Far from broken, US a political beacon

THE world is badly misinterpreting the US debt crisis - it is not a sign of the weakness of US politics, but its strength. This crisis, more than anything, demonstrates why America is not Europe.

European governments have found nothing easier than raising their national debt limits, until their debt gets more, or less, beyond their ability to service it.

If the US was Europe, raising the debt ceiling, rather than threatening government spending, especially entitlement programs, would be as easy as apple pie. It is true that the US is still in a deep fiscal hole. It is also true that this deal has its good and bad points, and is only one episode in a huge, panoramic drama.

And taking the game right down to the last day or two certainly showed a willingness by all sides to flirt with disaster.

But here's one crucial lesson about government debt. It's far better to have a political crisis about getting into it before you have an economic crisis about how you pay it.

This negotiation has been an astonishing victory for congressional Republicans.

They have won the intellectual and political argument. President Barack Obama, the biggest-spending president in a generation of US politics, has abandoned plans for new taxes, effectively abandoned plans for any significant new government programs and accepted - in principle and in practice - that there must be deep, structural cuts to US government spending.

Of course, it will be difficult for Republicans to enforce this and to keep their pledges to avoid new spending or merely leaving existing programs on a business-as-usual basis of endless expansion.

But Republicans have moved debt and the need to reduce spending to the centre of American life, made it a bipartisan consensus and conscripted the President to their cause.

There is plenty to criticise in the Tea Party and it certainly attracts its share of nuts and cranks. But only in the US could a recession produce a popular movement demanding government cut spending. Thus, the Tea Party has played its part in this debate and that has been a constructive part.

Of course, they are always in danger of overplaying their hand.

Most fanaticism begins with a good idea. The problem with the fanatic is the tendency to take the good idea to illogical conclusions, and to see it as the only good idea, and thereby lose the sense of balance which all good social politics requires. But the US political system is not just the Tea Party.

There is a foolish tendency among non-US commentators, and too many Americans as well, to regard the US system, because of its many checks and balances, as incoherent and dysfunctional.

But this episode is one where the US demonstrates the at least occasional superiority of its governing model to that of a parliamentary system.

A Westminster government that enjoyed majority support for the executive in parliament would have just raised its debt level, and kept doing so until it reached the logical end point of Greece: insolvency. That, unfortunately, seems to be the policy instinct of the Obama administration.

But the US system, with its two-yearly congressional cycle, forced debt reduction and the danger of the ballooning deficit to the centre of the debate.

It is perfectly reasonable to blame George W. Bush for a great deal of the public debt, though Obama is an epic government spender.

I would disagree with the Tea Partiers in advocating some action on the revenue side (that is, the abolition of some tax breaks) and some cuts in defence expenditure. Hopefully, eventually, US growth will ease the situation. And there are 1000 other factors. But when all is said and done, the key to the government debt problem is government expenditure.

That US politics is focused on that issue as the centre of the crisis is a sign of political health.