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Journalism of Courage
Whether President Obama speaks to the US Congress about his economic programme on Wednesday or Thursday of next week would seem a minor issue. Yet the rejection of his choice Wednesday by Republicans,forcing him to move it to Thursday,will be viewed as far from insignificant. It will,again,raise doubts that the American political establishment is capable of working together to do what the world needs it to do in order to stave off a double-dip recession. It is now generally accepted that the recovery of the world economy is spluttering; and fears of another downturn have built up considerably. The next few months will be crucial for the restoration of confidence. Given that the EU and the eurozone are deeply politically divided and Japan is still unable to emerge from its decades-old slowdown besides having had six prime ministers in four years the onus is on the US to get growth momentum going. But the US political establishment does not seem capable of delivering growth.
The sources of this inability are easy to see. US public debt is at 14.3 trillion,96 per cent of its GDP. Suspicions have grown that this path is fiscally unsustainable; but Americas sharply divided polity has not been able to agree on how to break out of it. The danger is that Republicans in Congress,spooked by the right-wing challenge within their party,will win the argument for spending cuts that will,in the short term,make any recovery impossible. Indeed,a sharp and immediate reduction in spending and benefits will further weaken demand,hurting both the US economy and those of its trading partners.
