A debate vital to the US and world has been hijacked by voodoo economics and silly posturing
In any halfway-normal week, the focus of the press would not be on crisis at Wapping, but squarely on the looming meltdown in Washington. When even the American president ditches his normally measured speech to warn of "Armageddon" if the latest battle in Capitol Hill is not resolved soon, it's worth paying serious attention.
For months, Barack Obama has been seeking the go-ahead from Congress to exceed the official limit on government borrowing. This is not such an unusual request for a president to make, or for politicians to grant ? permission has been sought by Mr Obama and George Bush, and given 10 times in the past decade alone. Nor is it unknown for Democrats and Republicans to play party games with the budget ? as a promising young senator for Illinois, Mr Obama himself voted in 2006 to deny the White House an increase in the debt ceiling. But it's one thing to engage in brinkmanship when the world economy is humming along nicely; it's rather more worrying when Europe is also convulsed over its own sovereign-debt crisis; when the world economy is still struggling to come round from the battering of 2008-09, and when credit-rating agencies such as Standard & Poor's reckon there's a 50-50 chance that they could slash America's credit-rating within 90 days. We can (rightly) debate the worth of pronouncements from ratings agencies, but the brute fact is this: the repricing of risk that would inevitably follow from changing the official credit-score of the world's biggest economy would cause ructions in markets that could easily rival the collapse of Lehman Brothers.
On those grounds alone, there should be plenty of reason for Republicans to reach a bargain with Democrats. And there is an unarguable case for an increase of the debt ceiling. The US economy remains mired in a slump, with nearly one in 10 of the workforce out of a job and house prices still falling. With interest rates at rock bottom, Washington has little option apart from to resort to fiscal policy ? which is presumably why America's top central banker, Ben Bernanke, warned last week that failure to raise the debt ceiling would be "calamitous".
But like an extreme version of last year's fight between Gordon Brown and David Cameron, this is at root an ideological argument over the size and legitimacy of the state. Michele Bachman and Tea Party Republicans pretend that a default by the US government would be a minor inconvenience. Other Republicans are open to raising the debt ceiling, but only at the price of slashing public spending, rather than balancing the books with tax rises too. A debate vital to the US and world has been hijacked by voodoo economics and silly posturing.
Peter Beardsley Middle East Gareth Barry Children Liberal-Conservative coalition Nepal
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