America, the Confounded

Published 7 October 2014 ~ http://trentarthur.ca/america-the-confounded/

The American government has closed up shop. October 1st marks the start of a new fiscal year in America, but Congress has so far failed to pass a budget. Lacking a budget to pay for all it does, the federal government has entered a state akin to hibernation: all non-essential functions have been shuttered (’furloughed’), and in the meantime no-one gets paid.[1]

Why is this happening?

‘Obamacare,’ otherwise known as the Affordable Care Act of 2010 mandating every American to purchase (heavily-subsidized) health insurance, has become an effigy encapsulating everything extreme conservatives loathe and fear about Obama’s presidency. They fear this new ‘entitlement’: that, like public education and Social Security, having once possessed it Americans will refuse to ever give it up. To those who view any government as a regrettably necessary evil to be kept as minimal as possible, this is grounds for war. But, being outnumbered, the ultra-conservative ‘Tea Party’ fringe faction of the Republican Party has chosen to fight by other means.

It just so happens that the Affordable Care Act was set to begin its implementation on this very same October 1st. Having failed to repeal it, the tea partiers’ last ditch effort is to hold the nation hostage by refusing to pass a budget through the Republican-controlled House of Representatives – unless it includes an amendment repealing, or at least delaying, the Age of ‘Obamacare.’

How can they do this?

In America, the dominant political party of the moment is able, once every 10 years, to redraw the boundary lines of political districts – in a basically arbitrary manner.[2] The ‘Tea Party’ insurgency in 2010 helped Republicans gain control of most state legislatures, and they have since redrawn the boundaries of their districts to maximize the electoral clout of more conservative regions, making it easier for Republicans – even End Times-chanting mouth-frothing tea party Republicans – to get elected, while bunching moderate and liberal regions into massive districts, as large as possible, to minimize their representation in Congress.

Republicans from ‘safe’ (i.e. heavily conservative) districts know the only threat to their re-election is the prospect of an even more outrageously conservative tea party Republican beating them for their party’s nomination. There are only 30 or so hard core avowed acolytes in the tea party fringe faction of House Republicans[3], but there are many more who feel pressured to toe the tea party line lest they should face a primary challenger from amongst the tea party faithful.

John Boehner, the Speaker of the House and Leader of the Republican majority, only just recently barely survived an attempt by the tea party faction to replace him with someone more obedient to the fringe’s whimsies. Even though there are enough (relatively) moderate Republicans to pass a clean budget through the House with Democratic support, Boehner knows the price of doing so would be his ouster as leader of the band.

What’s the worst that could happen?

Here’s where things get really scary. October 17th is the approximate deadline to raise the ‘debt ceiling’ – the limit on how much money the US Treasury can borrow to pay the government’s expenses. The US federal government has run a deficit in every budget passed since 2001, which means that the amount of debt owed by the government to creditors is continuously increasing.[4]

Once or twice each year – 77 times since 1962[5] – Congress goes through the theatrics of arguing, bemoaning and occasionally haggling over the state of the government’s debt – and then they vote to raise the debt ceiling, so the government can continue to borrow money.

This must be done again by (approximately) October 17th. Were Congress to not raise the debt ceiling, the federal government would either have to drastically and immediately curtail spending, or temporarily stop paying off its debts – leaving the government in default on its loans.

This has never happened before, so it’s hard to say exactly what the consequences will be – but for certain the government’s credit rating would drop and it would become more expensive for the government to borrow money.

Depending how long the default lasts, it could also send America into another recession – and potentially drag down other nations in a cataclysmic economic chain-reaction. At the least, it would be very, very bad for Canada.

The only other alternative is for the president to instruct the Treasury to ignore the debt ceiling and continue borrowing money. Which would be against the law. For which he could be impeached.

How will it all end?

It’s extremely unlikely that Congress will fail to raise the debt ceiling, and when they do so they will probably also pass a ‘continuing resolution’ authorizing the government to borrow enough money to resume full functioning – for a little while. Congress will meanwhile go back to haggling over the budget, and America will stumble drunkenly onward from crisis to crisis.

Speculation is rife that this fiasco may turn the American public against the tea party extremists and usher in a decline in the far right fringe’s political influence – a result so desirable it might make the whole ordeal seem worthwhile.

I fear that this is far too reasonable a response to expect from our flummoxed, contorted cousin, America. Stay tuned.

[1] Except of course the politicians (and other VIPs)! – See Reuters, “Factbox: What happens in a U.S. government shutdown?” – http://news.yahoo.com/factbox-happens-u-government-shutdown-191656204.html.

[2] M.S., “How can Republicans be both safer and more numerous?” – http://www.economist.com/blogs/democracyinamerica/2013/10/gerrymandering.

[3] Robert Costa quoted by Ezra Klein, “Why Boehner doesn’t just ditch the hard right” – http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/01/why-boehner-doesnt-just-ditch-the-right/.

[4] Interest paid on existing debt also increases the amount owed – and there’s a lot owed – and the economic ‘downturn’ following the 2008 Wall Street implosion and bailout ballooned budget deficits dramatically.

[5] Ben Morris, “Q&A: What is the US debt ceiling?” – http://www.bbc.co.uk/news/business-24365018.

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