The US Budget Crisis: Gambling With the Future of the Global Economy

America is heading full speed towards a fiscal cliff. The Lehman Brothers crisis is merely a gentle breeze by comparison. The dispute between Obama and the Republicans is about much more than merely power.

Everyone knows the kind of scene in which two cars race towards each other on a collision course. Neither adversary is willing to swerve; both are waiting for the other to pull the emergency break. “Better to die than give in,” goes the motto, which has been analyzed extensively as the so-called “Game of Chicken” in economic game theory.

The adrenaline rushes from action movies like “The Fast and the Furious” have turned absurdly into reality. President Barack Obama and his Republican adversary John A. Boehner are playing a Game of Chicken with each other; however, their game is not just about sex and crime like in the movies. It is about the future of the global economy.

Both protagonists are rushing toward the fiscal cliff without breaking. The U.S. will run out of money if the Republicans don’t give in within the next couple of days and approve the increase of the country’s debt ceiling. If that doesn’t happen, America will be insolvent by October 17th at the latest.

This would cause a shock for the global economy. The Lehman Brothers crisis would be insignificant in comparison. This will turn into a real storm with unpredictable consequences.

A Gamble for All or Nothing

How is it possible that intelligent people can allow themselves to get drawn into a Game of Chicken? Ostensibly it is merely a game for power. The Democratic president enforces the healthcare reform against the will of the Republican Party. The reform was Obama’s greatest political victory and the Republican’s most painful defeat, and it caused irreversible damage.

In a game for all-or-nothing, the president linked his entire prestige to the success of the healthcare reform. In a clever way, he argued that it cannot be acceptable that throughout and after the financial crisis the wealth of the rich has been preserved using government funds, while there isn’t enough money to help ill people to get better.

That was how Obama managed to overcome the oppositional Republicans and obtain sufficient public support. The Republicans had to distance themselves from Wall Street. Otherwise, they would have felt the anger of the masses.

Now, years past the financial crisis and at the beginning of clearly perceivable though not yet sustainable economic improvement, the Republicans felt it was time to demonstrate to Obama the true dynamic of power.

In turn for being asked to approve additional government debts, they were able to request that the president withdraw the healthcare reform. Now it’s their chance to turn the tables and to pay the president back for former defeats.

Vanity and Infringement

This illustrates that the American Game of Chicken is indeed about power and prestige. However, vanity, infringement, pride and humility as well as past successes and failures are just as important. This has become apparent in the news coverage, particularly on TV.

The aggression of Republican arguments have been made clear by their piercing tone and unforgivable rhetorical sharpness. The opposition is after more than just healthcare reform, which is merely used as a vessel for their actual message.

Republicans don’t hide their hatred and malice as they denounce Obama as a traitor of American ideals. The excessive government debt is just one factor, and turning away from personal and private responsibility for healthcare is another one.

Battle Between Liberals and Conservatives

In fact, the Republicans are generally concerned about whether or not 21st century America needs to become a welfare state, and to what extent one person is supposed to be responsible for someone else’s fate. This is the continuing ideological battle between liberal Democrats and the radically conservative Tea-Party, identified by Michael Stürmer. The nation is missing consensus.

In stark contrast to the black president, who openly supports a broad modernization of old-established conventions, the Republicans request to some extent to revert to the Founding Fathers’ conservative principles of the 18th century. In order to return to the old America of the WASPs, the White Anglo-Saxon Protestants, they are willing to risk everything and surrender nothing. For them this is about capitalism or socialism, life or death.

To fail together rather than yield the victory to the other side is one of the potential outcomes of the Game of Chicken America is now facing. Even the characters in “2 Fast 2 Furious” know that there are other solutions. Maybe Barack Obama and John A. Boehner should watch the movie together. That would increase the chances of saving the global economy from a completely unnecessary crisis.