Dave Mabell
LETHBRIDGE HERALD
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Catastrophe is averted. But the U.S. fiscal crisis continues.
And with its dysfunctional budget process, Lethbridge political scientist Geoffrey Hale sees little hope for improvement.
Unlike Canada and other parliamentary democracies, he says, the American government has no effective links between income and expenditures. What's more, the U.S. Senate and the House of Representatives have conflicting powers of taxing and spending.
Worse still, Hale says, politicians in the two parties who share the power have little interest in co-operation.
"Some of them hate the other people's guts," he says. "There has been strident polarization in both parties."
Hale, a political science professor at the University of Lethbridge, cites the so-called "fiscal cliff" as just one of the political ills facing Americans today. But it's linked to others, he said during an interview - including the U.S. administration's history of foot-dragging on issues relating to global warming.
This week's last-minute agreement in Congress will buy a little time, he says. It delayed scheduled tax hikes, but deferred decisions on more than $100 billion worth of defence and domestic program spending cuts. Meanwhile, the U.S. continues to run a deficit of about $1 trillion every year.
"Juggling short-term and longer-term political goals is a real challenge in Washington," Hale says. "They don't have any cohesive budget progress."
While federal and provincial governments in Canada may aim at a "balanced budget" - income equal to planned spending - Hale says the American constitution provides no similar safeguard for its financial affairs.
"On the spending side, there is absolutely no institutional control."
Both elected levels of Congress have their own "ways and means" committees as well as their "appropriations" committees, he points out.
And while the American president may command the world's strongest military, he has little real control of his nation's spending on defence let alone education or health care.
"The president can propose a budget," says Hale. "But there's no obligation to accept what the president says," even if his party held the majority in the House as well as the Senate.
Yet because the American dollar remains a "reserve currency," the U.S. is able to stumble along without a disciplined budget process.
"That would be absolutely insane in any other part of the world," but there's little likelihood of change.
Germany is the only other major nation which separates responsibilities for taxing and spending, Hale says. But there, the parties negotiate until they find an effective compromise.
"They have a tradition of co-operation."
Similarly in the United Kingdom, he adds, political parties debate the nation's budgets in an attempt to remain fiscally responsible.
"You don't go to the cliff."
In Canada, says Hale, finance ministers hope to "build in more margins," because our economy is so closely linked to the U.S. By providing those safeguards, he points out, former finance minister Paul Martin was able to pay down the nation's debt from extra income generated during economically strong years.
For now, he says, the limited agreement in Washington should foster some improvement in the American economy. A ripple effect could further boost Canada's recovery.
"But it doesn't address some of the larger questions like the energy glut," Hale says. "That's affecting our economy more than theirs."