Robert Schmuhl: That's one battle over but many more to come for indebted States
Published 03/01/2013 | 05:00
AS the curtain came down on Tuesday night on Washington's fiscal cliff melodrama, a prime question for the US and world economies remained unanswered. Will the next performance of 'Waiting for Governing' be as absurdist as this one or actually be a serious effort to deal with America's debt and deficit crisis?
Under the cover of darkness in each case – the Senate voted before New Year's Day dawn and the House of Representatives long after sunset – Congress raised the taxes for individuals earning over $400,000 (€300,000), or $450,000 (€340,000) for families, and approved measures without much financial pain for those below that income. A collective sigh of relief could be heard in most quarters from the Atlantic to the Pacific.
With the clock ticking, the best to be achieved was the hike in tax rates for the wealthy, an extension of unemployment insurance for another year, a modest change in estate taxes and a few other provisions. US President Barack Obama reached his campaign objective of imposing higher rates on those most prosperous, but the number of well-off people doesn't bring that much revenue to the Treasury, around $600bn over the next decade.
Taking everything together – and remember, cutting government costs was another motivation in the fiscal cliff follies – the non-partisan Congressional Budget Office estimates that the legislation just approved will result in deficits approaching $4 trillion during the next 10 years.
This means that the Battle of New Year's Day is just the first volley of what will be a protracted fight in months to come over spending and the haemorrhaging of the federal debt, now (gulp) at more than $16 trillion. Indeed, debating an increase in the country's borrowing authority could well be the next bloody skirmish that draws the world's attention to the shaky nature of America's fiscal house.
Last week, US Treasury Secretary Timothy Geithner announced the government was on target to start exceeding its debt limit at the beginning of January, a warning of an impending request.
Eighteen months ago, wrangling between Democrats and Republicans over raising the debt ceiling precipitated the manoeuvring that led to Tuesday's high-wire act. With a new House and Senate being seated today, the end of 2012 was given as the final date to work out changes in revenue and spending. Hence the frantic hustling to come up with something, complete with its imperfections.
Mr Obama realises the high political price he paid during the last confrontation over the debt, and on Tuesday night he issued a warning.
"While I will negotiate over many things," Mr Obama said, "I will not have another debate with this Congress about whether or not they should pay the bills they have already racked up."
Given the criticism Republicans are already receiving from more conservative members of the party, Mr Obama's statement might be the utterance of wishful thinking.
In weeks to come, as the debt limit comes to the fore and Congress considers budget cuts (another aspect of the new law), it will be interesting to watch how Republican senators and House members conduct themselves.
The New Year's deal convincingly passed the Senate 89 to 8 (with five Republicans and three Democrats in opposition). In the House, however, the margin was 257 to 167, with 151 Republicans voting no. Just 85 Republicans joined 172 Democrats in approving the proposal.
Although House Speaker John Boehner supported the bill, majority leader Eric Cantor and majority whip Kevin McCarthy voted against it. Mr Boehner's authority within his caucus is a large question mark, especially since it ended up being Senate minority leader Mitch McConnell, of Kentucky, who negotiated directly with Vice President Joe Biden to produce the final package.
The House was cut out of the process – as was almost everyone else on Capitol Hill – leading South Dakota Senator John Thune, a Republican, to grumble: "There are two people in a room deciding incredibly consequential issues for this country, while 99 other United States senators and 435 members of the House of Representatives – elected by their constituencies to come to Washington – are on the sidelines."
Bruised political egos often take a long time to heal.
Though there will be fewer Senate and House Republicans in the new Congress, the upcoming contests promise more fireworks than what happened this week. Urgency of the year-end deadline and its potential economic consequences domestically and abroad focused Washington on jury rigging something – in effect, a child's step on a long journey.
Now it's a matter of somehow coming to terms with all those borrowed dollars supporting costly government programmes, such as pensions through social security and healthcare for older citizens.
The next act of 'Waiting for Governing' will involve more than two protagonists and undoubtedly include several scenes featuring partisan brawls. The recent stroll along the cliff might seem a cakewalk by comparison.
Robert Schmuhl is Professor of American Studies at the University of Notre Dame
Irish IndependentFollow @Independent_ie