Shutdown likely to be just the start for Republican no surrender caucus

Opinion: Tightening of money supply could threaten fragile economic recovery

Texas Republican senator Ted Cruz  leaves after speaking following a meeting  of his party caucus on Wednesday. Photograph: Getty Images

Texas Republican senator Ted Cruz leaves after speaking following a meeting of his party caucus on Wednesday. Photograph: Getty Images


Fresh from his victory this week, which saw congressional Republicans unconditionally surrender over the government shutdown after 16 days, President Barack Obama suggested on Thursday that it was time to work together on important reforms, starting with immigration.

“There’s already a broad coalition across America that’s behind this effort of comprehensive immigration reform-from business leaders to faith leaders to law enforcement,” he said.

A similarly broad coalition would like Democrats and Republicans to agree on a budget over the next few weeks and to avoid another showdown over the debt ceiling - the limit to how much the federal government is allowed to borrow. Following last year’s mass shooting of schoolchildren at Sandy Hook, yet another broad coalition of Americans favoured tightening gun laws, spurring the president to put the issue at the top of the to do list of his second term.

Within weeks of his second inauguration in January this year, however, Mr Obama’s modest effort at gun control was in ruins, shot down by the powerful, intensely motivated gun rights lobby and its allies in Congress. The president’s hopes for immigration reform are also likely to be disappointed, not least because this week’s defeat over the shutdown has left conservative Republicans more determined than ever to oppose any cooperation with the White House. Far from feeling chastened, many of the firebrands who led the campaign to shut down the government have been energised by an experience that has whetted their appetite for more conflict.

“The battle is over but the war has just begun,” Austin Scott, a Republican congressman from Georgia, declared on Wednesday even as his party’s leadership was running up the white flag on the Capitol.

This week’s deal has not resolved the dual impasse over the federal budget and the debt ceiling, only postponed it for three months. In the meantime, a committee drawn from Democrats and Republicans in the Senate and the House of Representatives has been charged with finding “common ground” on a budget.

The origins of the current crisis go back to 2011, when Republicans threatened to default on the federal debt and Mr Obama blinked, signing into law a measure that would cut government spending by $917 billion over a decade. A congressional committee was told to come up with more cuts and warned that failure to agree would trigger a “sequester” - $1.2 trillion in cuts over ten years, starting at the end of 2012. The sequester is a crude instrument, cutting spending across every government department, including those beloved by Republicans such as defence and homeland security as well as Democratic favourites such as education, energy and medical research. Both sides would suffer if they failed to compromise. Fail they did, however, and the effects of months of across-the-board cuts have been felt across the United States, with food safety inspections cut back, research projects halted abruptly and thousands of jobs lost.

Sequester cuts planned for 2014, which will kick in automatically if the two parties fail to reach a budget deal, fall more heavily on defence than on other departments. The conventional wisdom has argued that Republicans will be unable to countenance deep defence cuts and will be eager to make a deal. A sizeable minority among conservative Republicans, however, are libertarian isolationists who want to shrink the US military footprint across the world and cut defence spending. Others associated with the Tea Party are so allergic to the idea of compromise with the president that they will not support any budget deal, regardless of the consequences.

The budget hysteria on Capitol Hill endures despite a dramatic fall in the US federal budget deficit in recent years - from 10 per cent of GDP in 2009 to about 3 per cent today. Americans have suffered austerity on a European scale through sharp reductions in government spending, although the impact has been cushioned by the expansive monetary policy pursued by the Federal Reserve. The Fed has signalled that its programme of quantitative easing will be phased out shortly, a tightening of monetary policy which, combined with further government spending cuts, could stall an already fragile US economic recovery.

Congressional Republicans have suffered badly in the polls as a result of their brinkmanship over the shutdown and their leaders in Washington would dearly love to avoid a repeat of the budget drama in January. The party’s meagre appetite for compromise can be seen, however, in the way Republicans voted on the deal this week in the House of Representatives - just 87 voting in favour and 144 against. Another measure of the party’s mood is the fate of Ted Cruz, the blowhard Texas senator who led the shutdown charge, accusing fellow Republicans who opposed his strategy of belonging to a “surrender caucus”. Loathed by his fellow senators and despised by respectable Washington opinion and despite the utter failure of his attempt to link the budget battle to Mr Obama’s healthcare reforms, Mr Cruz has seen his stock soar among conservative Republicans.

Mr Cruz’s upward trajectory contrasts with the fate of another Republican presidential hopeful, Florida senator Marco Rubio. After his party’s defeat in last year’s elections, Mr Rubio took to heart the shared wisdom of Washington, that Republicans would never be able to regain the White House until they broadened their appeal to Hispanic voters by embracing immigration reform. Mr Rubio, whose family is Cuban, set to work with a bipartisan group of senators on a reform that would give undocumented immigrants a chance to regularise their status but would also improve border security and enforcement measures. His reward was to be vilified by his former admirers in the conservative corner, leading him to retreat from the initiative, which he scarcely mentions nowadays.

The US system of government is designed in such a way that it requires a bipartisanship which was standard during much of the 20th century, when both parties were broadly based coalitions, with the Republicans including a large bloc of East Coast liberals and the Democrats embracing many southern conservatives. Both parties have become more ideologically homogenous, making compromise more difficult to achieve. The rise of a no surrender, anti-government, out-of-control caucus within the Republicans has made it almost impossible.

Denis Staunton is Deputy Editor

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