US Crisis Sows Doubt about the Country’s Long-Term Governability

Whatever the outcome of the political crisis that currently has the United States’ federal administration paralyzed while the risk of the country defaulting on its debt inches closer, the damage is already done: From the capital of the most powerful country in the world, the image that emerges is one of ungovernability and instability. Even if the impending catastrophe is temporarily delayed by a last-minute agreement — which now seems to be the most likely resolution — global economic stability will remain under threat due to the enduring uncertainty over the capacity of North American political leaders to sort out their country’s finances.

This Tuesday marks a fortnight since the beginning of the public administration shutdown. The country’s most emblematic landmarks — the Statue of Liberty, the Grand Canyon and Mount Rushmore — have reopened thanks to donations from their home states. Two emergency laws have ensured that the 800,000 civil servants who have been told to stay at home are paid retroactively and that the families of soldiers killed during this period receive the appropriate benefits. Other emergency bills have allowed part of the Pentagon’s employees to return to work, as well as those of other departments whose absence had been starting to affect national security. But some essential clinical trials, alongside other medical services, food inspections and legal proceedings in federal courts remain paralyzed. This week, garbage collection in Washington, D.C. may end up being suspended since, by law, its budget must be approved by Congress.

Of course, even though all of this causes huge inconveniences and a degree of decline in economic activity — a large part of which depends on tourism and personal consumption — it is nothing compared to the alarming prospect of a default on the country’s debt. As nothing like this has ever happened before, no one is able to predict precisely what might occur. The only scenario the Treasury has warned is an inescapable fact is that the country will run out of money with which to meet its debts on midnight Wednesday, and will have no means whatsoever by which to undertake the payments whose limits expire that day.

Faced with a danger of this magnitude, the world has put its faith in a last-minute restoration of sanity out of which an agreement will be reached. When there were still 48 days remaining, this was the idea that prevailed, but the fact is that a solution has yet to be arrived at, and now with only 48 hours to go. In the last few days, there have been several moves in the Capitol towards an agreement, but the reality is that at the time of writing, none of these have borne fruit.

Since the crisis blew up, the search for a solution has gone through different phases, from the refusal to enter into any negotiations whatsoever to the call to eliminate healthcare reform. Barack Obama has been in talks with the leaders of both Chambers, collectively and individually, with the leaders of both [political] parties at the same time, and with those of each party. On occasion, he has negotiated in the Chamber of Representatives, and recently [did so] in the Senate. This afternoon, the president had again convened the principal Democrats and Republicans in a final attempt to put a stop to this madness, although the meeting was postponed in the end to make more time for efforts the senators are engaged in.

The obstacle to this summit is the one that has existed since the crisis began: Of all the demands they are making, what can Obama offer the Republicans? Initially, the president affirmed that there would be nothing to negotiate until the Republicans, who control the House of Representatives, reopen the administration and raise the debt limit to avoid a default on payment. He later agreed to enter into such discussions, though the White House refuses to acknowledge them as negotiations. But in each of these talks, it has been clear that the opposition want something in return for ending the crisis, to ensure that the result will not be interpreted as a total defeat for the Republicans.

Ideally, making a virtue out of necessity, the situation could be used to reach a broad agreement on the budget, which would dispel uncertainty for at least another year. The Senate, where the Democrats have the majority, is working on something in that general direction. But an agreement of this sort requires assuming a position on taxes and public spending, issues over which U.S. politicians are currently at polar opposites.

If this ideal solution does not work out, it seems inevitable that the crisis will end in a false start that extends budget resources for a few weeks and puts off the crisis until Thanksgiving. And even this resolution will be difficult without one or the other party paying a high political price. Of course, an outcome like this will not only set off international alarm, but will also provide support for the arguments of countries such as China that beat the drum for the world’s de-Americanization.