The crisis in the U.S. raises questions about future governance
Whatever the outcome of the political crisis that has paralyzed the U.S. federal government and that is close to reaching a historic bankruptcy, has caused damage that is already irreparable: the image of lawlessness and anxiety arising from the capital of the one of the world’s most influential nation.
Even if a last minute deal resolves budgetary and fiscal messes, which now seems the most likely solution, global economic stability is threatened by continued uncertainty about the ability of American political leaders to marshal its own budget.
The US government has been shutdown through 15 days. The most beautiful monuments of the country, the Statue of Liberty, the Grand Canyon and Mount Rushmore – have reopened thanks to money donated by the states that harbor them as well as the strong opposition from veterans’ groups who have removed fences and other obstacles placed by Park Police.
Two emergency laws have ensured that 800,000 unemployed officials get retroactive wages. These laws also ensure that families of fallen soldiers receive the benefits they are entitled to. Other emergency ‘remedies’ allowed the return of Pentagon employees to work.
But some pivotal clinical trials and other medical services, food inspections or proceedings in federal courts remain paralyzed. This week, the city of Washington may stop garbage collection, as the budget that pays for that service must be approved by Congress.
However, nothing, not even the lack of garbage collection is as serious as the abyss of federal bankruptcy.
This is a situation that has never happened before, so no one risks an opinion about what may happen. The only thing the Treasury Department has warned as an inescapable fact is that, from midnight on Wednesday, the US government will run out of money and so it will fail to meet its debts.
Faced with a threat of this magnitude, the department remains confident that, at the last minute, “sanity prevails and a settlement will be reached”. That’s the idea that dominated when there were 48 days, but the truth is that the solution remains elusive when there is only a day or so left. In recent days, there have been several movements in the Capitol in search of a deal, but the reality is that, at the time of writing this report, none had come to fruition.
One of the main reasons of the current crisis, is Barack Obama’s failure to show leadership to negotiate with Republicans and Democrats. Obama hasn’t even sat at the negotiating table. His intransigence together with Harry Reid’s arrogance resulted in the paralysis of the country’s capital.
The US president called for a new round of talks with the Republican and Democrat leadership in a last attempt to stop the lock down, but the meeting was eventually postponed to give more time to the efforts of Senators.
The obstacle ahead of this meeting was the same one that existed at the beginning: What can Obama offer everything that the Republicans want? The president said at the beginning that there was nothing to negotiate until after the Republicans, who control the House of Representatives, reopened government and raised the debt ceiling to avoid default.
Subsequently, Obama agreed to having talks that the White House refuses to call negotiations. But in each of those conversations has become clear that the opposition wants something in return for an end to the crisis so that the result is not interpreted as a complete Republican defeat.
Ideally, making a virtue of necessity, they exploited this situation to achieve broad agreement on the budget that cleared all doubts for at least a year. Something in that direction was being negotiated in the Senate, where Democrats are in the majority. But such an agreement requires closer positions on taxes and spending, issues where congress is at odds.
If that ideal solution fails, it seems inevitable that budgetary resources will be made available to have the government open for a few weeks through Thanksgiving or perhaps Christmas. Even this solution is complicated without one of the two parties paying a high political price. A solution of that kind will not only not clear the international alarm, but would also give ammunition for countries like China who have called for the end of the dollar as the world’s reserve currency.