Democracy welcomes multiple ideas and an active opposition to criticize and improve government acts. However, there are some decisions to be made that require all (or most) parties to cooperate efficiently and on a timely basis to agree on immediate actions.
The US Debt is on of them. The US was about to reach to its debt ceiling of $14.3B on August 2nd and required to pass a bill to increase it before running out of cash. It seemed that the impact of the US defaulting on its debt was clear to both parties and the efforts for reaching out to an agreement started several months prior to judgment day.
Despite that, along the way both parties strayed from the course. A highly important decision became a political power clash, where each party trying to beat its rival. Apparently, the impact of failing to agree, failing to increase the debt top limit, gave way to the main event in town – the battle between Republicans and the Democrats.
The bill finally passed at the very last minute, on August 1st, but it seemed to be a little late. Investors, fuelled by S&P downgrade announcement, reacted and sent Wallstreet to the sharpest decline since the credit crisis in 2008.
There are perhaps two points:
- One big lesson about keeping politics (a feature in every large organization) out of the biggest and most important decisions;
- More importantly for many, however, is the resulting shockwave from the S&P downgrade and the unnecessary market chaos inflicted on the economy as collateral damage. Until calm and judicious leaders regain control in Washington, there seems no reason to expect fewer rather than more shocks to come.
To read more about the US Debt, click here
To read more about the story see the New York Time coverage:
> Republicans' Ideology Dooms Deal on U.S. Debt
> Global Concern Over U.S. Debt Ceiling Disagreement