News / USA

Economic Costs of Washington Dysfunction Weigh Heavily

Economic Costs of Washington Dysfunction Weigh Heavilyi
X
September 26, 2013 11:39 PM
The U.S. Senate is expected to work on an emergency funding bill this weekend to keep the government operating after its spending authority runs out October 1. The bill would still require approval from the Republican-led House of Representatives, which earlier this week agreed to fund the government only if none of the funds are used to implement President Barack Obama’s signature health care law. But even if lawmakers succeed in averting a costly shutdown, some say the U.S. economy already is paying the price for political dysfunction. Mil Arcega has more.
The U.S. Senate is expected to work on an emergency funding bill this weekend to keep the government operating after its spending authority runs out October 1. The bill would still require approval from the Republican-led House of Representatives, which earlier this week agreed to fund the government only if none of the funds are used to implement President Barack Obama’s signature health care law. But even if lawmakers succeed in averting a costly shutdown, some say the U.S. economy already is paying the price for political dysfunction.

It’s down to the wire again as Washington wrestles with another fiscal deadline. But even if lawmakers succeed in defusing the latest crisis, the uncertainty carries a hefty price tag.

One study suggests that since the last budget impasse in 2011 - the market volatility, hiring delays and reduced consumer demand have shaved about $150 billion from the country’s gross domestic output.

Testifying in Congress this week, economist Mark Zandi said that’s equivalent to more than one million jobs. “If political uncertainty had not risen to the degree that it has, the unemployment rate today would still be high, uncomfortably high, but at 6.6 percent [we’re currently at 7.3 percent, it would be 6.6 percent] that would make a meaningful difference to our economy’s performance.”

Washington’s political dysfunction was evident this week when freshman Republican senator Ted Cruz railed for 21 hours against the health care law to delay a procedural vote. As part of his speech, he read excerpts from a children's book.  
 
Fiscal reform advocate Robert Bixby said that’s not a winning formula for Republicans. "If their position is they would not increase the debt ceiling or indeed pass any appropriations bills unless Obamacare is repealed or defunded, that I think would be viewed by the public as an unreasonable demand and I think they would hold Republicans responsible.”

Likely to be even more contentious is the coming debate on the debt ceiling. Failure to raise the debt limit will mean the U.S. government could run out of money to pay its debts by October 17 - the consequences of which Mark Zandi says “would be cataclysmic. It would mean higher mortgage rates, higher borrowing costs for businesses, lower stock prices, lower house prices, a full blown recession and there would be no reasonable policy response to it.”

But another leading economist says those claims are greatly exaggerated. Alan Meltzer says the budget debates are necessary and more likely to lead to a compromise.

“There will be consequences, but the consequences will depend upon how long the default goes on. It isn’t going to go on forever and it probably will arouse enough reaction from the public that will, if we don’t get the agreement before, we’ll get it after,” said Meltzer.

The domestic wrangling is a big worry for U.S. trading partners. Many countries, especially those in emerging markets are dependent on American consumer demand for their exports. Another political stalemate could erode the world's confidence in the U.S. economy, which had been showing modest but steady signs of recovery.

You May Like

Australia-Cambodia Resettlement Agreement Raises Concerns

Agreement calls for Cambodia to accept refugees in return for $35 million in aid and reflects Australia’s harder line approach towards asylum seekers and refugees More

India Looks to Become Arms Supplier Instead of Buyer

US hopes India can become alternative to China for countries looking to buy weapons, but experts question growth potential of Indian arms industry More

Earth Day Concert, Rally Draws Thousands in Washington

President Obama also took up the issue Saturday in his weekly address, saying there 'no greater threat to our planet than climate change' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Are Energy Needs Putting Thailand's Natural Beauty at Risk?i
X
Steve Sandford
April 17, 2015 12:50 AM
Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Are Energy Needs Putting Thailand's Natural Beauty at Risk?

Thailand's appetite for more electricity has led to the construction of new dams along the Mekong River to the north and new coal plants near the country's famous beaches in the south. A proposed coal plant in a so-called "green zone" has touched off a debate. VOA's Steve Sandford reports.
Video

Video Overwhelmed by Migrants, Italy Mulls Military Action to Stabilize Libya

Thousands more migrants have arrived on the southern shores of Italy from North Africa in the past two days. Authorities say they expect the total number of arrivals this year to far exceed previous levels, and the government has said military action in Libya might be necessary to stem the flow. VOA's Henry Ridgwell reports.
Video

Video Putin Accuses Kyiv of ‘Cutting Off’ Eastern Ukraine

Russian President Vladimir Putin, in his annual televised call-in program, again denied there were any Russian troops fighting in Ukraine. He also said the West was trying to ‘contain’ Russia with sanctions. Henry Ridgwell reports on reactions to the president’s four-hour TV appearance.
Video

Video Eye Contact Secures Dog's Place in Human Heart

Dogs serve in the military, work with police and assist the disabled, and have been by our side for thousands of years serving as companions and loyal friends. We love them. They love us in return. VOA’s Rosanne Skirble reports on a new study that looks at the bio-chemical bond that cements that human-canine connection.
Video

Video Ukrainian Volunteers Search for Bodies of Missing Soldiers

As the cease-fire becomes more fragile in eastern Ukraine, a team of volunteer body collectors travels to the small village of Savur Mohyla in the what pro-Russian separatists call the Donetsk Peoples Republic - to retrieve bodies of fallen Ukrainian servicemen from rebel-held territories. Adam Bailes traveled with the team and has this report.
Video

Video Xenophobic Violence Sweeps South Africa

South Africa, long a haven for African immigrants, has been experiencing the worst xenophobic violence in years, with at least five people killed and hundreds displaced in recent weeks. From Johannesburg, VOA’s Anita Powell brings us this report.
Video

Video Sierra Leone President Koroma Bemoans Ebola Impact on Economy

In an interview with VOA's Shaka Ssali on Wednesday, President Ernest Koroma said the outbreak undermined his government’s efforts to boost and restructure the economy after years of civil war.
Video

Video Protester Lands Gyrocopter on Capitol Lawn

A 61-year-old mailman from Florida landed a small aircraft on the Capitol lawn in Washington to bring attention to campaign finance reform and what he says is government corruption. Wednesday's incident was one in a string of security breaches on U.S. government property. Zlatica Hoke reports the gyrocopter landing violated a no-fly zone.
Video

Video Apollo 13, NASA's 'Successful Failure,' Remembered

The Apollo 13 mission in 1970 was supposed to be NASA's third manned trip to the moon, but it became much more. On the flight's 45th anniversary, astronauts and flight directors gathered at Chicago's Adler Planetarium to talk about how the aborted mission changed manned spaceflight and continues to influence space exploration today. VOA’s Kane Farabaugh reports.
Video

Video Badly Burned Ukrainian Boy Bravely Fights Back

A 9-year-old Ukrainian boy has returned to his native country after intensive treatment in the United States for life-threatening burns. Volodia Bubela, burned in a house fire almost a year ago, battled back at a Boston hospital, impressing doctors with his bravery. Faith Lapidus narrates this report from VOA's Tetiana Kharchenko.
Video

Video US Maternity Leave Benefits Much Less Than Many Countries

It was almost 20 years ago that representatives of 189 countries met at a UN conference in Beijing and adopted a plan of action to achieve gender equality around the world. Now, two decades later, the University of California Los Angeles World Policy Analysis Center has issued a report examining what the Beijing Platform for Action has achieved. From Los Angeles, Elizabeth Lee has more.
Video

Video Endangered Hawaiian Birds Get Second Chance

Of the world's nearly 9,900 bird species, 13 percent are threatened with extinction, according to BirdLife International. Among them are two Hawaiian honeycreepers - tiny birds that live in the forest canopy, and, as the name implies, survive on nectar from tropical flowers. Scientists at the San Diego Zoo report they have managed to hatch half a dozen of their chicks in captivity, raising hopes that the birds will flutter back from the brink of extinction. VOA’s George Putic reports.
Video

Video Exhibit Brings Renaissance Master Out of the Shadows

The National Gallery of Art in Washington has raised the curtain on one of the most intriguing painters of the High Renaissance. Mostly ignored after his death in the early 1500s, Italian master Piero di Cosimo is now claiming his place alongside the best-known artists of the period. VOA’s Ardita Dunellari reports.
Video

Video Sidemen to Famous Blues Artists Record Their Own CD

Legendary blues singer BB King was briefly hospitalized last week and the 87-year-old “King of the Blues” may not be touring much anymore. But some of the musicians who have played with him and other blues legends have now released their own CD in an attempt to pass the torch to younger fans... and put their own talents out front as well. VOA’s Greg Flakus has followed this project over the past year and filed this report from Houston.
Video

Video Iran-Saudi Rivalry Is Stoking Conflict in Yemen

Iran has proposed a peace plan to end the conflict in Yemen, but the idea has received little support from regional rivals like Saudi Arabia. They accuse Tehran of backing the Houthi rebels, who have forced Yemen’s president to flee to Riyadh, and have taken over swaths of Yemen. As Henry Ridgwell reports for VOA, analysts say the conflict is being fueled by the Sunni-Shia rivalry between the two regional powers.

VOA Blogs