America's dangerous debt dance

By threatening debt default and government shutdown, Congressional Republicans are risking disaster.

The world turns, seasons come and go, the sun rises and falls, and the American government collapses into chaos at the mere mention of the possibility of passing a budget. Such is the way of things; and this week's crisis has given us just more of the dreary same, except that every time the cycle comes around again, the apocalyptic language gets dialled up a notch. Every time the band strikes up for the annual dance of President and Congress with shut-down and debt default, the music is that little bit louder, the tempo that little bit faster.

The Republican leadership in Congress - who already have a reputation for stubbornness that would make a mule blush and who sometimes act as if they really think this is all just a political dance, and not the actions of a government whose decisions affect people - truly rose to the occasion this time. They rolled out a preposterous set of demands from a long-list of Fox News talking points, including defunding Obamacare; dropping greenhouse gas and oil drilling restrictions, and the building of an expensive and controversial new oil pipeline, among others.

In the Senate, there were some fireworks: first-term Texas Republican Senator Ted Cruz tried to capture the drama of a filibuster in a silly but entertaining 21-hour speaking session which saw him, among other things,
reading Green Eggs and Ham to the Senate chamber.

Majority Leader Harry Reid ended the shenanigans by calling a vote in which the Senate overwhelmingly chose (79-19 - a super-majority, above the point at which hard-line Republicans like Cruz could filibuster) to cut off debate on the legislation. Then, the Senate voted along party lines to strip Republican policy demands from the bill, and passed what amounted to a stopgap that would fund the government until the middle of November. This has now been batted back to the House of Representatives, with Reid making it clear his Senate would not vote on any budget bill with Republican demands bolted on again.

Meanwhile on Wednesday, US Treasury Secretary Jack Lew sent a warning to the House of Representatives that the point at which the United States would be unable to pay its obligations - meaning a potentially catastrophic US default on debt - would be reached on October 17 if the debt ceiling, the self-imposed limit on US government borrowing, isn't raised. (The borrowing limit was actually reached in May, but the problem was put off by the imposition of the package of emergency measures known as the Sequester.)

The row over a bill to raise the debt ceiling has mirrored the row over the budget, with Republicans again demanding ideological bolt-ons; but the debt ceiling issue is the more important of the two: a government shutdown would be embarrassing and inconvenient, and might have economic implications if it went on for a while; but a US default on debt could potentially be an international financial disaster.

Why do we keep coming back here time after time? Congress have set ceiling limits to America's national debt since 1917, and have raised it without issue seventy-nine times since 1940, according to CNN's money blog. But now, partly due to a tribalisation of American politics in which the hard-line Republicans have to win points against the Democrats no matter what, and with an obstructionist Republican party in charge of the House, the debt ceiling has become a hostage with which to endlessly extract demands. Republicans counter with the argument that US debt is dangerously high. As of yesterday it stands at $16,738,443,175,473 and 97 cents, which is an impressive figure, though as a proportion of GDP it is by no means the highest among developed economies; many countries, including the UK, are higher, and Japan's is more than double that of the US.

But the Republican party is in a state of internal warfare. One one side are the moderates, who would like a conservative budget but are willing to work with Democrats on a compromise; and on the other are extremists whose loathing for the Obama administration is so great that they would risk a complete government shut-down and a US debt default to score points.

President Obama, for whom this is the fourth year that congressional Republicans have nearly forced the government into crisis, has clearly had enough. He giving a blistering speech in Washington yesterday:
 
“No Congress before this one has ever, ever, in history been irresponsible enough to threaten default, to threaten an economic shut-down, to suggest America not pay its bills, just to try to blackmail a President into giving them some concessions on issues that have nothing to do with a budget.”
 
Boehner, who is in thrall to his caucus, now has to choose between bringing the temporary measure passed by the Senate to a vote in the House, where it would probably pass with a combination of moderate Republican and Democrat votes but which would seriously undermine his position as speaker, or return Republican demands to the bill, which means continuing to face down the possibility of shutting off funding for the government, as well as ignoring the dangerous debt ceiling problem.
 
One ray of hope is that it is starting to look like Republican resolve is fading. “I don't want to be undercutting Boehner, but put it this way: I will not let the government shut down,” one Republican congressman, Peter King, told the New York Times. One possible alternative outcome is an even shorter-term solution than the Senate bill, one that would keep the government open just until the end of the week; keeping the music playing for just that little bit longer.
 
In the end, it seems that the price you pay for a governmental system composed of checks and balances is the risk of total gridlock. What America really needs is a reform of how this entire process occurs, but this is an impossible pipedream.
 
In the meantime, the world just has to hope that Congress can get this dance done and dusted and find a workable solution. Because at some point, the music is going to stop. And the silence will be deafening.
Senator Ted Cruz speaks to reporters after he spoke on the Senate floor for more than 21 hours. Photo:Getty.

Nicky Woolf is a writer for the Guardian based in the US. He tweets @NickyWoolf.

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On the "one-state" solution to Israel and Palestine, what did Donald Trump mean?

The US President seemed to dismantle two decades of foreign policy in his press conference with Benjamin Netanyahu. 

If the 45th President of the United States wasn’t causing enough chaos at home, he has waded into the world’s most intricate conflict – Israel/Palestine. 

Speaking alongside Israeli Prime Minister Benjamin Netanyahu, Trump made an apparently off-the-cuff comment that has reverberated around the world. 

Asked what he thought about the future of the troubled region, he said: “I’m looking at two-state and one-state and I like the one that both parties like.”

To the uninformed observer, this comment might seem fairly tame by Trump standards. But it has the potential to dismantle the entire US policy on the Israeli-Palestinian peace process. Trump said he could "live with" either a two-state or one-state solution. 

The "two-state solution" has become the foundation of the Israel-Palestine peace process, and is a concept that has existed for decades. At its simplest, it's the idea that an independent state of Palestine can co-exist next to an independent Israel. The goal is supported by the United Nations, by the European Union, by the Arab League, and by, until now, the United States. 

Although the two-state solution is controversial in Israel, many feel the alternative is worse. The idea of a single state would fuel the imagination of those on the religious right, who wish to expand into Palestinian territory, while presenting liberal Zionists with a tricky demographic maths problem - Arabs are already set to outnumber Jews in Israel and the occupied territories by 2020. Palestinians are divided on the benefits of a two-state solution. 

I asked Yossi Mekelberg, Professor of International Relations at Regent's University and an associate fellow at Chatham House, to explain exactly what went down at the Trump-Netanyahu press conference:

Did Donald Trump actually mean to say what he said?

“Generally with President Trump we are into an era where you are not so sure whether it is something that happens off the hoof, that sounds reasonable to him while he’s speaking, or whether maybe he’s cleverer than all of us put together and he's just pretending to be flippant. It is so dramatically opposite from the very professorial Barack Obama, where the words were weighted and the language was rich, and he would always use the right word.” 

So has Trump just ditched a two-state solution?

“All of a sudden the American policy towards the Israel-Palestine conflict, a two-state solution, isn’t the only game in town.”

Netanyahu famously didn’t get on with Obama. Is Trump good news for him?

“He was quite smug during the press conference. But while Netanyahu wanted a Republican President, he didn’t want this Republican. Trump isn’t instinctively an Israel supporter – he does what is good for Trump. And he’s volatile. Netanyahu has enough volatility in his own cabinet.”

What about Trump’s request that Netanyahu “pull back on settlements a little bit”?

“Netanyahu doesn’t mind. He’s got mounting pressure in his government to keep building. He will welcome this because it shows even Trump won’t give them a blank cheque to build.”

Back to the one-state solution. Who’s celebrating?

“Interestingly, there was a survey just published, the Palestinian-Israel Pulse, which found a majority of Israelis and a large minority of Palestinians support a two-state solution. By contrast, if you look at a one-state solution, only 36 per cent of Palestinians and 19 per cent of Israel Jews support it.”

 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.