How the world sees the U.S. shutdown
October 8th, 2013
11:24 AM ET

How the world sees the U.S. shutdown

By Jason Miks

As the U.S. government shutdown enters its second week, it is not just Americans wondering when the stalemate will be over – around the world, politicians and commentators have been weighing in with their take on how the U.S. got here, what happens next, and whether their own countries should be worried. GPS Digital Producer Jason Miks selects some of the highlights.

U.S. has been living far beyond its tax base

“For a generation or so, the American government has been living far beyond its tax base, with deficits since 1970 in all but four years. In 2010, it spent $1,900 billion more than it collected in tax – borrowing more than the entire GDP of Canada or India just to pay the bills. If the federal deficit has come down since then, total public debt is now well over 100 per cent of GDP, compared to less than 60 percent in the early noughties,” writes British Member of Parliament Douglas Carswell in The Telegraph.

“…Is it manageable? Perhaps. Maybe. Just about. Now imagine that interest rates return even half way towards their post-war historic average? Wipe out. The barely manageable will become completely unmanageable. Something is going to give. And I don’t mean in a philanthropic sort of way.”

China: We’re concerned

“China, the U.S. government's largest creditor, is ‘naturally concerned about developments in the U.S. fiscal cliff,” Vice Finance Minister Zhu Guangyao said in the Chinese government's first public response to the October 17 deadline in the United States for raising the debt ceiling,” Reuters reports.

“‘The United States is totally clear about China's concerns about the fiscal cliff,’ Zhu told reporters in Beijing, adding that Washington and Beijing had been in touch over the issue. ‘We ask that the United States earnestly takes steps to resolve in a timely way before October 17 the political (issues) around the debt ceiling and prevent a U.S. debt default to ensure safety of Chinese investments in the United States and the global economic recovery…This is the United States’ responsibility.’

Problem more serious than it appears

“America’s problem is even more serious than it appears. America is now two artificially created countries, operating in parallel. There’s the country that chooses presidents, and the one that can only rail righteously against them,” argues Waleed Aly in the Sydney Morning Herald. “The country where funding the government is a matter of sensible routine, and the country where shutting down the government is a badge of pride, a slogan you can sell. The Republican Party is going to have to figure out which country it wants to rule because these countries cannot be reconciled.”

“They won't be until every state hands over the power to draw electoral boundaries to an independent, non-political body. In the meantime, the Republican Party is trapped in a bubble largely of its own making.”
Singapore: U.S. diplomacy dented

“The federal government shutdown has dented the United States' diplomacy and restructuring efforts at home, Singapore Prime Minister Lee Hsien Loong has said, though he believes the country is vibrant and resilient and welcomes it remaining a powerful force into the future,” the Straits Times reports.

“‘It is... not helpful for the American political system to be in gridlock when you have to make some basic decisions on how to keep your fiscal state in balance in the long term, and how to strengthen your competitiveness over decades.

“‘…Obviously we prefer a US government which is working to one which is not, and we prefer a US President who is able to travel and fulfill his international duties to one who is preoccupied" with domestic issues…America is a very important partner for us, but we understand his [Obama’s] problems and his priorities and we hope he'll be able to resolve them quickly."

Shutdown just a precursor to debt fight

“In Washington, capital of the democratic superpower, an impasse in Congress has thrown the U.S. federal government into a shutdown because the Republican-led House of Representatives insisted on passing the federal budget only if the Democrat-led White House and Senate agreed to delay President Barack Obama's healthcare reform legislation,” Taiwan’s China Post notes in an editorial. “The shutdown came at a time when the US is facing once-in-generations challenges with high unemployment rates and a stagnated recovery from the Great Recession.”

“The even sadder fact is that this shutdown is widely seen as a mere precursor to the upcoming congressional fight over the U.S.'s debt ceiling. If Congress fails to pass a ceiling hike, the US will have to default on its debts for the first time in history. Many economists said they simply have no idea what the consequences of such an unprecedented event will be. Some who dare to guess said the negative impact on the economy could be on the scale of the Lehman Brothers collapse.”

GOP mortally afraid of its base

“The Republicans have kept insisting that the people will eventually thank them for this inconvenience, but they know the polls are negative and they know they are getting more blame for the shutdown than the Democrats,” writes Robert Fulford in Canada’s National Post.

“They probably don’t like being a joke on television, and no doubt they have a normal fear of public opinion. But they fear something else more: They are mortally afraid of the Republican party base. The base hates Obama and hates Obamacare even more. So any hint of compromise over the financing of the Affordable Care Act would be considered an outrage.”

South Africa: We should all fear worst

The global community “should fear the worst over the U.S. debt crisis and shore up its economic defenses accordingly,” South Africa’s finance minister said Monday, according to Reuters.

“Pravin Gordhan said there was a ‘heightened sense of anxiety’ among the world’s investors and policymakers. ‘This is clearly an issue that might go to the brink. All of us need nerves of steel at this point,’ Gordhan said on the sidelines of a conference in London. ‘We need to anticipate the worst and hope that we all have sufficient defenses in place.’”

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Topics: Economy • Politics • United States

soundoff (158 Responses)
  1. ProfMHSettelen

    The whole World, especially the other members of the G8, are watching the parabolic behaviour of the bonkers members of the Mad Hatter's Tea Party, when they compare US health care to that in their own countries.
    Indeed are we watching a dysfunctional, unevolved from the 18th Century, Democracy where members of the Cabinet are forced to lead debate on their portfolios from the Lawn rather than the Floor: the VP (already in the Senate) must be transformed into a PM with the Cabinet alongside on the Floor & the Finance & Treasury Minister must take command of the Shutdown & Debt Ceiling situations forthwith, as would his counterpart in evolved & indeed
    serious 21st Century Democracies!
    Cc: The Economist

    October 15, 2013 at 10:21 am | Reply
  2. coffee

    so what were the requirements again for the antichrist that destroyed the western world? I need to brush up on my nebechaneezer or whatever his name was. That will be a good thing to have on the presidents list of accomplishments to put in the history books, because of his idea to pool all of healthcare into an insurance pool where who knows what the market price will be once people start ringing up their charges (history shows we like to swipe those credit cards). Looks like another low cost entry bubble that will blow up in our faces big in a few years. Kind of like those homes the banks gave away against all common sense a few years back....that didn't pan out too well...So we get to possibly just go flat out broke...I guess the bubbles will go away then...

    October 15, 2013 at 1:18 pm | Reply
    • Katherine

      Excuse me? On the "president's list"? We spoke loudly in November, my friend, and it was NOT for John Boehner and the Republican party. A majority elected Obama and liberal economic policy. That being the case, this is not an issue of this shutdown being on Obama's list.

      October 16, 2013 at 6:09 am | Reply
      • ILENE

        SO I guess according to you the American People are to blame????? which I guess is true...or part of us .....the ones who voted for OBAMA!!!

        October 16, 2013 at 10:57 am |
  3. Phil

    Believe me–in our country (Canada) this is front page news at the moment. We are all puzzled how a small minority can take such a great nation to the edge. Do fiscal challenges exist in the US–absolutely. Our own country has challenges 20 years ago, but we were able to work together and not be so poloarized. Naaturally some people did not like the changes that had to occur (reduced spending and increased govt revenue)–but almost all politiicians realized something had to be done. The incredible polarization of the US system is strangely entrancing to watch and shake your head at.

    October 15, 2013 at 1:23 pm | Reply
  4. Robert V.

    People may wonder and wonder as to the reasons and motives behind this self-destruction of the American economy by a bunch of ideologicallyl motivated anarcho capitalists. They would rather destroy the country as long as they can start fresh, with a weakened state. For this is their ultimate goal. Ayn Rand would of been very happy today if she was alive. For what they are doing is no more or less than a COUP D'ETAT. The American Democracy is not real.

    October 15, 2013 at 4:24 pm | Reply
  5. Jax

    RULE? That's exactly the problem- our government thinks they are all RULERS! They are supposed to SERVE NOT RULE! "America’s problem is even more serious than it appears. America is now two artificially created countries, operating in parallel. There’s the country that chooses presidents, and the one that can only rail righteously against them,” argues Waleed Aly in the Sydney Morning Herald. “The country where funding the government is a matter of sensible routine, and the country where shutting down the government is a badge of pride, a slogan you can sell. The Republican Party is going to have to figure out which country it wants to rule because these countries cannot be reconciled.”

    October 15, 2013 at 9:45 pm | Reply
    • Danielle

      THAT is exactly what your President is trying to do – SERVE. I ask you, was he not ELECTED by the MAJORITY in your country to SERVE? Your words just show me that you and the Mad Hatter Tea gang, etc. have no respect for the "law" (Obamacare) and are no better than the Taliban or other terrorist groups. The U.S. looks pretty pathetic right now and certainly not a place where the majority of people would ever consider living. "The American Dream" my ass. It's a dream alright, it's BS!

      October 16, 2013 at 9:04 am | Reply
  6. ILENE

    All this is everyones fault.....Obama, congress & senate and the american voters who stopped looking at the person they were electing and voted based on the party. I guess we are all in this togather!!!

    October 16, 2013 at 11:01 am | Reply
  7. Melissa

    I keep reading these comments and, though argumentative, many good points are made. I think many of us are forgetting, though, that the American people also need to take some of the blame..and not just for our voting decisions. Our government BLEEDS funds. Through healthcare (Medicare, Medicaid), through welfare systems, frivolous spending, through school grants, children's programs, etc. I'm not saying any of the programs are wrong, but how many of us have turned up our noses at an extra tax break or help with college funding? We try to give as little as possible to the government, and try to pull as much as we can back in return. Yes, our elected government officials are currently acting like children and our debt is reaching crisis level, but the whole of the American population has to take responsibility for our own actions as well, and understand how they relate to the larger problem.

    October 16, 2013 at 7:22 pm | Reply
  8. Jesse

    As an American citizen, I am so ashamed of the Government of the United States. I cannot even pretend that they are my government, for their partisan bickering reflects not a whit on my personal cares. They debate endlessly over nothing, and allow education, the economy, and our infrastructure to slowly turn to mush. They have pushed us past the point of insolvency, and it scares me as a 27 year old who will bear the brunt of austerity measures to come. I hope we can one day take back out government from the stranglehold those Washington insiders and the elite have hijacked. Maybe if we spent more time reflecting inwards, instead of focusing our attention on those areas of the world that obviously don't concern us we wouldn't be in this terrible situation.

    October 16, 2013 at 10:57 pm | Reply
  9. Aaron Smith

    You know, when you hear something like "The US is carrying deficits larger than the entire GDP of Canada" (they were pointing to the 2008 Banking Crisis and its 1.9 trillion dollar deficit), you need to realize that really says less about Canada than it does about the US. Its like comparing California to Rhode Island, but that is beyond the point.

    I am also surprised by what was NOT pointed out. Lets get something straight. The United States is the wealthiest nation on the planet. As much as you hear about debt, blah de blah, the ultimate truth is, our total cash and assets outweigh our debts and leave enough left over to still make the US the largest economy in the world. So, when you are dealing with a nation that wealthy, the spending is not a problem.

    For example, if you look at the percentage of other nation's budgets, it would help a lot of things.

    The US puts a smaller percentage of our budget into education than any 1st world nation and many 2nd world nations.
    The US puts a smaller percentage of our budget into infrastructure & innovative programs than any 1st world nation.
    The US puts a smaller percentage of our budget into healthcare than any other 1st world nation.
    The US puts a smaller percentage of our budget into University scholarships, grants, etc..

    The United States has these other problems...
    The US spends a much higher percentage of its budget on defense
    The US has very low tax rates, particularly on our wealthy, and particularly because of our capital gains tax, which just allows people who are already rich to make money that much easier. Once you have enough money, and you are investing wisely, US millionaires and billionaires end up paying similar tax rates, if not lower, than those who make 40K a year. And since the top 2% of the US has 52% of the nation's wealth...we simply do not bring in revenue to pay for our programs...despite the fact that we spend a much smaller percentage on those other programs than other nations.

    Personal income tax rates in other 1st world nations are much higher on the wealthy, and have far fewer loopholes.
    The US does not have legitimate penalties for outsourcing its labor like other nations, eliminating employed citizens and lowering government revenue
    The US allows charitable write-offs on taxes which are abused by the wealthy. For example, Mitt Romney. Based on Mitt Romney's 2011 tax return, he made 12 million and paid 14% in taxes. People who make 40k a year pay 25% in taxes. Mitt got a large tax write-off because he gave 4 million dollars to the church, and it is therefore written off and not taxed. How fair is it, especially on a society and nation that was started for the purpose of religious freedoms and separation of church & state. How fair is it then, that someone can give money to their religion, and write it off on their taxes, making the rest of us having to make up for that money, even though we may not even be a part of that religion.
    Further, because Mitt Romney is considered a "spokesman" for the church (and is working on getting his boys to be the same thing so they took can take advantage of this tax loophole), so the 4 million that he donated to his church is tucked into the coffers, and then when Mitt goes anywhere, even taking a vacation, that 4 million he gave to the church is used to pay for his travel expenses, his food expenses, and his boarding expenses when he travels. So, not only did he not even really give that money away, and just uses the church as a place to hold his money so it doesn't have to be taxed, and then is allowed to use it as his discretion if whatever he is doing can somehow be sold as being tied to religion (like, when he eats out in a restaurant, he can claim he was there to help out a fellow Mormon who was having doubts about their faith. Its a trick many many wealthy people use and abuse.

    The truth is, our nation has a problem getting the wealthy to do its societal duty to pay a little extra in taxes, because the lower and middle classes (consumers) is where all of their wealth came from originally. There has to be enough money in the bottom to keep corporate demand high so employment stays high and federal revenue stays high. The best way to do that is to get rid of the loopholes the wealthy cheat on their taxes, as well as the corporations who save billions because they invested some money in clean energy research (GE), Well, that investment will ultimately pay off for the corporation, but not only do they get that, they get out of having to pay ANY taxes, or in this case, the government actually pays THEM.

    Another issue is corporations who make huge profits in foreign nations but refuse to bring their profits back to the US because they do not want to pay taxes on them, so they "defer" those tax payments indefinitely (which should not be allowed).

    The truth is, the US is the wealthiest nation in the world, but ever since this idea of low taxes on the rich being good for the economy, which started under Reagan (and its no coincidence), that is when the nations debt problems really started and have never been able to recover from.

    When US citizens come out of lala land and demand corporations that bring in billions of dollars of revenue each year start paying a fair share of taxes, and call out the republican liars that claim tax cuts for wealthy individuals creates jobs...until the republicans who champion these lies are put out of business in this nation, there will never be a fix.

    Its as simple as that.

    October 17, 2013 at 4:56 am | Reply
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