Wednesday, August 3, 2011

Disputes Over US Federal Debt Ceiling

After days of stalemate and tension, the US Democratic and Republican parties finally reached an agreement on the US federal debt ceiling. This was to the relief of global stock markets, and global investors. The pressure, as heavy as a thousand-ton stone, was simultaneously removed from everybody’s chest.
Earlier, the US Democratic and Republican parties did not want to come to a compromise over their respective proposal on how the US debt limit should be set. They refused to give in to each other and so in the end they could not reach an agreement. Their persistence in holding on to their respective proposal has even led to the situation whereby when the US House of Representatives passed the proposal it was bounced back by the US Senate. Such situation has gone back and forth for a number of times before the US Congress finally passed President Barack Obama’s debt limit ceiling at the very last minute when the deadline approaching.
Default Predicament
This kind of congressional result carried out in the US Capitol has given people a little suspense, but it was not too surprising to many. President Obama attributed the lifting of the US debt credit default crisis to the e-mail and telephone ‘bombardment’ that the US citizens have given to their congressional representatives. But in fact, we believe both Democratic and the Republican lawmakers then were pretty aware of the fact that if the Congress could not reach a compromise on the US debt limit ceiling, none of them could afford to bear the severe consequences of a US debt default predicament.
US Treasury Secretary Timothy Geithner did say that the consequence of US debt default is very serious. The level of such a threat is far greater than the impact of the Lehman Brothers bankruptcy. As such, investors from all over the world were all holding their breath to wait for the result of the Congress decision on the US debt default crisis. They were all afraid that the US debt default could lead to the collapse of the global economy. To many people, the vivid memories of the devastated stock market triggered by the Lehman Brothers bad debts remain until today.
Bipartisan Confrontation
The truth behind the stiff noises between the two US political parties over the US debt limit ceiling has everything to do with the US presidential election to be held in 2012. Whether it is the Republican or the Democratic Party, their respective debt limit ceiling proposal was one of the ways for them to fight for favorable public opinion. To the American people who have long suffered the economic downturn, the respective proposal by the two parties was aimed to add extra points for them. Of course, these US congressional representatives also understood the consequence of what would happen to the nation if they could not reached a compromise in settling the US federal debt crisis. Yet they have chosen the approach to, besides standing firm on their respective ground, also hoped that they could have more opportunities to gain additional political capital before the final passing of the US debt ceiling resolution.
This round of political battle between the Democratic and Republican Party has also highlighted the bipartisan confrontation between the two parties in the US Congress. The last time when more than a few hundred US congressional representatives fought until midnight to allow the US Patriot Act to pass through was when US President Obama was overseas. In the end, President Obama had to sign the bill using his automatic pen. This action taken by President Obama has even led Obama faced with the legal question of whether the US President had indeed violated the US Constitution rule.
Spreading Economic Disaster
For sure, the political battle staged by US politicians over the US debt crisis has carried it a bit too far this time. US politicians have used global economy as their dice in their gambling game. The result is that the world economy can be at stake fearing not only accidental misfires by the US politicians but also the repeat of a new wave of global market crash amid the possible consequence that the US Government might lose its credit standing in the international community.
When this happens again in the future, we can only say that the US politicians are indeed ‘played out the fire’ spreading economic disaster to the international community.

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