How the US government shutdown looks to the rest of the world

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The People’s Republic of China doesn’t do government shutdowns. USflag

Neither does India, the world’s largest democracy.  Neither does Russia nor Japan nor the European Union.

The crisis that the United States faces over the next month — the nearly certain federal government shutdown set to begin on Tuesday and the US government’s potential sovereign default if the US Congress fails to raise the debt ceiling — is almost completely foreign to the rest of the world.

The vocabulary of the government budget crises that have sprung from divided government during the presidential administration of Barack Obama — from ‘sequester’ to ‘fiscal cliff’ to ‘supercommittee’ — is not only new to American politics, it’s a vocabulary that exists solely to describe phenomena exclusive to American politics.  As the Republican Party seems ready to force a budgetary crisis over the landmark health care reform law that was passed by Congress in 2010 and arguably endorsed by the American electorate when they reelected Obama last November over Republican candidate Mitt Romney, the rest of world has been left scrambling to understand the crisis, mostly because the concept of a government shutdown (or a debt ceiling — more on that below) is such an alien affair.

If, for example, British prime minister David Cameron loses a vote on the United Kingdom’s budget, it’s considered the defeat of a ‘supply bill’ (i.e., one that involves government spending), and a loss of supply would precipitate his government’s resignation.  If Italian prime minister Enrico Letta loses a vote of no confidence in the Italian parliament later this week, his government would also most likely resign.  In some cases, if cooler heads prevail, their governments might form anew (such as the Portuguese government’s reformation earlier this summer following its own crisis over budget austerity).  Otherwise, the country would hold new elections, as will happen later this month in Luxembourg after the government of longtime prime minister Jean-Claude Juncker fell over a secret service scandal.

So to the extent that a government falls, in most parliamentary systems, the voters then elect a government, or a group of parties that then must form a government, and that government must pass a budget and, well, govern.  Often, in European and other parliamentary systems, the typically ceremonial head of state plays a real role in pushing parties together to stable government.  Think of the role that Italian president Giorgio Napolitano played in bringing together both Letta’s government and the prior technocratic government headed by Mario Monti.  Or perhaps the role that the Dutch monarch played in appointing an informateur and a formateur in the Dutch cabinet formation process until the Dutch parliament stripped the monarchy of that role a few years ago.

But wait! Belgium went 535 days without a government a few years ago, you say!

That’s right — but even in the middle of that standoff, when leaders of the relatively more leftist, poorer Walloon north and the relatively conservative, richer Flemish south couldn’t pull together a governing coalition, Flemish Christian Democrat Yves Leterme stayed on as prime minister to lead a caretaker government.  The Leterme government had ministers and policies and budgets, though Leterme ultimately pushed through budgets that reduced Belgium’s budget deficit.  No government workers were furloughed, as will happen starting Tuesday if congressional members don’t pass a continuing resolution to fund the US government.

To the north of the United States, Canadian prime minister Stephen Harper caused a bit of a constitutional brouhaha when he prorogued the Canadian parliament in both 2008 and 2009 on the basis of potentially political considerations.  In Canadian parliamentary procedure, prorogation is something between a temporary recess and the dissolution of parliament — it’s the end of a parliamentary session, and the prime minister can prorogue parliament with the consent of Canada’s governor-general.  Harper raised eyebrows among constitutional scholars when he hastily prorogued the parliament in December 2008 after the center-left Liberal Party and the progressive New Democratic Party formed a coalition with the separatist Bloc Québécois in what turned out to be a failed attempt to enact a vote of no confidence against Harper’s then-minority government.

The governor-general at the time, Michaëlle Jean, took two hours to grant the prorogation — in part to send a message that the governor-general need not rubber-stamp any prime ministerial requests for proroguing parliament in the future.

Harper again advised to prorogue the parliament from the end of December 2009 through February 2010, ostensibly to keep parliament in recess through the 2010 Winter Olympics in Vancouver, though critics argued he did so to avoid investigation into his government’s knowledge of abusive treatment of detainees in Afghanistan.  Again, however, proroguing parliament didn’t shutter Canadian government offices like the US government shutdown threatens to do.

Moreover, in parliamentary systems, it’s not uncommon for a government to survive a difficult vote with the support of the loyal opposition.  But in the United States, House speaker John Boehner has typically (though not always) applied the ‘majority of the majority’ rule — or the ‘Hastert’ rule, named after the Bush-era House speaker Denny Hastert.  In essence, the rule provides that Boehner will bring for a vote only legislation that’s supported by a majority of the 233 Republicans in the 435-member House of Representatives, the lower congressional house (Democrats hold just 200 seats).  So while there may be a majority within the House willing to avoid a shutdown, it can’t materialize without the support of a majority of the Republican caucus.  That means that 117 Republicans may be able to hold the House hostage, even if 116 Republicans and all 200 Democrats want to avoid a shutdown.

Realistically, that means that anything that Boehner can pass in the House is dead on arrival in the US Senate, the upper congressional house, where Democrats hold a 54-46 advantage.

There’s simply no real analog in the world of comparative politics.  Even the concept of a debt ceiling is a bit head-scratching to foreign observers — US treasury officials say that the government will face difficulties borrowing enough money to achieve the government’s obligations if it fails to lift the debt ceiling of $16.7 trillion on or before October 17.

Denmark stands virtually alone alongside the United States in having a statutory debt ceiling that requires parliamentary assent to raise the total cumulative amount of borrowing, but it hasn’t played a significant role in Danish budget politics since its enactment in 1993:

The Danish fixed nominal debt limit—legislatively outside the annual budget process—was created solely in response to an administrative reorganization among the institutions of government in Denmark and the requirements of the Danish Constitution. It was never intended to play any role in day-to-day politics.

So far, at least, raising Denmark’s debt ceiling has always been a parliamentary formality, and it was lifted from 950 billion Danish kroner to 2 trillion Danish kroner in 2010 with support from all of Denmark’s major political parties.

Contrast that to the United States, where a fight over raising the debt ceiling in summer 2011 caused a major political crisis and major economic turmoil, leading Standard & Poor’s to downgrade the US credit rating from ‘AAA’ to ‘AA+.’  The Budget Control Act, passed in early August 2011, provided that the United States would raise its debt ceiling, but institute a congressional ‘supercommittee’ to search out budget cuts.  When the supercommittee failed to identify budget savings before January 2013, it triggered $1.2 trillion in ‘sequestration’ — harsh across-the-board budget cuts to both Democratic and Republican priorities that took effect earlier this year, though they were originally designed to be so severe so that they would serve as an incentive for more targeted budget adjustments.

Despite the fact of the dual crises facing the US government in October, the yield on the 10-year Treasury note has actually declined in recent weeks, indicating that while US political turmoil may spook global investors, they still (ironically) invest in Treasury notes as a safe haven:

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Ezra Klein last week, writing in The Washington Post, argued that the United States should eliminate the debt ceiling altogether:

The debt ceiling is an anachronism. It’s an accountability mechanism from the days when Congress didn’t much involve itself in federal budgeting. Today, Congress exerts full control over the federal budget. The debt ceiling isn’t imposing accountability on the executive but calling into question whether Congress will pay the bills it has already chosen to incur….

If we crash through the debt ceiling, a global financial crisis could — and likely will — result. Even once we return to sanity and begin paying our bills again, America’s borrowing costs are likely to be permanently higher, and the market’s confidence in our political system is likely to be permanently harmed. The Bipartisan Policy Center estimates that the near-miss we had in 2011 cost us $18.9 billion. That’s $18.9 billion we spent for no reason. It didn’t buy us one service or lower taxes by even a dime.

But before the United States even reaches the debt ceiling showdown, it faces a shutdown within the next 24 hours.

The longest previous shutdown in US government history occurred over the holidays in 1995 and 1996 over a standoff between Democratic president Bill Clinton and Republican House speaker Newt Gingrich and, despite the brinksmanship over welfare reform, Medicare cuts and balancing the budget, the exercise reduced trust in the US government, wasted millions of taxpayer dollars and ultimately backfired against Republicans — the shutdown marks the turning point of Clinton’s upward trajectory between his devastating November 1994 midterm election defeat and his overwhelming November 1996 reelection.

Thoughtful analysts from all sides of the debate disagree about the damage that Republicans could cause between a government shutdown and the coming debt ceiling crisis.  House Republicans have demanded, in exchange for averting a government shutdown (and likely, in exchange for raising the debt ceiling) a one-year delay in the enactment of the Patient Protection and Affordable Care Act, commonly known as ‘Obamacare,’ the legislation that creates state health insurance exchanges.  While the legislation prohibits insurance companies from denying coverage on the basis of preexisting conditions, the legislation also contains an ‘individual mandate’ for every US citizen to have health care insurance (a mandate that the US Supreme Court blessed last summer in National Federation of Independent Business v. Sebelius with the support of chief justice John Roberts, a Bush administration appointee), along with subsidies for low-income citizens to afford health care insurance.

Tyler Cowen, writing at Marginal Revolution, uses public choice theory to shrug off the coming shutdown, arguing that it shouldn’t surprise us, given that the House has already voted 41 times to repeal Obamacare:

By threatening a government shutdown over Obamacare defunding, the GOP is again staking out a public position against the law.  Such a statement is more focal, and generates more publicity, than a 42nd vote for repeal…. If you’ve voted 41 times for repeal, you will like the fact that everyone is concerned with this new dispute.  If the GOP lets the government actually shut down, people will talk about their Obamacare stance even more.  But the party, and its representatives, will bear costs from being associated with the shutdown, which is inconvenient, hurts the economy, and lowers our international status.  We don’t know whether they will cross this threshold, but either way it is a purely political calculation and not especially mysterious or ‘irrational.’

James Fallows, writing at The Atlantic, claims American politics is crossing a Rubicon that hasn’t been passed since the era of the American Civil War:

As a matter of substance, constant-shutdown, permanent-emergency governance is so destructive that no other serious country engages in or could tolerate it. The United States can afford it only because we are — still — so rich, with so much margin for waste and error…. As a matter of politics, this is different from anything we learned about in classrooms or expected until the past few years. We’re used to thinking that the most important disagreements are between the major parties, not within one party; and that disagreements over policies, goals, tactics can be addressed by negotiation or compromise.

No matter whether you believe Cowen or Fallows is correct (and you could believe they are both right) there’s no escaping that the shutdown and debt ceiling politics — like baseball, jazz and constitutionalism — are rapidly becoming uniquely American institutions.

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