A government shutdown is not the real threat

The debt ceiling debate is far more important.

As I write, 2.30pm UK time on 30th Sept, it is looking increasingly likely that the dysfunctional US Congress is stumbling towards an impasse which will cause an embarrassing temporary shutdown of US Government. The one consolation that ordinary Americans can potentially cling to in the face of this debacle, is that this is how it’s meant to be-having escaped Britain’s despotic rule, the Founding Fathers drafted the constitution very carefully to ensure extensive check and balances, limitations of powers, and separation of powers between different branches of government.

Last week the Republican House majority amended the so-called  "continuing resolution" (CR-the bill required to authorize government spending), to include de-funding of the Affordable Care Act (Obamacare). The Democrat-controlled Senate was quick to chuck this out, (of course). The House then came back with a tweeked amendment, delaying some Obamacare for a year and repealing a tax on medical devices.  The senate will also reject this version of CR when it rolls into work today at 2pm Washington time.

We may then get yet another iteration from the House, but time will be running out if so, as the current fiscal year ends and government spending authority expires at midnight on 30th, leaving very little time for the Senate and House to complete this ping-pong game successfully. Waving some of the Senate’s ponderous procedures may yet allow passage before midnight, but it’s looking unlikely now.

Up to 800,000 government workers may be laid-off and some economic statistics will not be released, but the law states that many categories of spending are deemed critical and are thus exempt from mandatory shutdown; only so-called "discretionary spending" is affected. The direct hit to GDP is probably about 0.2 per cent per week of shutdown, on an annualized basis, and I would expect the shutdown to last a week at most.

The real problem here is that there are in fact three parties in the House-mainstream Republicans and Democrats, and then the Republican Tea Party caucus; the latter is effectively forcing Republican House Speaker Boehner to take a stab at Obamacare by including these amendments in the CR-even though they have no chance of getting through the Senate.

The reality is that this is surely a nerve-racking escapade, even for the Tea Party, and certainly for more moderate Republican politicians who know their constituents will not thank them for provoking this pointless to and fro, and a government shutdown. Mid-term elections approach in November 2014 and I believe this is why we should not worry that these CR shenanigans imply anything for the far more important debt ceiling debate, which must be concluded over the next few weeks to avoid a US default.

Congress may yet cause a government shutdown, but if so, that’s probably because politicians know it won’t have disastrous consequences, either for the country or for their chances of re-election - they are extremely unlikely to view the prospect of a US default in the same way. The party seen to have caused that will have committed electoral suicide.

Photograph: Getty Images

Chairman of  Saxo Capital Markets Board

An Honours Graduate from Oxford University, Nick Beecroft has over 30 years of international trading experience within the financial industry, including senior Global Markets roles at Standard Chartered Bank, Deutsche Bank and Citibank. Nick was a member of the Bank of England's Foreign Exchange Joint Standing Committee.

More of his work can be found here.

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Would you jump off a cliff if someone told you to? One time, I did

I was walking across the bridge in Matlock park, which is about 12 feet high, with a large group of other kids from my year, in the pouring rain.

Ever heard the phrase, “Would you jump off a cliff if they told you to?” It was the perpetual motif of my young teenage years: my daily escapades, all of which sprang from a need to impress a peer, were distressing and disgusting my parents.

At 13, this tomboyish streak developed further. I wrote urgent, angry poems containing lines like: “Who has desire for something higher than jumping for joy and smashing a light?” I wanted to push everything to its limits, to burst up through the ceiling of the small town I lived in and land in America, or London, or at least Derby. This was coupled with a potent and thumping appetite for attention.

At the height of these feelings, I was walking across the bridge in Matlock park, which is about 12 feet high, with a large group of other kids from my year, in the pouring rain. One of the cool girls started saying that her cousin had jumped off the bridge into the river and had just swum away – and that one of us should do it.

Then someone said that I should do it, because I always did that stuff. More people started saying I should. The group drew to a halt. Someone offered me a pound, which was the clincher. “I’m going to jump!” I yelled, and clambered on to the railing.

There wasn’t a complete hush, which annoyed me. I looked down. It was raining very hard and I couldn’t see the bottom of the riverbed. “It looks really deep because of the rain,” someone said. I told myself it would just be like jumping into a swimming pool. It would be over in a few minutes, and then everyone would know I’d done it. No one could ever take it away from me. Also, somebody would probably buy me some Embassy Filter, and maybe a Chomp.

So, surprising even myself, I jumped.

I was about three seconds in the air. I kept my eyes wide open, and saw the blur of trees, the white sky and my dyed red hair. I landed with my left foot at a 90-degree angle to my left ankle, and all I could see was red. “I’ve gone blind!” I thought, then realised it was my hair, which was plastered on to my eyes with rain.

When I pushed it out of the way and looked around, there was no one to be seen. They must have started running as I jumped. Then I heard a voice from the riverbank – a girl called Erin Condron, who I didn’t know very well. She pushed me home on someone’s skateboard, because my ankle was broken.

When we got to my house, I waited for Mum to say, “Would you jump off another cliff if they told you to?” but she was ashen. I had to lie that Dave McDonald’s brother had pushed me in the duck pond. And that’s when my ankle started to throb. I never got the pound, but I will always be grateful to Erin Condron. 

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser