Wednesday, 9 October 2013

U.S.: Government Shutdown Stalemate

The US government has been shut down for eight days, and the nation is coming dangerously close to risking a default on its loans, yet President Obama and House Speaker John Boehner, R-Ohio, continue to talk past each other.

Both leaders say the shutdown should end and that the nation's credit should never come into question. In spite of this, they've found themselves at a stalemate primarily for two reasons: their negotiating history and the current House GOP dynamics.

Obama and Boehner have tried - and failed - before to work together on large-scale deals. In the 2011 battle to raise the debt ceiling, the pair came close to negotiating a so-called "grand bargain" of tax and entitlement reforms, only for negotiations to fall apart at the 11th hour. Both sides have a different narrative for what went wrong.

When the U.S. was on the verge of the fiscal cliff in December 2012, Obama and Boehner tried negotiating a deal one-on-one once again, and once again they failed. Such failures have left a bitter taste in the mouth of both parties and left a large trust deficit.

Barack Obama has warned of immediate damage to US creditworthiness if Congress fails to raise the debt ceiling – even if the Treasury can find funds to avoid triggering a technical default in the bond market. With billions of dollars of payments to social security, recipients and lenders competing for possible attention if such a crisis were to occur, the president shot down new suggestions among Republicans that the administration could prioritise payments to avoid lasting damage.

Dubbed the 'pay China first' strategy by some Democrat critics, the argument growing in Congress is that October 17 is not the hard and fast deadline portrayed by the White House because the US has a choice over which bills to pay first and can avoid missing market-sensitive payments. But the notion was rejected by the president on Tuesday, who told reporters that skipping any payments would alarm markets to such an extent that the cost of borrowing for the US government was bound to go up anyway.

Obama refused to answer questions about the legal requirements on the US to prioritise certain financial liabilities first, although Treasury secretary Jack Lew is expected to give further details to Congress on Thursday in evidence that will be keenly scrutinised by bondholders and other international creditors already anxious about the crisis. Obama also ruled out taking extreme legal steps to circumvent the deadlock in Congress, such as relying on the 14th amendment to make unilateral borrowing decisions.

Obama reiterated that he would be prepared to accept a temporary extension of the debt limit and government spending authority as a prelude to talks with Republicans, but otherwise stuck to his position that he will not negotiate at all while Congress continues to threaten a default or maintains the shutdown.

There is little doubt that Mr Boehner, a Republican, could, whenever he wants, gather enough votes from moderate Republicans and most, if not all, Democrats to reopen the government. But conventional wisdom says the Republican caucus would swiftly dethrone Mr Boehner. And, interestingly, conventional wisdom and punditry, in Washington at least, don't blame Mr Boehner one bit for holding the government hostage to his career aspirations. Thus is the cynicism of this town today.

Once seen as a skilled dealmaker, Mr Boehner isn't able to make deals. Never seen as an ideologue, he has now relinquished control of the Republican policy agenda to the party's most ideological faction.

The fundamental problem is that: Unrestrained gerrymandering to ensure conservative Republican districts over the past 20 years has led to a House Republican caucus consisting of members who are safe with their Tea Party voters and a handful of Republicans who are terrified of the Tea Party's reaction if they cut a deal. There are many reasons to criticize the Democrats for weak leadership and lack of imagination. But right now, it is the Republicans who look disorganized. The party is fractured and cowering in front of the footlights.

So far, these tea party-aligned Republicans have put more pressure on Boehner than House moderates. If Boehner tried to buck this wing of his party and put a no-strings-attached spending bill up for a vote, it could result in another embarrassing failure that calls into question his leadership.

Ironically, chances are high Mr Boehner will have to cave eventually and team up with Democrats to avoid an economically irresponsible - and politically lethal - default on government debt obligations.

By Guylain Gustave Moke
Political Analyst/Writer
Investigative Journalist
World Affairs Analyst

Photo-Credit: AFP-Obama & Boehner