99 per cent have struggled and seen their incomes drop, their jobs under threat and their children uncertain of getting jobs at all. Social and economic mobility, once the centre of the American Dream, is now lower in the US than in tired old Europe.

Meanwhile, the government's ability to act is savagely constrained by continuing deficits and the overhang of debts, which the squabbling parties are making worse by their refusal to accept tax rises, on the Republican side, or cuts in entitlements, on the Democrat side.

Paul Volcker, a former Federal Reserve chairman who defeated inflation by his tough-love policies, writes in the current issue of the New York Review of Books that America's view of itself as a great country is being threatened by its dependence on capital flows from abroad, its miniscule savings and flat household income. "These are not the characteristics of a country willing and able to prolong its global leadership," he writes .

America is a nation of immigrants, but its immigration policy is in a mess. Newcomers are viewed with suspicion.