Off Topic Messages

The U. S. goes through the looking glass

Sat Oct 05, 2013 2:18 pm ... story.html

In the U.S. constitutional division of powers, the president proposes, the Congress disposes and the Supreme Court decides.

In 2010, President Barack Obama proposed the Patient Protection and Affordable Care Act, and Congress passed it. Last year, the Supreme Court upheld ObamaCare.

But the Tea Party wing of the Republican majority in the House of Representatives denied funding for ObamaCare in the budget standoff with the Democratic majority in the Senate this week.

With no budget authorization, the government ran out of approved money at the end of one fiscal year, and the beginning of another. When the clock struck midnight on Tuesday, the government shut down all non-essential services, and 800,000 federal employees were sent home.

There is a protocol for shutting down the town in Washington. The first thing they do is close all national parks, beginning with the Washington Monument. Members of Congress continue to work, even though Congress is clearly not working, because they are deemed to be essential workers. It’s a bit like Alice in Wonderland, at the tea party.

As the U.S. government shut down on Tuesday, registration was beginning for health care “exchanges” for 40 million Americans with no health care insurance. Even ObamaCare is a long way short of the Canadian system of universal public health care, with a single payer: government. Most health insurance in the U.S. is still provided by employers, with elderly funded by Medicare and low income earners through Medicaid. To say that the U.S. health care system is complex is to understate the case.

But two things are clear in the budget impasse.

First, health reform is a signature piece of legislation for Obama. There is no chance that he would allow himself to be rolled on it by the Republicans.

Second, the Tea Party has broken constitutional convention in terms of the division of powers. They have provoked what amounts to a constitutional crisis. Such is the significance of the standoff that Obama cancelled an important trip to Asia to attend the APEC summit of heads of government.

But at this point, what is playing out is essentially a Washington blame game, an Inside the Beltway version of reality TV, with Republicans and Democrats voting each other off the island.

The situation will become really serious if Congress doesn’t raise the debt ceiling by Oct. 17. If that happens, the U.S. would technically default on its debt. This is a matter involving the good faith and credit of the United States. And since the U.S. dollar is the world’s reserve currency, this has implications for the global economy.

The Republican speaker of the House, John Boehner, obviously understands the gravity of the situation, but has lost control of his own caucus. His spokesperson said Thursday: “The United States will not default on its debt, but if we’re going to raise the debt limit, we need to deal with the drivers and of our debt and deficit.”

In other words, Boehner is asking the White House for a deal, but he can forget about one with defunding of ObamaCare. What Boehner may be looking for is a broader budget deal that includes funding for ObamaCare. To do a deal with the Dems, Boehner would have to ditch the Tea Party wing of his caucus. Losing the crazies would be a good thing for the Republican brand, which has taken a big hit in this Washington impasse.

In the circumstances, the stock market hasn’t been behaving all that badly. In the last 11 sessions before Friday, the Dow Jones Industrial Average has closed down nine times. While it closed under 15,000 Thursday, it was less than three per cent off its all-time high only two weeks ago.

Meanwhile in Ottawa, Opposition Leader Tom Mulcair demanded the House be recalled to debate the shutdown of the U.S. government and its impact on Canada.

In other words, if the House weren’t prorogued until after Thanksgiving, the opposition could be grilling the government in question period.

But Mulcair isn’t wrong on the substance of it. The furloughing of 800,000 workers will result in a slowdown in the U.S. economy. Unemployment of 7.3 per cent is still higher than the Canadian rate of 7.1 per cent. Any slowdown of the U.S. economy will hurt ours.

Already there’s been a flight from the greenback to the loonie. And a higher Canadian dollar hurts exports. Lower exports means lower revenues at both the federal and provincial levels. Which means, among other things, it will be more difficult for Finance Minister Jim Flaherty to achieve his goal of balancing the budget by 2015.

Thanks, Washington, we needed that.

L. Ian MacDonald, editor of Policy magazine ( is a former head of the public affairs division of the Canadian Embassy in Washington. He writes for the Citizen and the Montreal Gazette. ... story.html

Take care,

Paul Sweeney

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