Senate blocks Republican bill as debt crisis deadline looms

The current crisis threatens to derail the global economy, as well as Barack Obama's presidency.

The US debt crisis shows no signs of resolution as Tuesday's deadline to raise the debt ceiling draws closer.

Late last night, the Republican-controlled House of Representatives finally approved a bill to raise the debt ceiling in return for $22bn spending cuts. It was immediately rejected by the Democratic-controlled Senate.

The frenzied series of votes has highlighted not only the profound partisan division between Democrats and Republicans; it has also laid bare the deepening rift within the Republican party. On Thursday, the Republican leader in the House, John Boehner, was forced to abandon a vote on his bill to avoid a humiliating defeat by hardline Tea Party conservatives.

While this chaos in the Republican ranks temporarily looked like it could strengthen Barack Obama's position, as the Tuesday deadline looms, the situation does not look good for anyone. We can expect the fast-paced political manoeuvres to continue as each party tries to make their plan more acceptable to the other side, while also keeping their own hardliners on side.

Obama, who entered the debt ceiling debate calling for a "clean" increase with no spending cuts attached, has made significant concessions, accepting deep cuts to state-run health and pension schemes.

This is a crisis that threatens the entire global economy. The International Monetary Fund has already warned the US that a continued impasse risks reigniting Europe's debt crisis. Even if a bill is rushed through, it is possible that we have not seen the last of it.

It is also a crisis that threatens to derail Obama's presidency. The Democratic Senate leader, Harry Reid, has promised a vote on a new deficit-reduction proposal which will incorporate parts of a "back up plan" initially proposed by Mitch McConnell, a Republican Senator. "Unless there is a compromise or [Republicans] accept my bill we're headed for economic disaster," said Reid, who is seeking a vote on this proposal today. According to the Huffington Post, some centrist Republicans may be willing to back the bill.

The two proposals have much in common, the crucial difference being that in the Democratic Senate version, Obama would be given the $2.5 trillion debt increase in one step, rather than the three steps suggested by the Republican bill. This would prevent a hugely damaging second debt crisis during an election year. Democrats are worried with good reason -- a recent Pew poll contains worrying results for Obama.

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Disastrous growth figures -- the US grew at an annual rate of just 1.3 per cent in the three months to June -- will do nothing to help. Obama needs nothing short of a miracle on the economy, and this crisis has laid bare the extent to which he is held hostage by the Republican control of the House. If the GOP selects a plausible candidate for 2012, the president will have a very serious fight on his hands.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Leader: The age of Putinism

There is no leader who exerts a more malign influence on world affairs than Vladimir Putin.

There is no leader who exerts a more malign ­influence on world affairs than Vladimir Putin. In Syria, Russia’s military intervention has significantly strengthened the tyrannical regime of Bashar al-Assad. Under the guise of fighting Islamist terrorism, Mr Putin’s forces have killed thousands of civilians and destroyed hospitals and schools. Syrian government forces and their foreign allies have moved closer to regaining control of the rebel-held, besieged eastern part of Aleppo, a city in ruins, after a period of intense fighting and aerial bombardment. In Europe, Russia has moved nuclear-capable missiles to Kaliningrad, formerly the Prussian city of Königsberg, through the streets of which the great philosopher Immanuel Kant used to take his daily walk.

Across the West, however, Mr Putin is being feted. As Brendan Simms writes on page 30, the Russian president has “annexed Crimea, unleashed a proxy war in eastern Ukraine and threatens Nato’s eastern flank, to say nothing of his other crimes”. Yet this has not deterred his Western sympathisers. In the US, Donald Trump has made no secret of his admiration for the Russian autocrat as a fellow ethnic nationalist and “strongman”. The president-elect’s refusal to commit to Nato’s principle of collective defence is an invitation to Russian expansionism in the Baltic states and eastern Europe.

Mr Trump is far from alone in his admiration for Mr Putin. In France, François Fillon, the socially conservative presidential candidate for the Républicains, favours the repeal of European sanctions against Russia (imposed in response to the annexation of Crimea) and a military alliance in Syria. In return, Mr Putin has praised his French ally as “a great professional” and a “very principled person”.

Perhaps the one certainty of the French election next spring is that Russia will benefit. Marine Le Pen, the Front National leader and Mr Fillon’s likely opponent in the final round, is another devotee of the Russian president. “Putin is looking after the interests of his own country and defending its identity,” she recently declared. Like Mr Trump, Ms Le Pen seems to aspire to create a world in which leaders are free to abuse their citizens’ human rights without fear of rebuke.

In Britain, Paul Nuttall, the newly elected leader of the UK Independence Party, has said that Mr Putin is “generally getting it right” in Syria. Mr Nuttall’s predecessor Nigel Farage named the Russian leader as the politician he admired most.

Mr Putin, who aims to defeat the West by dividing it, could not have scripted more favourable publicity. But such lion­isation masks Russia’s profound weaknesses. The country’s economy has been in recession for two years, following the end of the commodities boom, the collapse in the oil price and the imposition of sanctions. Its corrupt and inefficient bureaucratic state now accounts for 70 per cent of its GDP. Its population is ageing rapidly (partly the result of a low ­fertility rate) and is forecast to shrink by 10 per cent over the next 30 years, while life expectancy is now lower than it was in the late 1950s.

Yet this grim context makes Mr Putin an even more dangerous opponent. To maintain his internal standing (and he is popular in Russia), he must pursue external aggression. His rule depends on seeking foreign scapegoats to blame for domestic woes. Not since the Cold War has the threat to Russia’s eastern European neighbours been greater.

How best to respond to Putinism? The United Kingdom, as Europe’s leading military power (along with France), will be forced to devote greater resources to defence. Theresa May has rightly pledged to station more British troops in eastern Europe and to maintain sanctions against Russia until the Minsk agreements, providing for a ceasefire in Ukraine, are implemented. The Prime Minister has also condemned Russia’s “sickening atrocities” in Syria. Germany, where Angela Merkel is seeking a fourth term as chancellor, will be another crucial counterweight to a pro-Russian France.

It is neither just nor wise for the West to appease Mr Putin, one of the icons of the illiberal world. The Russian president will exploit any weakness for his own ends. As Tony Blair said in his New Statesman interview last week, “The language that President Putin understands is strength.” Although Russia is economically weak, it aspires to be a great power. We live in the age of Putinism. Donald Trump’s victory has merely empowered this insidious doctrine.

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage