Falling off the "fiscal cliff" would have had repercussions for the world economy, not merely that of the United States
Washington's crisis of political maturity
The Arabic media have a new term in their lexicon: "al hawiya al maliya", referring to the - seemingly averted - "fiscal cliff" in the United States. And so Americans' domestic political bickering and partisan intransigence has taken on a multilingual, transnational nomenclature. Frantic last-minute negotiations appear to have averted automatic tax hikes and spending cuts that were to take effect on the first day of the year. Congress was expected to approve the deal today or tomorrow, although nothing is certain in Washington's torrid politics these days.
While the details of the deal mainly matter to the United States, the fact that the phrase has entered Arabic - and many other languages - underscores the enormity of the consequences if this deadline were missed. The US economy is still the world's largest, and if it fell off the proverbial cliff, it would have dragged the rest of us along for the ride.
That makes the endless partisan bickering of US politicsians childish. Both Republicans and Democrats knew there was a deadline and that they needed to meet it - and yet both sides pushed. Despite a shared national interest, their own narrow agendas kept them right up to the deadline (and, in fact, slightly over it) simply pandering to their constituencies. The brinkmanship is deeply irresponsible at a time when the US recovery is fragile and the global economy is still feeble.
The issue is ultimately confidence. That confidence centres on this: that the US will be able to pay its debts. The US credit rating has already been downgraded from the Triple-A rating, with reports that a further downgrade may occur in 2013. Economies thrive or collapse depending on public sentiment - the panic after Lehman Brothers folded in 2008 should have provided ample evidence of this.
While the US outlook is improving, partisan politics can still spoil the recovery. The US political system is designed to encourage compromise - instead, the brinkmanship of recent weeks has shown the willingness of US politicians to put their own interests ahead of the country's. Partly this is because of a Republican Party that is struggling with its libertarian right wing, but the Democrats have also chosen to settle scores after the recent election, rather than govern effectively.
Washington has backed away from the fiscal cliff, for now. But there will be other challenges and other cliffhangers. This endless bickering in the Beltway puts everyone at risk.