The price of polarisation
It is a sign of just how polarised politics have become in Washington that Republicans in Congress have the triggered the first shutdown of the federal government since 1996 over a few months of spending. President Barack Obama ordered the shutdown after the Republican-dominated House of Representatives refused to approve government spending for the rest of the year unless he agreed to postpone a key element in his healthcare reform package the Affordable Care Act, universally known as Obamacare. Under Ronald Reagan, the government shut down a number of times, but only for a few hours and it was not until 1996, when Bill Clinton battled over the budget with Republican House speaker Newt Gingrich, that Americans saw the impact of an extended stoppage – first for six days and later for three weeks.
That shutdown was so unpopular and so damaging to Republicans, who paid a heavy electoral price in the 1996 elections, that the conventional thinking in Washington has been that Congress would always pull back from the brink. This time is different, not least because the dominant faction among congressional Republicans is less interested in the budget itself than in wrecking Obamacare, the president’s signature legislative achievement. The healthcare legislation was passed by both houses in Congress after a brutal legislative battle and tested by the supreme court after Mr Obama signed it into law. That is not enough for its conservative critics, who have absurdly characterised this modest, market-based reform which subsidises the expansion of private health insurance as “socialised medicine”. Unfortunately for the United States, the most dynamic part of the Republican Party is also the most uncompromising on both Obamacare and the budget. Many of those congressional Republicans who favour a more moderate approach have hesitated to voice their concerns for fear of facing a primary challenge from the right.
Mr Obama has rightly refused to negotiate on the shutdown, arguing that funding federal services should not be seen as a political concession but as a public duty for legislators. The stock market yesterday appeared to shrug off the crisis, apparently persuaded that it will be resolved within days and before it wreaks significant economic damage. That could change if the shutdown continues into next week with no sign of compromise. Even if the current crisis is defused, Mr Obama faces another budget battle in the next few weeks, with an October 15th deadline for Congress to approve the raising of a ceiling on how much the federal government is allowed to borrow. If reason fails to make a breakthrough on Capitol Hill in the coming days and the US economic recovery starts to falter, the repercussions will be felt across the world.