The failure of the comically mis-named "super-committee" of Congress to come up with even the modest debt reduction package required of it has been a racing certainty for weeks in Washington. Nonetheless, Monday evening's admission of that failure – the latest proof of the dysfunctionality of America's political system – is not only shameful. It is also dangerous.
The 12-person committee, split equally between Republicans and Democrats, was not being asked to remake the universe. Its task was to find $1.2 trillion of savings over 10 years, or barely 0.5 per cent of total GDP for that period, just a fraction of the $4trn worth of deficit reduction that most economists deem necessary for the nation's finances to be put in order.
The group was, moreover, given exceptional powers, including fast-track voting, decisions taken by a simple majority and no filibusters. Even so, it could not get the job done. The stumbling blocks were the usual ideological ones: the Democrats' reluctance to make meaningful cuts in public health and pensions programmes, the Republicans' refusal to countenance any tax increases, even for the very rich.
What happens now? The short answer, almost certainly, is nothing, at least until the 2012 presidential elections are out of the way. Theoretically, mandatory cuts, affecting even the normally sacrosanct Pentagon budget, will kick in automatically – but not until January 2013. President Obama insists he will hold Congress's feet to the fire by vetoing any attempt in the meantime to nullify these cuts. We shall see.
In political terms, the most obvious "winner" from the debacle is Mr Obama himself. Wisely, he declined to get involved in a doomed venture. Instead, he has to all intents and purposes launched his re-election campaign, portraying Republicans as the heartless party of "fat-cat" America and weighing into a "do-nothing" Congress.
Polls suggest Americans agree with that approach, with more than two-thirds favouring higher taxes for the rich as part of any debt reduction package. It is no coincidence that while voters' approval of Mr Obama's performance – currently in the mid-40s range – is perilously low for a President seeking re-election, he has now moved into a clear lead against all his Republican challengers.
Meanwhile, public disgust at Congress, measurable by that institution's single-figure approval rating even before the super-committee fiasco, will surely be complete. Yes, recent election results suggest Americans favour divided government in Washington – but in order to generate compromise, not paralysis. Today, a healthy scepticism of government risks turning poisonous.
There is, moreover, scant likelihood that the election will settle matters. November 2012 could produce a new occupant of the White House, along with a change of control in one or both chambers of Congress. Whatever happens, though, neither party will secure the mandate (still less a filibuster-proof majority of 60 in the Senate) to push through its ideological vision. In short, there is no alternative to compromise.
The greatest danger is to America's anaemic economy. The super-committee's failure will shake the confidence of both business and consumers, hardening the impression that Congress is incapable of acting in the national interest. Everyone knows the ingredients of a deal: tax increases and the closing of tax code loopholes, combined with cuts in entitlement programmes. But agreement never happens.
Thus far, America has been lucky. Thanks in part to the eurozone crisis, the US Treasury can borrow more cheaply than ever. But it will not be ever thus. Further credit downgrades may come, the economy may weaken further – sooner or later, the real cost of this latest Congressional fecklessness will be plain for all to see.Reuse content