Mandel Ngan/Agence France-Presse — Getty Images
Struggling to pay your rent this month? You’re not the only one. The clock is ticking and if the American government does not come to its senses in just over a week, it could run out of cash. The current government shutdown, quite the political embarrassment, is bad enough with 800,000 federal workers furloughed (despite some back at work at the Pentagon and others assured of back pay). But if the U.S. finds itself unable to raise the debt ceiling, currently set at $16.7 trillion, by October 17th the situation will escalate and trigger devastating consequences.
Failure to raise the ceiling would result in the country defaulting on its debt. The stakes are high: an error of this magnitude would be economically devastating for the American economy and the rest of the world. No one is prepared for another financial crisis; no one is ready to relive 2008. Hopefully, for all our sakes, the global economy will not crash.
For some, such as Jack Lew, Treasury Secretary, and Christine Lagarde, IMF Managing Director, there is definitely reason to worry. After all, the health of the world economy is at stake, and if the Congress fails to grasp the severity of the issue, it could plunge the world into a global recession. It is essential to reach an agreement — and fast — because the U.S.’s inability to pay its bills will severely harm its reputation domestically as well as internationally. Most observers hope for a last-minute deal and stand by the fact that the potentially destructive outcome would be in no one’s interest.
A last-minute agreement is probable, and yet, it will not entirely resolve the problem or make these past few weeks any less unacceptable. The fact that a small number of radical politicians could be responsible for our government’s shutdown because they are committed to bringing down the Affordable Care Act is shameful. This legislation was adopted by Congress, passed the Supreme Court’s scrutiny and its chief architect, President Obama, was re-elected by the American people. The idea that that a minority could potentially crash our nation’s economy is unbelievable. This raises questions about the fundamental structure of our political and economic systems.
And no, it is not only American citizens who are disappointed with a government shutdown resulting from a political dispute. They are not the only ones asking questions – the rest of the world is too. If the United States is unable to manage its domestic budget, how can it be the world’s financial leader? A country as resourceful, rich, and powerful as the United States should not even face problems of this sort. And yet, here we are: impatiently hoping that our credit markets won’t crash, unable to reach a simple agreement that will serve all parties’ interests. At this rate, Italy’s government appears more cohesive than ours!
We do not face the debt problems that European countries do. We can afford to pay our debt, but can’t if our cash flow is held captive. Perhaps it is worse – we don’t face the same financial unease, and yet we are still unable to solve the issue. The government shutdown was a great disservice to the American public. For other nations, it was a mockery. One can only hope now that future decisions of this country will live up to its own standards. Tick, tock.