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America’s debt crisis fuels Obama’s political crisis

30 July 2011

10:24 AM

30 July 2011

10:24 AM

Momentousness without momentum. That’s what we’re getting from America at the moment, as
this all-crucial debt deal continues to stutter and stall. The main development in Washington yesterday was John Boehner securing enough Republican votes to pass his bill in the House of
Representatives — only for it to be summarily tabled by Democrats in the Senate. What will
follow over the weekend is yet more frantic negotiation between the Democrats and Republicans in Congress, as each tries to make their various plans more acceptable to the other, while also keeping
their own die-hards on side. Meanwhile, the clock keeps on ticking down towards default: three days, 13 hours, 35 minutes…

The economic consequences of an American default are something that we
considered
yesterday (the quick version: global recession). But it’s worth emphasising that there are likely to be severe consequences even if Washington’s lawmakers manage to scrape together a
deal in the next few days. The fear is that the deal will be so rushed, with so many unlikelihoods stitched into its fabric, that the US credit rating will be downgraded anyway, from AAA to AA. It
would be yet another shock to the international system, coming on top of the protracted collapse of the Eurozone.

And it all adds to the poisonous stew at the end of Barack Obama’s spoon. There are some who might have hoped to tar the Republicans with recent events, but it’s not proving quite as simple as
that. The President’s ratings are plummeting on the back of this crisis, and in response to economic concerns
more generally. The Rasmussen Approval Index has 50 per cent of people
saying that he is doing a poor job on the economy. Gallup have him at his lowest ever approval rating. And here is
perhaps the most concerning polling of all for Obama’s supporters, from Pew:


Little wonder why the good folk of Political Betting are asking starkly: Is now
the time to bet against Obama? The President is looking more vulnerable than he ever has done. An efficient and convincing Republican candidate might cause all sorts of electoral mayhem.

P.S. Here’s The West Wing‘s take on the debt ceiling, default and all that:


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