Serious as the debt-ceiling deadlock in the US may be, outside observers see it as little more than a silly temper tantrum. Foreign politicians and financial professionals are increasingly talking to, and of, Washington as if it were a room full of spoiled brats.
China’s Deputy Finance Minister Zhu Guangyao sounded decidedly condescending when he reminded the US that “the clock is ticking”.
“We hope the United States understand the lessons of history,” he lectured, noting the US credit-rating downgrade by Standard & Poor’s after the previous such crisis in 2011.
China owns at least US$1.3 trillion (RM4.15 trillion) of US government debt, so its officials feel entitled to call on their US counterparts to show some responsibility.
Germany, holding a mere US$55 billion (RM175.7 billion) of US debt, is irritated at the way the US is shirking its role as the Western world’s leader.
The government shutdown is holding up trade talks between Washington and Brussels, and President Barack Obama had to skip an Asia-Pacific Economic Cooperation meeting this week, ceding valuable ground to the leaders of China and Russia.
“The American self-blockade is shocking”, the newspaper Handelsblatt quoted Karl Georg Wellmann, a foreign policy expert with Germany’s Christian Democratic Union party, as saying. “It undermines their position as a Western power.”
Chiding and condescension from the rest of the world is not what the sole remaining great power needs to enhance its reputation.
Few of the foreign commentators understand that Obama’s stand on the debt crisis is so rigid for the same reason he was so determined to launch airstrikes against Syria: Two years ago, he promised, before witnesses, never to negotiate with Republicans on the debt ceiling again.
Bob Woodward, in his book “The Price of Politics’,’ described the cathartic moment after Obama and House Speaker John Boehner made the deal that averted a US. default in 2011:
“Do we have a deal?” Obama asked. Boehner said they did. “Congratulations,” he said. “Congratulations to you too, John.”
Then Obama turned to the staffers in the room. “Let’s not do this again,” he said. “We’re not going to negotiate on the debt limit ever again.”
The humiliation of the extended negotiations, the endless bickering over relatively trivial matters such as tactical cuts to defence spending or Medicaid, the ever-present threat of default that, to some participants, made the process look like the Cuban missile crisis – Obama has vowed never to go through any of this again.
For him, standing firm and staring down his opponents is the only way to make sure the debt limit will never again be used for political bargaining.
As with Syria, Obama will only step away from the brink if a novel solution arises to break the stalemate. In the Syrian case, Russia convinced President Bashar al-Assad to agree to chemical disarmament, and Obama gratefully stepped back from ordering air strikes. In the current crisis, too, he needs a way out.
To outsiders, this may look like stubbornness. In fact, it is an example of commitment, just the kind people expect from the leader of a superpower.
Obama knows, after all, that unorthodox solutions exist: The minting of a trillion dollar coin, or the issuance of bonds at prices far exceeding their face value. Such moves would be undesirable, but so would forcing Obama to renege on his two-year-old decision never to negotiate the debt ceiling again. – Bloomberg, October 8, 2013