The “Shutdown Showdown”

Last week, the United States Congress passed last minute legislation funding the government and raising the country’s borrowing limit to avoid the potential of a US default on its debt.

The measure ended the 16-day government shutdown and delivered, what most say, is a “stinging loss” to the Republican Party. The Party secured virtually none of their demands, including their signature effort to defund President Obama’s healthcare reform bill.

From a public relations, communications, or any other point of view, it’s hard to find much positive in the Congressional wrangling that descended into the shutdown of the US government. A quick overview of traditional media showed plenty of “he-said, she-said” punditry, message-point-stuffed interviews with elected officials, and a few polls showing that the American people were thoroughly disgusted by the “shutdown showdown”.

In fact, a CNN/ORC International poll showed that 63% of Americans were angry at Republicans, with 57% also angry at Democrats, and 53% unhappy with President Obama. Nearly half of those surveyed said the shutdown caused major problems. It’s safe to say – neither side came out smelling of roses after the federal funding impasse.

The world’s view was also not unbiased. Much like the houses of legislation themselves, the international media pointed the finger of blame and responsibility toward one side of the aisle but in the end, everyone was laughing at Washington’s shenanigans.

According to the BBC, “even in the middle of its ongoing civil war, the Syrian government has continued to pay its bills”, “a superpower has paralyzed itself”, wrote Germany’s Spiegel Online and Lebanon’s Daily Star commented, “the House Republicans seem almost to enjoy holding the country hostage. Their version of Russian Roulette has become so familiar that we forget just how outrageous it is.”

So now that the US government is back to “business as usual”, the challenge for all sides is to rebuild trust and faith in the US democratic system. And last week’s agreement was not necessarily a step in the right direction. It funds the government until January and raises the debt ceiling until February, so a viable solution is still elusive.

Whilst Congress’ refusal to pass a clean continuing resolution inflicted considerable damage on the US economy, the shutdown was a comparatively small economic event by global standards. Should the US default on its debt obligations however, the reverse is true. For the global credit markets and in particular countries like the UK for which finance is so important, the shutdown was very unsettling.

Early next year, the whole situation could be repeated, this time with more severe consequences.

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