The U.S. is not going broke

But it does need some fixing


A salient feature of American “exceptionalism” is the belief that the United States can never be ordinary. If it is not the best, then it must be the worst. If it is not destined to dominate the world forever, then it is doomed to decay.

This kind of thinking explains why much of the commentary in the United States about the recent shutdown of its government, and about the impending default on the national debt (due on Oct. 17), started at hysterical and quickly geared up to apocalyptic. Americans have lost the mandate of Heaven, and it will soon be raining frogs and blood.

So everybody take your tranquilizer of choice (mine’s a double Scotch), and let’s consider what is going on here.

The United States is the world’s oldest democratic country, with an 18th-century constitution that is bound to be an awkward fit for 21st-century politics. But that hasn’t stopped the United States from becoming the world’s biggest economy and its greatest power. Has something now gone fundamentally wrong?

The problem lies in Congress, specifically in the House of Representatives, where the GOP majority is refusing to pass the budget. It also threatens not to raise the official debt ceiling, unless President Obama postpones the implementation of his law that extends medical care to all Americans.

The Affordable Care Act was passed by both houses of Congress and signed into law by Mr. Obama almost four years ago. Last year, it passed scrutiny by the Supreme Court, and was welcomed by a majority of voters in the presidential election. So Mr. Obama is understandably refusing to yield to blackmail.

But House Republicans seem unworried by the fact that the public blames them for the impending train wreck. Why? Because 80 percent of the Republicans in the House don’t have to worry about what the general public thinks.

They represent congressional districts that have been so shamelessly gerrymandered by state legislatures that it is almost impossible for anybody who is a Republican to lose an election there. National public opinion is no threat to them, whereas the views of their extremist Tea Party colleagues are a potentially politically lethal danger.

Republicans who seek re-election to the House may not have to worry about their Democratic opponents, but they have to fear the Tea Party. If it decides to mount a challenge to an incumbent in the Republican primary elections, the far-right challenger will be lavishly funded by the Tea Party’s supporters. That may mark the end of the incumbent’s political career.

So the Republicans in the House, even those who are generally open to compromise, are keeping their heads down for fear of angering the Tea Party. That means it is possible (though not probable) that the Oct. 17th deadline will be missed, and that the U.S. government will be forced to default on its debt. How bad would that be?

Very bad, according to a U.S. Treasury spokesman: “Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world.” And it might rain frogs and blood.

Or maybe not. There certainly would be turmoil in the markets: Many people would lose money, and some would gain.

The U.S. government can still pay its debts; it just has to get Congress’ permission first. And the markets, while prone to panic, are not completely stupid.

Nor is the U.S. Constitution fundamentally broken. It always requires a fair degree of compromise between the various branches of the government to work smoothly, and at most times in history that cooperation has been forthcoming.

The current paralysis is due mainly to the gerrymandering of congressional districts that makes members of the House less afraid of public opinion than of the views of their own party’s hard-liners.

It wouldn’t hurt to put some controls on election spending as well, so that rich ideologues had less influence over the political process. But that is merely desirable; ending gerrymandering is essential.

It will take time, but this is a problem that can be fixed. In the meantime, the U.S. government is not really going broke.

Gwynne Dyer is a London-based independent journalist.