Wednesday, 17 February 2010

The American Economy - Ouch

Like Hannah, I also found an interesting article in the NY Times. This one appeared this morning:

It provides a concise summary of the underlying issues which cause concern in the American economy and paranoia and fear within the electorate. These are the kinds of economic issues which America has failed to address over the last few decades and which, as Calmes suggests, are generally considered unsustainable for much longer. Calmes indirectly links this failure with the structure of the US government and its reliance on support at the grass roots level. This manifests in the behaviour of individuals in Congress who prioritise the views/priorities of their own - very different demographically - electorates over the need to reach a practical consensus, causing gridlock.

According to this perspective, the Democratic majority is actually disadvantageous as Calmes describes how it is more politically expedient for Republicans to block remedial political action (thus making the Democrats seem responsible for 'failing') than to co-operate in addressing the problems as, by virtue of their minority status, they are able to absolve themselves of responsibility.

The article refers to Democratic Senator Evan Bayh from Indiana, who has lodged a complaint about excessive partisanship and Congressional gridlock and also quotes:

“I used to think it would take a global financial crisis to get both parties to the table, but we just had one,” said G. William Hoagland, who was a fiscal policy adviser to Senate Republican leaders and a witness to past bipartisan budget summits. “These days I wonder if this country is even governable.”

Sensing political advantage, Republicans are resisting President Obama’s call for a bipartisan commission to cut the debt, although recent studies have implicated the tax cuts and spending policies of the years after 2000 when they controlled Congress and the White House. Even seven Republican senators who had co-sponsored a bill to create a commission nonetheless voted against it recently."

I'm no expert in economics but this article suggests that America has only sustained this bedrock of debt for this long because of the sheer size of her economy relative to that of other nations. Americans can't afford their lifestyle, haven't been able to do so for many years, and have been borrowing from the rest of the world (notably China in recent times)in order to do so. As the Tea Party movement demonstrates, they are ideologically unsuited to the reality check that is on the horizon - and, in many cases, already above the horizon. In this context, the 'Patriotic' sentiments of the Tea Party movement are ironic as they reject notions of individual responsibility (it's the fault of the government) whilst claiming individual rights. They want the impossible.... no cuts in spending, no tax rises.... but expect the debt to be brought under control.

As the article reports on recent poll results:

"Americans by a two-to-one ratio say Mr. Obama is trying to work with Republicans, while by more than two-to-one they say Republicans are not reciprocating. As for the deficit, 41 percent say the Bush administration is most to blame, 24 percent say Congress and 7 percent say Mr. Obama.

Yet politicians’ failure to reduce deficits has long reflected voters’ opposition to the necessary steps. The poll also found that by a two-to-one ratio Americans oppose cutting health care and education; 51 percent oppose lower military spending."

My view is that if America can't reconcile its political ideology to fiscal reality soon then what the Tea Party movement fears most - not big government but the loss of the 'Dream' - may become a self-fulfilling prophecy. What do others think?


  1. I just noticed this on the Washington Post. It relates to the extreme partisanship within the political machine at the moment. This is the reason that Senator Evan Bayh (referred to above)is not seeking re-election. It's provoked controversy as this article explains:

  2. Thanks Cherie. I think in general media the politics of America's debt is infrequently reported and there is not enough emphasis on it. It is interesting to read about it because it is an issue that affects all Americans, which you'd believe would encourage normally opposing politicians to work together in fixing the issue.

    Calmes writes, 'Those bipartisan deals were done during times of divided government, when one party had the White House and the other controlled at least one chamber of Congress, giving each side some governing responsibility to find solutions. Now, with Democrats controlling the White House and Congress, the parties have less incentive to work together.' Because of this control, it could be said this is what has encouraged such 'extreme' and distinct movements as the Tea Party. Power within central government has become nearly stagnent for Republicans and their 'voice' has transferred to the local, people level. This is good in that politicians become aware of what such people want and crave from their government, i.e. Palin found a comfortable place to maximise her controversial biews.

    In the article, co-chairman of Obama's National Commission on Fiscal responsibility and Reform says, '"... to use the politics of fear and division and hate on each other — we are at a point right now where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American."'

    Such remarks represent the power of possessing 'American values' over political tendancies and beliefs. He suggests a shared view between the opposing parties with regards to the debt crisis but this view is becoming distorted in the eyes of Republicans who are marginalising themselves by breaking away and supporting such movements as the Tea Party.


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