Once more unto the brink
It’s no way to do business. It’s not as if the US Congress and dysfunctional political system stumbled involuntarily to the edge of the precipice, the fiscal cliff. They themselves fashioned this dangerous game of chicken to force their own hand, and blindly teetered for days on the brink of what would have been self-inflicted recession.
In the end, in the early hours yesterday, the Republicans, widely blamed for the gridlock, blinked first and provided the majority for measures that averted big income tax increases on most Americans and prevented crude, swingeing cuts in spending for the Pentagon and other government programmes.
President Obama got his increased taxes on the very rich and the continuation of unemployment benefits, at the price of making permanent Bush-era tax cuts for the middle classes. But, although the immediate crisis was averted, he will have taken little comfort in his victory. We are certainly not out of the woods, and many House Republicans say they voted reluctantly for the Bill, keeping their powder dry for the next looming showdown – a vote within the next two months on raising the legally permissible ceiling on federal debt.
The federal government has already broken through that ceiling but technical “extraordinary measures” by the treasury will allow the government to continue paying its bills for two months. If Republicans again hold the line, the real prospect of default looms as the government runs out of money to pay wages with the likely consequent chaos on domestic and world markets . The White House says that there will be no negotiations over the debt ceiling, and that if Republicans want further spending cuts, their only chance is to hand over more tax revenue. We’re back to the game of chicken.
And it’s not as if the “small deal” and Bill agreed yesterday by the House goes anywhere near solving the deficit problem it was supposed to address. On the contrary. In all, the bill which will barely stabilise borrowing overthe next decade, will cause deficits to rise by nearly $4 trillion over the period, according to the nonpartisan congressional budget office.
Nor, its critics complain, does the Bill go anywhere near addressing the challenge of 12 million unemployed, while it is also stuffed with the sort of pork barrel concessions to individual politicians that are typical of the worst kind of congressional legislating.
In the end, however, and this is perhaps clutching at straws, Congress did act, albeit in the most minimal way. And a significant majority of Republicans – those who, as one columnist put it, still hold the old-fashioned view that they were elected to help run the country –did demonstrate a degree of flexibility and bipartisanship almost unthinkable before the election. Obama’s renewed mandate has given him a new small measure of freedom. But it will dissipate fast if he does not use it.