The People's Daily, China
America Has No Right to
Constantly Agitate the World
By Zhong Sheng
Numerous international organizations have issued warnings that the U.S. is hanging on the edge of a cliff and its negative influence upon the global economy might become just as grave as the Eurozone crisis.
Translated By Dagny Dukach
30 November 2012
Edited by Peter L. McGuire
China - The People's Daily - Original Article (Chinese)
The first phase of U.S. Congress negotiations regarding the fiscal cliff have only brought about disappointment. Fear that America could “topple over the cliff” has become pervasive.
The International Monetary Fund has stated that if America “topples over the cliff,” that is, if by 2013 U.S. public expenditure is lowered to reach a GDP change of four percent, that will be enough to sink the world’s number one economy back into a great depression. A few days ago, the Organization for Economic Cooperation and Development also issued a warning that if the U.S. is unable to avoid implementing large-scale reduction policies, America’s negative influence upon the global economy might become just as grave as that of the Eurozone crisis.
The impasse that has been reached between the two American parties regarding the fiscal cliff reflects a notable ideological difference between the two parties that hold office. Objectively speaking, under the current backdrop of American’s lukewarm recovery, Europe’s unsolved debt crisis and continuing uncertainty regarding the global economy, American politicians must understand that a “self-inflicted” recession will seriously strip away both hard and soft U.S. power. Although in reality it is unlikely that America will “topple over the cliff,” given the deep globalization of the modern era, the contention between parties that unceasingly agitate the world go to show that the American form of government has some issues, notably a lack of the appropriate sense of duty and responsibility on the part of this powerful nation.
Anyone familiar with American politics will know that the polarization of the two parties’ conflicting interests and ideologies is preventing them from reaching any final decisions, as no one is willing to take lightly a step towards the other side. The congressmen are very good at this sort of marginal political game and bring great uncertainty both to global and domestic American markets. The attack on global and American economic confidence that results from this sort of uncertainty is self-evident. U.S Federal Reserve Chairman Ben Bernanke warned that the possibility that the reign of uncertainty will reach the lowest levels depends upon whether “our political system will be able to put forward a rational proposal for a solution as soon as possible.”*
It could be said that Bernanke hit the mark spot on: When it comes to the fiscal cliff, the crucial point is “as soon as possible.” However, American politics disappoints in that it leads to “political paralysis,” a phenomenon that rears its head time and time again. When it comes to the important issues, the two parties are severely antagonistic; they undermine each other and many reforms involving the future direction of America are either hard to push forward or shrink in scope dramatically. The predicament in which America finds itself regarding the fiscal cliff issue reflects the predicament of the American political system in general.
Even if this time America, as expected, avoids “toppling over the fiscal cliff,” that is still only a temporary resolution. If the fuse of the fiscal cliff runs out, the focus of the market could shift to the coming “peak” of the U.S. national debt, thus triggering the risk that the U.S. will default on its short-term loans. America’s financial issue is that it is inherently unable to bridge the immense gap that exists between federal expenses and profits. For many years, the American government has used deficit spending to stimulate the economy; in response to the financial crisis, the Obama administration has launched an economic stimulus plan that takes one more step towards increasing the pressures that confront the U.S. financial system. Market concerns about the U.S. fiscal cliff are, after all, based mostly on fears that the high U.S. federal public debt is unsustainable. Given this, a reassessment of the fiscal cliff issue must include an acknowledgement that there is an overdependence of the economic development process upon the virtual economy, and also of the methodological defects that stem from a lack of control over financial risks. If it does not, it will be impossible to fundamentally resolve the issue of the fiscal cliff.
America is currently the world’s largest economic power, the primary global source for reserve currency and as such, faults in American economic policy result in well-known negative effects upon global economic input. Minimizing these negative spillover effects from the U.S. economy is the proper course for change in the international economic system and is also something for which U.S. policymakers ought to feel a sense of responsibility. As a starting point, this would require U.S. economic policymakers to transcend party interests in order to balance the interests of the American people with global economic recovery, to forge consensus and make every effort to boost the economy.
Accustomed to demanding that other countries take responsibility, America ought itself to assume the stance of a responsible global power when it comes to significant issues concerning the future of the global economy.
*This statement, while accurately translated, could not be independently verified.
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