The crisis which was engulfing the united states during the last three weeks came to an end as a result of an excellent bi-partisan effort in the senate, the democrats and the republican’s in a rare show of co-operation were able late on Wednesday 16 to come out with a bill to end the 16-day long shutdown of the federal government, and to raise the current debt ceiling to prevent a highly possible default, which would allow the government to borrow the money it needs to function and to pay its bill, this agreement was endorsed by the senate with a very big majority and late on Wednesday it was ratified by the house, and during the early hours of Thursday October 17 it was signed by the president and became law. This agreement provided a welcome end to an extremely worrying and dangerous situation, had the United States went into default over its debt, had the shutdown of the federal government lasted much longer, the consequences would have been absolutely catastrophic to the people, to the country’s credibility and its position as a superpower and to the world. But again and in spite of what I have just said there are few questions which are begging for answers, In the end, there were no clear winners or losers, both sides share the blame about what happened, although the republicans are receiving a larger share of the responsibility for the damage which was inflicted on the people and the state and the large sums of money which has been wasted on what proved to have been a great upheaval about nothing, also this agreement has in fact in spite of all its helpful essentials has done nothing about the roots of the conflict, in fact there are already signs that the country might go through a similar mess pretty soon, because the two main players in American politics, are still widely separated and refusing to talk to each other, when if they would like to make sure that what has recently transpired would not be repeated then they have to sit down together and talk about the issues that separate them, and must be able to come out with solutions which are acceptable to both of them, if not there is going to be more polarization, more paralysis and disarray.
This very unfortunate crisis which has been embroiling America during the last few weeks has very definite roots in the recent past, it goes back to the days when congress was in the process of legislating what came back to be called the affordable health care act, which is more commonly known as Obamacare, the trouble was that the democrats were pushing it against a very solid opposition by the republicans, and when the democrats succeed in pushing it through congress without their participation and was signed by the president on march 23, 1010 into law, they [the republicans] swore that they are going to do everything in their power repeal it, to undermine it and prevent or delay its implementation, and they tied and always failed, and to make things even more difficult for them , the supreme court on June 28, 2012 upheld its constitutionality and paved the way for its implementation, but that didn't stop them from pursuing their campaign about the law , and their last effort against it when they tried to include a clause in the new budget, the one for fiscal 2014 to defund obamacare which was totally unacceptable to the democrats in congress and to the president which started the bedlam between the two parties which went on for more than two weeks, when they kept talking past each other and immediately refusing whatever the other side suggested , the republicans insisting that defunding , delaying or altering the controversial law must be part of an final deal, the democrats meanwhile stood firm in insisting the’d negotiate only after the passage of a spending bill and legislation to raise the debt ceiling without anti-obamacare add-ons. Both sides remained inflexible and stubbornly refusing to compromise which resulted in the shutting down of the federal government on October first, and the cost of the shutdown was unbelievable,
Economists have estimated the shutdown cost the US economy near 25 billions of dollars. The shutdown affected Americans and visitors to the US in countless ways: most national parks were closed, medical research ground to a halt, and ordinary paperwork went unfinished, delaying visa applications, business permits and safety inspections. Hundreds of thousands of employees were put on leave without pay during the shutdown, with many forced to delay purchases or even payment of routine bills. A few days into the shutdown Congress passed a law ensuring they would receive back pay. But Before dawn on Thursday, the US Office of Personnel Management, which manages the federal workforce, announced in a terse statement on its website that government workers should return to work as regularly scheduled. And had the crisis remained unresolved by October 17 and the debt ceiling was not raised and the country had defaulted, the situation would have turned into a real disaster.
In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant (condition) of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either unwilling or unable to pay his or her debt. This can occur with all debt obligations including bonds, mortgages, loans, and promissory notes. National default refers to the idea of an entire government unwilling or unable to pay a required national debt. The term default should be distinguished from the terms insolvency and bankruptcy. "Default" essentially means a debtor has not paid a debt which he or she is required to have paid. "Insolvency" is a legal term meaning that a debtor is unable to pay his or her debts. "Bankruptcy" is a legal finding that imposes court supervision over the financial affairs of those who are insolvent or in default. And had the united states defaulted , the situation would have turned as I have already mentioned into a real disaster, it would have created an extremely severe damage to the markets in the united states and those in many other parts of the world, the dollar would have plummeted, and the social security and other benefits to the people would have stopped or very severely curtailed, the united states prestige and credibility all over the world , and politicians, bankers and economists had warned of global economic calamity unless an agreement to raise the US government’s borrowing limit was reached. IMF head Christine Lagarde's said in a statement, “It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner,”. So , on the brink of a debt default and after more than two weeks of a federal government shut down, congress finally approved a plan Wednesday evening to temporarily end both crises and restore a degree of normalcy to the situation.
The eleventh-hour deal will fund the government through January 15 and lift the debt ceiling through February 7. This will allow the federal government to reopen letting the hundreds of thousands of federal employees to head back to work, to open the parks and museums, and restart medical research and other similar activities, it also directed congressional leaders to appoint negotiators for longer term budget agreements and the other thorny issues which separate the two parties. President Obama said Wednesday night after signing the bill, we can begin to lift this cloud of uncertainty from our businesses and from the American people, one of the things that I have learned during the last few weeks is that we've got to get out of the habit of governing by crisis, he continued, my hope is that everybody has learned that there is no reason why we cannot work on the issues at hand, why we can’t disagree between the parties while still being agreeable, and make sure that we’re not inflicting harm on the American people when we do have disagreements, but the reality is different, and the situation is more complicated, the polarization in congress stems from a deep polarization in American society, and the partisan fights are likely to continue far into the future, but this attitude must change , and the two adversaries must remember the first rule in politics, the need to compromise, they need to sit down with the others, and start negotiating the issues that separate them, otherwise there is going to be more polarization, paralysis and disarray.
Friday, October 18, 2013