--自由之国正在变得似乎无法治理。该是适可而止的时候了(The Land of the Free is starting to look ungovernable. Enough is enough)
AS MIDNIGHT on September 30th approached,
everybody on Capitol Hill blamed everybody else for the imminent shutdown of
America’s government. To a wondering world, the recriminations missed the
point. When you are brawling on the edge of a cliff, the big question is not
“Who is right?”, but “What the hell are you doing on the edge of a cliff?”
The shutdown itself is tiresome but
bearable. The security services will remain on duty, pensioners will still
receive their cheques and the astronauts on the International Space Station
will still be able to breathe. Some 800,000 non-essential staff at federal
agencies (out of 2.8m) are being sent home, while another 1.3m are being asked
to toil on without pay (see article).
Non-urgent tasks will be shelved until a deal is reached and the money starts
to flow again. If that happens quickly, the economic damage will be modest:
perhaps 0.1-0.2% off the fourth-quarter growth rate for every week the
government is closed. The trouble is, the shutdown is a symptom of a deeper
problem: the federal lawmaking process is so polarised that it has become
paralysed. And if the two parties cannot bridge their differences by around
October 17th, disaster looms.
Battles over spending are nothing
unusual—indeed, Congress has not passed a proper budget on time since 1997. But
this battle represents something new. House Republicans are blocking the budget
not because they object to its contents, but because they object to something
else entirely: Barack Obama’s health-care reform, a big part of which started
to operate this week (see article).
Their original demand was to strip all funding from Obamacare. In other words,
they wanted Democrats to agree to kill their own president’s biggest
achievement. That was never going to happen. As the deadline for a budget deal
approached, Republicans scaled back their demands. Instead of defunding
Obamacare, they said that its mandate for individuals to buy health insurance
(or pay a fine) should be delayed for a year.
The bane of budgetary brinkmanship
That may sound more reasonable, but it is
not so, for two reasons. First, delaying the mandate could wreck the whole
reform. Obamacare sits on two pillars. Everyone is obliged to have insurance,
and insurance firms are barred from charging people more because they are
already ill. If only the second rule applies, the sick will rush to buy
insurance but the healthy will wait until they fall ill before doing so.
Insurers will have to raise premiums or go bust, making coverage unaffordable
without vast subsidies. Obamacare will enter a death spiral and possibly
collapse. For some Republicans, that is the goal.
The second reason is that Republicans are
setting a precedent which, if followed, would make America ungovernable. Voters
have seen fit to give their party control of one arm of government—the House of
Representatives—while handing the Democrats the White House and the Senate. If
a party with such a modest electoral mandate threatens to shut down government
unless the other side repeals a law it does not like, apparently settled
legislation will always be vulnerable to repeal by the minority. Washington
will be permanently paralysed and America condemned to chronic uncertainty.
It gets worse. Later this month the federal
government will reach its legal borrowing limit, known as the “debt ceiling”.
Unless Congress raises that ceiling, Uncle Sam will soon be unable to pay all
his bills. In other words, unless the two parties can work together, America
will have to choose which of its obligations not to honour. It could slash
spending so deeply that it causes a recession. Or it could default on its
debts, which would be even worse, and unimaginably more harmful than a mere
government shutdown. No one in Washington is that crazy, surely?
Step back from the edge
America enjoys the “exorbitant privilege”
of printing the world’s reserve currency. Its government debt is considered a
safe haven, which is why Uncle Sam can borrow so much, so cheaply. America will
not lose these advantages overnight. But anything that undermines its
creditworthiness—as the farce in Washington surely does—risks causing untold
damage in the future. It is not just that America would have to pay more to
borrow. The repercussions of an American default would be both global and
unpredictable.
It would threaten financial markets. Since
American Treasuries are very liquid and safe, they are widely used as
collateral. They are more than 30% of the collateral that financial
institutions such as investment banks use to borrow in the $2 trillion
“tri-party repo” market, a source of overnight funding. A default could trigger
demands by lenders for more or different collateral; that might cause a
financial heart attack like the one prompted by the collapse of Lehman Brothers
in 2008. In short, even if Obamacare were as bad as tea-party types say it is
(see Lexington),
it would still be reckless to use the debt ceiling as a bargaining chip to
repeal it, as some Republicans suggest.
What can be done? In the short term, House
Republicans need to get their priorities straight. They should pass a clean
budget resolution without trying to refight old battles over Obamacare. They
should also vote to raise the debt ceiling (or better yet, abolish it). If
Obamacare really does turn out to be a flop and Republicans win the presidency
and the Senate in 2016, they can repeal it through the normal legislative
process.
In the longer term, America needs to tackle
polarisation. The problem is especially acute in the House, because many states
let politicians draw their own electoral maps. Unsurprisingly, they tend to
draw ultra-safe districts for themselves. This means that a typical congressman
has no fear of losing a general election but is terrified of a primary
challenge. Many therefore pander to extremists on their own side rather than
forging sensible centrist deals with the other. This is no way to run a
country. Electoral reforms, such as letting independent commissions draw
district boundaries, would not suddenly make America governable, but they would
help. It is time for less cliff-hanging, and more common sense.