The row over the US federal debt ceiling raises the question of whether we are observing political theatre or a serious struggle with a large and complicated problem. The answer is a bit of both.
The theatre is obvious. President Barack Obama’s call for a grand bargain with $4,000bn in deficit reduction over a decade belies the fact that in his initial budget proposal in February he ignored his own deficit commission’s recommendations. There was also a lack of detail on the “plan” offered in his budget speech in April. Many congressional Republicans have put aside a deal for three parts spending reduction, one part revenue increase. Meanwhile, congressional Democrats have attacked the fiscal plan offered by Paul Ryan, while offering no serious thoughts of their own.
But the political actors are also grappling with a complicated problem that US budget rules were not set up to address. The US ratio of debt to gross domestic product is set to cross 90 per cent in a decade, with significant increases due to higher entitlement spending on social security, Medicare and Medicaid.