Last week when the House did not pass the bill to raise the debt ceiling for US spending, this, in turn, caused the US government to shutdown. The House majority ruled, but the republicans refused to pass this bill because they could not get an amendment that would stall Obama-care for another year. Since the shutdown, it seems like neither side is willing to budge to fix the real problem at hand, even though it has been estimated that by 17OCT2013, the US treasury will have then exhausted all its cash reserves forcing them into nonpayment of any of the US obligations.
The two main parties here, the Republican and the Democrats, are not making any progress in actually finding a resolution to this but are just having a pride war, meaning no one is willing to bargain their points because if they did give in then they would been seen as weak to their opposition. Each side is publicly blaming the other for the reason why there have been no meetings and they are saying the other side is just being stubborn in efforts to being productive on this issue. President Obama saying, that , "failure to raise the debt ceiling would result in an economic shutdown, with consequences far worse than the current partial shutdown of the federal government — though he also admonished House GOP members for being reckless in causing the government to close," shows explicit blame towards the republicans blocking a vote to end this shutdown while the Speaker of the House John Boehner says, he just wants to sit down the President and democrats to hash the terms of this new debt ceiling and wants to know why they won’t meet with him and talk this through.
Our two main parties in the US are displaying a perfect example of fundamental attribution error, they are sitting on opposite ends of the bill, blaming each other for the problems it is causing the US government. Telling the US people that it is the other's fault and they are willing to "play ball" if the other party is ready too. While Federal employees suffer the consequences of "Furlough" until something is decided. The House Speaker said he will not let the shutdown get that fair but his vote is not the only one needed to raise this debt ceiling something needs to be started immediately so US doesn't have to fail any obligations its owes.
I agree with your post. The political polarization in congress is damaging the country simply over the two parties trying to save face in front of each other. Congress' inability to compromise is detrimental to our government employees as well as our financial future as a country. Our politicians fail to recognize the gravity of our situation because they are still collecting a check for doing nothing to solve the problem.
ReplyDeleteIm glad you made a post about this Jon, especially with how relevant it is to all of us right now. I personally, can relate to these affects because my roommate who has a government position is currently unemployed. This has made it very clear to me that something needs to be done sooner rather than later, not just for the employees that are being Furloughed, but so that matters do not get worse. I did not know that we could be facing an economic shutdown by Oct. 17th if an agreement is not made. While I do see both sides of this issue, and understand that neither side wants to appear weak, I think someone is going to have to take that fall. I do not want to say who, but something needs to happen.
ReplyDeleteThe House Republican leaders today proposed a type of supercommittee: a bipartisan, 20-member committee to make strides towards an efficient end to this government shut down. They would make recommendations on a debt-limit increase and further explore ways to help the current deficit. The benefits of this would be that each party would be represented and would act in the best interests of their constituents, which may not allow for a compromise. Polls now say that both parties are equally willing to stop the shutdown. Both sides are searching for ways to resolve this before the critical date in nine days which would increase the country's $16.7 trillion borrowing limit.
ReplyDeleteLastly, to bring levity to this situation, I found this: http://www.buzzfeed.com/ellievhall/the-government-shutdown-is-basically-exactly-like-mean-girls
Sources: http://my.chicagotribune.com/#section/-1/article/p2p-77703111/
http://www.lehighvalleylive.com/breaking-news/index.ssf/2013/10/us_rep_charlie_dent_says_congr.html
This situation also shows an example of tying hands to negotiate since the Republican's plan to use a shutdown to gain leverage over the implementation of ObamaCare would effectively make the Democrats either give into stalling the implementation of the law for a year or default on the nation's debt. It is also interesting to see how this interaction could effect foreign policy with other nations. The economic stability of the US has a large effect on the world economy and the rest of the world is watching as the US gets closer to defaulting on it's debts. Could this have repercussions with responses from China or Japan who have a large share of US investment?
ReplyDeleteAndrew,
DeleteI think you bring up a really good point in considering the global economic effects of the closure of the US government, and China and Japan's responses with respect to foreign investment.
It would surely make sense for China to be concerned, considering the substantial amount of money they have invested in T-Bills. Beyond just being concerned, China could potentially modify their current investment portfolios: they would invest less in those bonds in anticipation of the S&P rating being dropped below AAA. Also, this could potentially have a negative domino effect for investment elsewhere in the United States, because in economics, as well all know, when people get the idea that things are going badly, they generally tend to go badly.
Due to the government shutdown, the U.S is currently not representing the democratic peace theory or even demonstrating capitalistic peace. The U.S is characterized to be a democratic country, right now due to the government shutdown the U.S is showing that we aren't very "democratic." Their is a strong gridlock between the republicans and democrats, neither party is giving in. This is not the usual behavior that we usually see in a democratic state. By not agreeing to a common ground, the democrats and republicans are jeopardizing many government related jobs. Democratic states are known to be able to solve issues by using the legislative process, but currently congress is showing they do not share the same norms to use conflict resolution.
ReplyDeleteSome good points here about bargaining. An interesting application of what we've discussed, but in a different field. Good work!
ReplyDeleteOne brief correction: the House has not yet voted on the debt ceiling, but the reason for the shutdown is that Congress has not passed a budget (or more precisely, not authorized appropriations).
If you are interested in the behavior of both parties and the bargaining strategies they are using, have a look at what some political scientists have written on the topic. One noteworthy aspect is the use of failing to pass a budget (or appropriations) is a new "tool" in bargaining between parties. See more writing by two political scientists here (links are not necessarily endorsements):
http://mischiefsoffaction.blogspot.com/2013/09/house-republicans-polarized-not-partisan.html
http://mischiefsoffaction.blogspot.com/2013/09/this-is-not-just-about-polarization.html
http://www.foreignpolicy.com/articles/2013/10/07/debt_chicken_government_shutdown?page=0,0&wp_login_redirect=0
Since US T-Bills are the world's most trusted security in the financial market a default on them would cause horrible repercussions in the United States and around the world. Many private investors and countries save their money with the US treasury because the US has never defaulted on a loan. If 17OCT2013 is reached without an agreement by the two parties and the US does in fact default, than all trust in the US treasury would be lost and issuing bills/bonds in the future would be very difficult for the US; effectively crippling the US financial market. Because of this, there is no doubt in my mind that the two parties will come to an agreement before the 17th, it may not be until the 16th at 2300hrs but there is no chance the two parties will be stubborn enough to let the US financial system plummet.
ReplyDeleteSince the last budget battle, which was 6 months ago, House Republicans could have spent that time to organize their plans, so what made them wait until now to figure out what to do? They all were pretty much in agreement that they didn't want to support and furthermore defund and delay Obamacare. They should have publicized their plans a long time ago to draw the line at Obamacare and work in recent months to gain public backing. If the Republicans do not attain their goal of defunding Obamacare, they may want to try again considering the increasing lack of support for Obamacare.
ReplyDeleteI'm also really glad you posted about this. I agree with what John said above in that if a default occurs, the repercussions will be global. I found an interesting article while browsing the NY Times the other day about many in the GOP offering a theory that default "wouldn't be that bad." Obama replies to this theory by saying: "“When I hear people trying to downplay the consequences of that, I think that’s really irresponsible, and I’m happy to talk to any of them individually and walk them through exactly why it’s irresponsible. And it’s particularly funny coming from Republicans who claim to be champions of business. There’s no business person out here who thinks this wouldn't be a big deal, not one." It's interesting to see that domestic actors such as the GOP aren't taking this issue as seriously as it needs to be, but international actors such as China are actually warning us about these repercussions of not raising the debt ceiling. Articles about this that were really interesting:
ReplyDeletehttp://www.telegraph.co.uk/finance/economics/10368979/China-warns-US-to-stop-manufacturing-crises-and-raise-debt-ceiling.html
http://www.nytimes.com/2013/10/09/us/politics/many-in-gop-offer-theory-default-wouldnt-be-that-bad.html?ref=todayspaper&_r=1&
I absolutely agree with your post. Regardless of whose fault it is, they need to step up, raise the debt ceiling, and get the United States out of this slump. The fact that the parties won't even talk or meet with each other is preposterous. Your phrase "pride war" is a perfect example of what's going on. In order to accomplish anything productive, they need to get together and do what's right for our country. The middle school drama needs to be thrown out the door and these politicians need to put on their big boy pants.
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