US Debt Crisis Averted, but Betrays Signs of Decline

In the nick of time, the U.S. Congress finally passed a bill to fund government operations and raise the debt ceiling. President Obama signed the bill immediately into law, granting the world a temporary respite from the looming U.S. debt crisis. But in truth, the world has not seen the last of either the tug-of-war battle over raising the debt ceiling or government shutdowns, as these financial and political crises have evolved into intractable structural conflicts. From the prevailing political and economic climate in the U.S., we can logically deduce that these crises will only increase in frequency and that the country’s status as a world power, as well as its influence, is now destined for a steady and almost inescapable decline.

In the past half-century, the U.S. has raised the debt ceiling 75 times, largely accomplished without protestation from the opposition party and with the issue of the debt ceiling garnering little attention. However, now the trend toward extremism within the political feud between donkey and elephant is becoming ever more apparent. Driven by a “votes over all else” mentality, the parties are hyper-focused on their supporters’ interests, with partisan bickering supplanting work in the national and public interest, and radicalization of the system of interparty checks and balances. The political divide is widening; it has not only become more difficult to reach an agreement on the debt issue, but the debt ceiling has become simply another political bargaining chip and a tool to force opponents to compromise. These tactics transform financial woes into political calamity, giving rise to even more political and economic challenges for the future. One could say that the recurring U.S. debt ceiling drama illustrates how American democracy, which has consistently been held up as a model for the rest of the world to follow, is now in decline.

This time around, the crisis has shaken both the U.S. and global economies. As a result of these events, the U.S. federal government was shut down for 16 days, with economic losses amounting to $24 billion and fourth-quarter gross domestic product slipping by 0.6 percent. Standard and Poor’s also adjusted its estimate for U.S. economic growth in 2013 downward from 3 to 2 percent. Currently, global economic and financial markets are becoming highly integrated; the U.S. dollar is the world’s primary reserve currency, with most commodities also priced in dollars. If the U.S. truly defaults on its debt, the global economy will inevitably fall into a downward spiral. And although the debt crisis has been averted for the time being, the U.S. will certainly have suffered a blow to its reputation, which will in turn affect capital markets worldwide.

With constant shocks from globalization and the continuing impact of the polarization around [issues of] employment and welfare, the rise in the financial deficit and national debt of the U.S. has proved difficult to reverse. Since breaching the $4 trillion mark in the 1980s, U.S. debt has ballooned to almost $17 trillion, surpassing its GDP. Meanwhile, consequent political confrontations have intensified by the day. This makes evident that the U.S. financial and political crises have evolved into intractable structural conflicts — ones that have caused endless internal strife, impeded the country’s development and heralded the decline of the U.S.