Given Washington’s apparent detachment from reality, it was always going to be unwise to bank on a resolution of the debt-ceiling crisis before the ink was dry. Sure enough, early signs of progress yesterday – enough to prompt a small swell of optimism that a US default, and the ensuing global chaos, might be avoided – swiftly ran into the sand.
With less than 48 hours to go, time is running out. But even if agreement is reached, untold damage has been wrought by the spectacle of a faction holding first its own government, and then the world economy, to ransom. Nor is it only the Republican party – widely blamed for the debacle – that is tarnished. With America’s supposedly sophisticated model of government left looking farcical, and its dominance of world financial systems risky, the country’s global standing is also diminished.
Pleas for sanity have not been restricted to the likes of the International Monetary Fund and World Bank. China’s official news agency calling for a “de-Americanised world” may, in the context of Beijing’s trillion-plus dollars in US Treasuries, speak as much of fear as of threat. But the notion of an international system less exposed to the vagaries of one riven polity nonetheless strikes more of a chord than it did.
As the US tots up the costs – political and economic – of the latest farrago, the only sensible course is the abolition of the debt ceiling. Such a ceiling is not necessary. Of developed economies, only Denmark has a similar set-up; and the US version was only created as a way of holding the president accountable at a time when legislators had little to do with federal budgeting. Now, they vote annually on comprehensive tax and spending resolutions – rendering the ceiling wholly redundant. All it does is put a question mark over Congress paying for spending it has itself mandated.
But if the case for ditching so antiquated and easily exploitable a measure is straightforward, the politics are sadly less so. Even as the polarisation of US politics has turned a once-harmless anachronism into an extremists’ weapon of mass destruction, so those same extremists will be loath to part with it. Meanwhile, the near-sanctity in which even pseudo-constitutional mechanisms are held presages a blizzard of challenge and counter-challenge.
All is not entirely hopeless. Recent polls have been sufficiently devastating for the Republicans to strengthen Speaker John Boehner’s hand were he to try to discipline the Tea Party fundamentalists. Thus far, there is little sign either that he will do so or that he would be heeded if he did. But moderate conservatives are scared of the electoral fallout in next year’s mid-terms, creating a sliver of possibility that a whipping at the ballot box might bring some sense to proceedings and beget conditions under which the iniquitous debt ceiling might be scrapped. It is just about possible. It is certainly in the interests of the US and the rest of the world alike. And yet, even with the chasm that has gaped at all our feet this week, it is still only an outside chance.