America’s budget road-blocks

The political conflict over America's federal budget and debt has economists and financial markets on edge, but so far the damage has been slight. That could change dramatically within a few weeks if a failure to raise the debt ceiling leads to a US government default. But at this stage of the conflict it is of as much interest for what it says about the exercise of political power.

President Obama argues that the Republicans have no right holding the nation's finances to ransom in pursuit of their smaller government agenda just because they control one legislative chamber (the House of Representatives) out of two, which in turn form one out of three branches of government. The Republicans argue that they won a House of Representatives majority in last year's general elections and are entitled to exercise the powers bestowed on that House by the constitution.

Both sides have a point, but ultimately one will have to be proven more right or more wrong than the other. This will probably be determined in the court of public opinion rather than the Supreme Court. Is it legitimate to create disruption in the hope that the other side blinks first in a game of brinkmanship? Is US economic and social policy so rotten that a dose of fiscal anarchy is justified to help stop the rot?

Everyone has their own answers to such questions, but what is beyond doubt is that there are limits to the exercise of power, even when constitutionally valid. Having power is one thing; using it judiciously is another. The court of public opinion probably tolerates some game playing that tests the other side's resolve, but draws the line at tactics that have the intention or effect of creating chaos.

In America's system of divided power there is a long history of conflict over budgets and debt ceiling legislation, but the legislation has always been approved in the end because it is part of the routine of government. Appropriating funds to keep the government functioning and raising the debt ceiling are not tantamount to waving a white flag to the forces of big government. There are other ways to fight that battle. While debt ceiling legislation helps draw attention to excessive debt, ultimately it can only be capped and reduced by changing the expenditure and tax policies that produce chronic deficits in the first place.

Above all, the Republicans have to make a better fist of senate and presidential elections than they did in 2012 if they wish to advance their agenda. The risk to them is that their parliamentary tactics turn public opinion so sharply against them that they fail to improve on their 2012 performance in future elections, or even do worse.

Robert Carling is a Senior Fellow at The Centre for Independent Studies.