“Ending shutdown” read the headlines of the leading American newspapers of October 17, informing that the US managed to avoid the first default in its history. The US President Barack Obama signed the document providing the raise of the federal debt ceiling up to 16.7 trillion dollars and resuming the work of the state agencies (resuming of their funding).
“We are reopening the state agencies. We can free our businessmen and our people from uncertainty and anxiety. Hopefully, next time it won’t be on the 11th hour. I repeat what I have already said during these debates: we’ve got to get out of the habit of governing by crisis,” Obama emphasized after the vote in the Senate.
Instead, according to The Wall Street Journal, the agreement developed by the two Senate leaders only suggests a temporary delay of power balancing that has become a trait of the government division. However, in mid-February the US will have to look for new agreements.
Senate Majority Leader Harry Reid emphasized that “the compromise we reached will provide our economy with the stability it desperately needs.” According to the rating agency Standard & Poor’s, the US has spent over 24 billion dollars over the 16 days of the crisis.
Except for raising the federal debt ceiling to 16.7 trillion dollars, the new agreement is supposed to compensate the mandatory leaves the 800,000 state officials had to take. The document also provides for creating a special commission including the members of both chambers that will have to develop a long-term budget plan.
The Day asked the former Ukrainian ambassador to the US Oleh SHAMSHUR to comment on the new agreement.
In your opinion, who are the winners and losers of this confrontation?
“Trivial as it may sound, it is difficult to give a clear answer. As for the economy, recent stock trading indexes look promising for the American business. However, the 16-day confrontation in the Congress decreased the consumer confidence index, slowed down job creation and provoked unrest on the global financial markets; in addition, one of the leading rating agencies declared the possibility of lowering the US solvency rating. Politically Obama and the Democrats beat their opponents: they managed to resume funding of the government and raise the federal debt ceiling without making any serious concessions in launching the healthcare reform (the rejection of this reform motivated the supporters of the harsh confrontation between Obama and the Republicans). However, we should take into consideration that the bill introduces temporary measures: its provisions concerning the government funding and the federal debt ceiling will be valid till the beginning of the next year.”
How can it influence the midterm elections in 2014?
“This conflict has affected the rating of the Republican Party. Three quarters of Americans criticize the behavior of its representatives in the Congress during the recent budget war. According to the American analysts, it will significantly complicate their task to gain the Senate majority at the elections of 2014. However, there is still enough time before the elections. Actually, the question is, whether the party leaders will be able to draw necessary conclusions and ‘rebrand’ the party to make it more moderate. Influential politicians such as Senator Lindsey Graham and the Governor of New Jersey Chris Christie have already supported the necessity of this image correction.”
Did this agreement lift the threat of a new confrontation between the Republicans and the Democrats?
“No, it did not. The law provides funding of the federal government only till January 15, 2014 and the raise of the federal debt ceiling is allowed till February 7, 2014. By December 13 the parties will have to agree on long-term principles of the US budget development. Only few people in Washington hope that the party wars will result in an ambitious plan of reforms of tax system or federal programs for social assistance which are the main source of the fiscal deficit. However, if these problems are not solved, it will make the US political system periodically repeat situations, similar to the current one. More and more politicians of both parties realize the danger of risks such situations might involve.”
How would you assess Obama’s actions in this situation and what does it give to him?
“Unlike previous financial and budget confrontations this time President Obama was an active and mainly skillful ‘combatant.’ He has every reason to be happy with the tactics he chose. However, at the same time he, probably, realizes that difficult trials are awaiting him, taking into account the necessity to compromise on the budget and federal debt ceiling, as well as the healthcare reform implementation which is the main achievement of his presidency.”
