The Anemia of the United States

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The United States is going through a very difficult and uncertain period. The problems are enormous – an unsustainable debt and deficit, stubbornly high unemployment, and a widening gap between the rich and poor. Economic growth is anemic. For many Americans, talk of recovery after the 2008 economic crisis sounds hollow. More than two thirds believe the country is going in the wrong direction.

Yet the most fundamental problem is not economic, but rather political. The US has faced critical situations before, but the political system was better able to deal with them and reach solutions. There was less polarization than there is today, a greater spirit of moderation and willingness to compromise.

In recent weeks, the worst features of the current state of US politics have been on display, prompted by the August 2 deadline to raise the debt limit (when the US government no longer has the authorization to continue to borrow to pay its debts). This time the political fighting has been unusually bitter, not only between Congressional Democrats and Republicans, but within each political party, and also relations between the Congress and President Obama. It is hard to recall a time when the mood in Washington has been so sour and acrimonious.

There are many explanations for the sad state of affairs. Fierce partisanship has been fed by rapid media technologies. Government spending has been out of control. Tax laws have been notably unfair. The US has had to borrow a lot of money to sustain two wars – in Afghanistan and Iraq – as well as other government programs. Globalization has produced considerable anxiety, as the US faces greater competition from emerging powers like China, India and Brazil. US politicians “pushed the can down the road,” putting off the inevitable moment when such profound problems could no longer be ignored.

In the 2010 elections the Republicans, led by members of the Tea Party, regained control of the US House of Representatives with what they see as a mandate to substantially reduce the size of government. In the fight to lift the debt limit, they have held their ground, refusing to consider any increase in taxes and insisting only on sweeping cuts. Their clout and intransigence largely determined the terms of the final agreement that was struck on Sunday between Obama and Congressional leaders to avoid a default. The main element is, as they wanted, spending cuts and limits on future spending.

Unfortunately, the political system was unable to reach a formula that combines a boost to the economy in the short-term with a serious, longer-term plan to bring down the huge deficit and debt. The Tea Partyers and other Republicans won’t consider any more stimulus measures or tax increases, and they don’t believe that Democrats in Congress and Obama are committed to taking steps to reduce the deficit and debt. As has been clear in recent weeks, distrust on all sides is deep, and prevented a compromise until the last minute.

The depressing spectacle has had no political winners. Obama’s approval level has dropped to 40 percent, the lowest of his presidency. It is exceeded only by public disapproval of the Congress. Despite temporary relief, there is a sense of disgust towards the political class.

The world now knows that politics in Washington are broken. Yet, most Americans believed that a solution would somehow be found. There is still confidence that the US will not become a banana republic.