Dispatches from the Potomac#03 | The First Government Shutdown in 18 Years — What's Going on with US Politics?

Government offices were shut down for the first time in 18 years, and the US came very close to defaulting on the federal debt. The worst situation was avoided, but what was happening in the US political system to cause this mess?

This article was originally written in October for publication in the November 2013 edition of the Marubeni Group Magazine, M-SPIRIT.

Washington D.C. Office General Manager, Marubeni America Corporation    Takashi Imamura

Republican Party overly obsessed with destroying “Obama Care”

Since October 1, most US government offices and agencies have been closed. This was because the interim budget for the 2014 fiscal year was not approved on time.

The Democratic Obama administration and the Republican Party are always on opposite sides during budget negotiations, and in March of this year, compulsory reductions on annual spending were initiated. Subsequently, the US economy started to recover. The tax increases previously approved by both parties, along with the spending cuts, started to have a positive effect, and the federal debt decreased. As a result, the two parties seemed less concerned about the budget negotiations. This led to the Democratic Party assuming that agreements would be reached without too much difficulty for the budget negotiations in September, as well as the raising of the federal debt ceiling negotiations in October.

But, the situation changed suddenly when the Republican Party decided to adopt a brinksmanship strategy of making hostages of the interim budget and the debt ceiling increase in an attempt to force some compromise on the health care insurance reform act.

The health care insurance reform, one of the major achievements of the Obama administration, is strongly disliked by the Republican Party, who regards it as “socialism.” They tried to quash health care insurance reform more than 40 times during congressional deliberations, but the Democratic-majority senate was able to block these attempts. In the summer of 2012, the Supreme Court ruled that the health care insurance reform is constitutional. In autumn that year, the Republican Party, insisting on the abolishment of the health insurance reform, actually lost both the Presidential election and senate seats. Under the health insurance reform act, a new medical insurance purchase system called “Exchange” was started in October, and the obligation for all US citizens to enroll in a health insurance program will go into effect in January 2014, so the implementation phase has already begun. Then, the Republican Party came up with a brinksmanship strategy, saying “We will not agree to an interim budget or a debt ceiling increase unless the Obama administration reconsiders the health insurance reforms.”

This Republican “game-changer” strategy, however, was futile, because the health insurance reforms are not directly related to the budget issues. It would make more sense if the Republican Party was demanding reduction of the deficit or spending cuts, but demanding a revision of the health insurance act is unsupportable. Furthermore, the attempt to overturn an act that was approved three years ago is tantamount to challenging the entire democratic political system. The health insurance reforms were properly legislated, and approved by the Supreme Court; and, US citizens indicated their support by reelecting President Obama for a second term. In other words, because this health insurance reform is a product of the democratic process, the Republican Party has been unable to attack. As a last resort, they stooped to a strategy of taking the budget and the debt ceiling hostage to obtain what they want. Both Obama and the Democratic Party refused to give in, leading to a government shutdown.

Will Republicans learn from the mistake and make changes?

Naturally, US citizens have displayed great frustration with the Republican Party after the shutdown. It is clear from many polls that the general opinion is “Republicans are responsible for the government shutdown.” There are many people who oppose the new health insurance reforms; but, that doesn't mean they approve of shutting down the government and risking default in order to change them. Although only a minority hard-liner conservative group supported such risky tactics, the Republican Party continued with the unreasonable demands, and caused the government shutdown. The support for the Republican Party has dropped and it is predicted that they will end up paying the price in the mid-term elections in autumn 2014.

The Republican Party didn't stop this reckless strategy until they realized the full significance of a federal default. Just before the October 17 deadline set by the Treasury Department for the decision on the federal debt ceiling, the moderate Republican senators finally decided to avoid the default risk by breaking ranks with the party hard-liners. They dropped almost all the demands related to the health insurance reforms, and reached an agreement with the Democratic Party on a short-term interim budget and the debt ceiling increase. Republican hard-liners still disagreed in both the senate and house, but did not launch any resistance through filibuster or other means. The federal debt ceiling was finally raised just a few hours before the deadline on the night of October 16, and the government offices have been open as usual since.

The Republican Party is one of the two major political parties in the US with a long history of running the US government. What made them so obsessed with quashing the health insurance reforms that they would adopt such a reckless strategy, so far removed from public opinion? The decline of a major party is not a small loss for the US political system. However, history shows us that in the 1980s, the rival Democratic Party became overly liberal, lost public support, and was defeated in 3 consecutive presidential elections. They eventually realized that they were risking their position as one of the major parties, and started to reform themselves. While the Democratic Party was working to become a more realistic representation of the people, Bill Clinton helped to revive interest and was elected President. I believe that the Republican Party has the ability to learn from the mistake of resorting to brinksmanship, recognize the pitfalls of an ultra-conservative stance, and start to reform themselves. As the US society becomes more diverse, the Republican Party needs to listen carefully to the citizens, learn what they really want, and act practically, without being dogmatic. I hope to see the appearance of Republican Party leaders to drive such reform and be able to compete with the Democratic Party to continue to make a positive contribution to the US politics.