CNN poll found that 63 per cent of respondents were angry with the Republicans for the way they have handled the shutdown, while 57 per cent found fault with Democrats and 53 per cent targeted Obama
It has been déjà vu all over again in Washington for much of the past one month. Just two years ago, the United States suffered for the first time in its history an ignominious downgrade of its stellar ‘AAA’ credit rating. That happened when a highly-polarised and dysfunctional political system took the nation to the brink of a debt default — mercifully averting a calamity at the eleventh hour. Much the same political dance has been witnessed on Capitol Hill in recent weeks and it looks like the rampaging Republicans are just about pulling back from the brink after all the sound and fury of what might really have been America’s first-ever debt default. They have finally offered a plan for a six-week extension of the debt limit in return for negotiations over spending cuts. It is another matter that at the time of writing, President Barack Obama was still to accept the Republican offer.
Unlike 2011, the stage this time round had really been set for a potential double whammy, with the Republicans having already forced a partial Government shutdown in their all-out push to defund or delay “Obamacare”. President Obama’s signature initiative to extend health insurance coverage to more than 30 million uninsured Americans, formally known as the Patient Protection and Affordable Care Act, has raised the hackles of Republicans, notably their vocal fringe of Tea Party conservatives, right from the time it was debated and passed finally in March 2010 - a time when the Democrats commanded majority in both chambers of US Congress. Ever since regaining control of the House of Representatives in the November 2010 elections, the Republicans have voted more than 40 times to repeal “Obamacare” - only to be thwarted by the Democrat-controlled Senate each time it was sought to be challenged.
But on October 1, the start of the new American fiscal year, the Republicans chose to exact revenge, bringing into play another uniquely American phenomenon - a Government shutdown that promptly closed most federal offices, monuments and parks, furloughing more than 8,00,000 employees. The shutdown came about with House Republicans refusing to pass a “clean” spending bill to keep the Government running beyond September 30. Instead, they attached one rider or another to the spending measure in a bid to defund Obamacare, delay it by a year or chip away at some of its features such as the one on individual mandate. Unacceptable as these were to the Democrats, the Senate rejected all the House measures. The bruising battle between the two sides promptly brought about the first US Government shutdown in 17 years. As of Friday, the shutdown entered its 11th day. The last one during Clinton administration stretched for 21 days during 1995-96.
The shutdown, for all its adverse impact on federal services and employee morale, came to be overshadowed by the fast-approaching October 17 deadline to raise the US debt ceiling. The Obama administration has been at pains to point out that beginning that date, it would no longer be able to pay all of its bills, unless Congress raised the debt ceiling beyond the current level of $16.7 trillion. In a testimony before the Senate Finance Committee, Treasury Secretary Jack lew bluntly stated that he would be unable to prioritise some payments over others, given that his department handles some 30 million transactions each week. “It would be chaos,” he warned. Fears of a possible US debt default, with its grim global implications, had already begun taking its toll on markets across the world.
The United States is just one of two countries in the world with clear legislative restrictions and constant scrutiny over its public debt, the other being Denmark. But in Denmark, debt ceiling has never raised the political tempers, let alone precipitated a crisis of the type that is increasingly becoming the norm in America. Since 1960, US Congress has acted to raise the debt limit as many as 78 times, says the Department of Treasury. In earlier years, the revisions were not such a bone of contention. But in recent times, notably with the Tea Party conservatives making their presence felt, every revision of the debt ceiling is fraught with uncertainty. The debt limit deals with the total amount of money the US Government can borrow to meet existing legal obligations, including payouts for Social Security, Medicare, military salaries, interest on the national debt, tax refunds etc. Treasury officials say that raising the debt ceiling does not authorise new spending commitments, but failing to increase the limit would cause the Government to default on its legal obligations.
It was against this looming financial catastrophe that the Republicans finally came around on Thursday and offered a short-term deal, put together by Congressman Paul Ryan, chairman of the House Budget Committee and Mitt Romney’s vice-presidential running mate in the last White House race. Ryan advanced some of his ideas to end the stalemate in an article in The Wall Street Journal. One aspect that instantly appealed to the Democrats, and angered the Tea Party elements, was his lack of any reference to defunding or delaying Obamacare. Ryan subsequently clarified that he had not given up his fight on this score, saying: “We’re going to keep going after Obamacare. I’m totally committed to dismantling this law because what we’re learning soon here is that it’s going to do so much damage to this country. Premiums are skyrocketing, people are losing the coverage they had, businesses are knocking people down less than 40 hours a week, it’s just terrible.”
As far as US debt goes, its major creditors include China and Japan. China indeed owns as much as $1.28 trillion of US Treasury bonds as of last July-end. Japan follows, owning $1.14 trillion in US bonds. little wonder that both these countries lost no time to urge America to get its act together. Jin Baisong, a Chinese academic, told the Global Times that Beijing may face short-term pains if the US failed to raise the debt ceiling in time, noting: “China’s exports will dramatically decrease because the default would significantly hurt the economy of the US and the European countries.”
The Republican turnaround in this crisis is due in no small measure to its plummeting approval ratings in a series of polls this week. A Gallup poll found the Republican approval rating was down to 28 per cent. Democrats have also taken a big hit, but their approval was relatively healthy at 43 per cent. A CNN poll found that 63 per cent of respondents were angry with the Republicans for the way they have handled the shutdown, while 57 per cent found fault with Democrats and 53 per cent targeted Obama. “It looks like there is more than enough blame to go around, and both parties are being hurt by the shutdown,” said CNN Polling Director Keating Holland.
The unresolved Government shutdown remained a sticking point at the meeting that the Republican delegation had with Mr Obama on Thursday evening, but the hope of a deal was very much alive. “The President had a good meeting with members of the House Republican leadership,” the White House said, but noted: “After a discussion about potential paths forward, no specific determination was made (on the Republican offer).” A spokesman for Speaker Boehner said, “House Republicans remain committed to good faith negotiations with the President, and we are pleased there was an opportunity to sit down and begin a constructive dialogue tonight.” A far cry indeed from the tone and tenor of exchanges between the two sides till recently.
(The writer is Washington Correspondent, The Pioneer)