After the nation’s major social program finally became law, critics regularly blamed it for a slowing economy and a swelling federal bureaucracy. Fierce congressional opposition led to the formation of a blue-ribbon panel to overhaul the measure. Obamacare in 2013? Not quite. It was Social Security in 1937.
The Great Debate
After the French Revolution, the statesman and diplomat Talleyrand said of the Bourbon kings, “They learned nothing and they forgot nothing.” The same might be said of congressional Republicans after their disastrous government shutdown adventure.
It could be that President Barack Obama and the Republican House of Representatives will again be able to avert fiscal and financial chaos through a short-term, ad hoc agreement on government funding and the “debt ceiling” limit. This would be good news for the world and its markets.
Warren Buffett calls the debt ceiling a “nuclear weapon, too horrible to use.” Obama administration official Jason Furman says the consequence of a default on U.S. government debt is “too terrible to think about.” When asked about a default, Wells Fargo strategist James Kochan simply commented, “Holy cripes.”
The political battlefield of the current government shutdown looks a lot like the last big shutdown of 1995. But major changes within the Republican Party in Congress — a weaker leadership, the demise of moderates and two decades of gerrymandering — could make this year’s endgame far harder.
The recent focus on what divides world leaders, from Syria to the euro zone, has obscured the significant agreements reached at the Group of 20 meeting in St. Petersburg earlier this month. One of the most important was support for free trade and opposition to protectionism.