BY ROSS GILLAM
Once again politicians seem hell-bent on short term political wins even if this has a direct negative impact on the global economy. This time however, it is back to America rather than the inept Europeans.
Following a political debacle in the summer when Republicans refused to agree to increase the US’s debt ceiling, the US lost its AAA credit rating from Standard & Poor’s. After this, a Joint Select Committee on Deficit Reduction, or super-committee as it is colloquially known, made up of six Republicans and six Democrats was tasked with the objective of finding $1.2 trillion (£767 billion) in cuts over the next ten years. This was an opportunity for the US’s politicians to right their wrongs and show they can act responsibly and start putting the economic mess back in order.
With the announcement this week that the super-committee had officially failed to agree on these cuts, once again politicians have shown a miraculous ability to do more harm than good to the economy. Following the news global stock markets fell illustrating the direct impact politicians have on the markets.
In case we needed reminding, this is largely due to the fact there is a US election next year. Both Republicans and Democrats are determined not to budge on economic principles in order to enhance their 2012 election prospects, although this is questionable after many Americans were fed up with both sets of politicians over the debt ceiling shambles in July. The news this week continues a worrying trend of politicians favouring short term political point scoring to the detriment of long term economic stability.
Politicians need to stop treating their electorate as stupid and try to dupe them with short term fixes. It is time politicians spoke to their electorate like adults and outline the long term strategy needed to sort out the global economy – even if this requires some painful truths. On this point it will be interesting to see how our own Chancellor talks to us when he delivers his Autumn Statement next Tuesday.
For further comment on US politics and its ability to stifle sound economic policy, the wise Francis Fukuyama’s article in yesterday’s FT is well worth a read.