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Counting the Cost of US Debt Ceiling Imbroglio
- By Williams Ekanem
- Published August 8th, 2011
- Washington File
- Unrated
The rancorous debt talks in the United States Congress did scale through and the nation averted what would have been an unprecedented default in the country’s financial history but at what cost?
President Barack Obama did not mince words when in one of his speeches, he referred to it as messy and in another, he said it was a an unnecessary manufactured crisis in Washington D.C. A day after signing the bill that raised the debt ceiling at a Democrat National Convention fund raising event in Chicago he said that “ we’ve just gone through an extraordinary week in Washington, an extraordinary two weeks in Washington. It’s not the kind of extraordinary that the American people are looking for. Because at a time when so many families are struggling, at a time when we should be singularly focused on how to make ourselves more competitive and make sure our kids have the best educations possible and how are we transforming our energy strategy and how are we building on high-tech industries and the huge competitive advantages that we have, politics continues to get in the way.”
According to Obama, “but we’re going to have a lot of work to do, and it’s going to be tough. and this week I think signifies not only how tough it’s going to be but exactly what’s at stake.” This is because, as the President told members of his cabinet two days later, “the economy is still weakened, partly because of some things we couldn’t control, like the Japanese earthquake and the situation in the Europe, as well as the Arab Spring and its effect on the oil crisis. Unfortunately, the debt ceiling crisis over the last month, I think, has had an unnecessary negative impact on the economy here, as well.” In the same vein, financial analysts across the globe have variously commented on the fight that developed over what has been done for 78 times in the nation’s financial history without any hue and cry.
Virtually everyone agree that although the immediate crisis over a threatened default seems to have been averted by the eleventh-hour, the debt-limit drama has left behind crucial questions about the American political process, the viability of its economic policy options and implications for the rest of the world. Mohamed El-Erian, co-chief investment officer of the international bond fund giant Pacific Investment Management Co. ( PIMCO), said that due to the very public and intense squabbles in D.C., already-anemic economic growth will be weaker, the unemployment crisis will worsen, income and wealth inequality will deteriorate further and, ironically, the fiscal dynamics will be more challenging.”
According to the PIMCO executive, the debt-limit battle was a “self-inflicted wound that weakens the economy and erodes its standing globally.”
China, Washington’s largest foreign creditor, has been particularly blunt about other countries’ exposure to Washington’s partisan warfare. “The ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight,” China’s state-run news agency Xinhua wrote in a commentary, referring to the symbols of the Democratic and Republican parties.
Tim Reid and Emily Kaiser, both financial analysts in their commentary of the development say Say that virtually everyone agreed that America’s fiscal path is unsustainable, especially considering that with a national debt of more than $14.3 trillion; the U.S. borrows forty cents of every dollar it spends. According to them, yet there is intense, fundamental disagreement on how to solve the problem, with Tea Party Republicans as passionately opposed to increasing taxes as progressive Democrats are to making deep cuts in the Social Security pension system and other so-called entitlement programmes.
President Barack Obama did not mince words when in one of his speeches, he referred to it as messy and in another, he said it was a an unnecessary manufactured crisis in Washington D.C. A day after signing the bill that raised the debt ceiling at a Democrat National Convention fund raising event in Chicago he said that “ we’ve just gone through an extraordinary week in Washington, an extraordinary two weeks in Washington. It’s not the kind of extraordinary that the American people are looking for. Because at a time when so many families are struggling, at a time when we should be singularly focused on how to make ourselves more competitive and make sure our kids have the best educations possible and how are we transforming our energy strategy and how are we building on high-tech industries and the huge competitive advantages that we have, politics continues to get in the way.”
According to Obama, “but we’re going to have a lot of work to do, and it’s going to be tough. and this week I think signifies not only how tough it’s going to be but exactly what’s at stake.” This is because, as the President told members of his cabinet two days later, “the economy is still weakened, partly because of some things we couldn’t control, like the Japanese earthquake and the situation in the Europe, as well as the Arab Spring and its effect on the oil crisis. Unfortunately, the debt ceiling crisis over the last month, I think, has had an unnecessary negative impact on the economy here, as well.” In the same vein, financial analysts across the globe have variously commented on the fight that developed over what has been done for 78 times in the nation’s financial history without any hue and cry.
Virtually everyone agree that although the immediate crisis over a threatened default seems to have been averted by the eleventh-hour, the debt-limit drama has left behind crucial questions about the American political process, the viability of its economic policy options and implications for the rest of the world. Mohamed El-Erian, co-chief investment officer of the international bond fund giant Pacific Investment Management Co. ( PIMCO), said that due to the very public and intense squabbles in D.C., already-anemic economic growth will be weaker, the unemployment crisis will worsen, income and wealth inequality will deteriorate further and, ironically, the fiscal dynamics will be more challenging.”
According to the PIMCO executive, the debt-limit battle was a “self-inflicted wound that weakens the economy and erodes its standing globally.”
China, Washington’s largest foreign creditor, has been particularly blunt about other countries’ exposure to Washington’s partisan warfare. “The ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight,” China’s state-run news agency Xinhua wrote in a commentary, referring to the symbols of the Democratic and Republican parties.
Tim Reid and Emily Kaiser, both financial analysts in their commentary of the development say Say that virtually everyone agreed that America’s fiscal path is unsustainable, especially considering that with a national debt of more than $14.3 trillion; the U.S. borrows forty cents of every dollar it spends. According to them, yet there is intense, fundamental disagreement on how to solve the problem, with Tea Party Republicans as passionately opposed to increasing taxes as progressive Democrats are to making deep cuts in the Social Security pension system and other so-called entitlement programmes.
