After two weeks of shutting down the US government (and seeing their approval ratings leave a smoking crater on the electoral landscape), Republicans have come up with what looks like a deal the Senate can pass—and it leaves Obamacare entirely intact with two exceptions too trivial to name. This will no doubt disappoint the few hundred living, breathing humans who came out to the Million Vet March, but they can take solace in the fact that Ted Cruz has managed the noteworthy trick of out-crazying everyone else on a stage shared with Sarah Palin.
Assuming that the Senate does in fact pass the deal, and that enough House Republicans vote for it to get it to the President’s desk, the crisis for now will have passed (until January, when it’s programmed to start all over again, just in time for the midterm primary season). What’s less clear is what the long-term damage to US financial credibility is—though early evidence suggests this hasn’t been a harmless bout of madness.
For starters, you’ve got the head of the IMF and various global finance ministers saying that the government shutdown and the concomitant tiptoeing up to the first-ever US sovereign default—and the much-televised Republican denials that default would even be that big a deal—are risking tipping the global economy back into a recession. Since many millions of Americans have barely noticed the “recovery,” a further recession could be catastrophic.
But the Tea Party wing of the Republican Party doesn’t care about the IMF or foreign finance ministers. They might, at the very least, care about continued American power and influence in the world—maybe. So it’s a bit more notable that the Chinese government has, in response to the debt ceiling crisis, resumed their calls for a “de-Americanized world” in global financial markets. Beijing has been banging the drums for some kind of alternative to the dollar as a global reserve currency for a while now, but it’s hard not to believe that they won’t find some new interested parties after the colossal irresponsibility of the Republicans in Congress this fall.
To be clear: The United States doesn’t actually get as many benefits from being the world’s reserve currency as some more feverish writers claim. But the benefits are not zero, and the prestige is real enough for politics. Certainly the dollar’s strength in the financial markets is more relevant than some previous GOP totems—Republicans lost their God-fearing minds in the late 1970s over the Panama Canal Treaties that most people alive today either never learned about or have long since forgotten. (Rachel Maddow’s Drift has an enlightening exploration of this forgotten chapter in neoconservative wackiness.)
The importance of the Chinese yuan in foreign markets is still small (it’s half as widely traded as the Canadian dollar), but it’s growing rapidly. China has been working hard to make its currency a more credible investment for years, as Hong Kong and Shanghai take their place as Asian financial centres. Even China skeptics might think that, faced with the challenge of a large and increasingly wealthy competitor on the global stage, the US might try to do its own financial system as little harm as possible.
But no. The last few months have been a stunning demonstration of the ability of even a large, modern, democratic country to publicly embarrass itself so thoroughly that even longtime friends are quietly looking around, asking who will call a cab and somehow get Washington, D.C. home safely—and wondering how many more times this is going to happen before something breaks beyond fixing.