OPINION:The debt deal could impact on defence policy and interest rates in the EU, writes JOHN BRUTON
THE NEWS that the leaders of the two parties in the US Congress have finally reached a deal on raising the borrowing limit for the federal government will be a relief to many.
It was beginning to look as if the political divisions in the country had become so deep that the US political system itself had become paralysed. If that were to happen, the entire world would suffer.
Party discipline is very weak in the US for a number of reasons.
Each member of Congress must raise huge sums for his or her personal campaigns. So members pay as much attention to potential donors as they do to their national party.
While in Washington as EU ambassador to the US, I was told that newly elected House members spend as much as half their time fundraising for the next election. Political action committees, tied to particular causes, that raise funds for candidates can have as much influence on how House members vote as his or her national party.
Some districts have really bizarre boundaries designed to corral party supporters to create safe seats for one party or another.
This means that the contest in the primary, for the party nomination, is often more important than the general election. So members tend to spend a lot of effort courting the extremes of their own party rather than middle-ground voters, because their district has a built-in majority for their own party anyway.
Because party “headquarters” thus have little or no influence over who is selected as a party candidate for the House, the penalty for a House member for voting against the national interest is low. But that for voting against the interests of his or her constituents or big donors is very high indeed.
Party discipline was not always as weak as it now is, but “reforms” introduced in the 1970s have made the system more “democratic”, but less manageable.
There are many explanations for the fact that politics has become more partisan in the United States. One is that improvements in air travel have meant that members spend more time each weekend in their home districts.
Of course this means they spend less time in Washington and have less time to socialise with other members of Congress from the other party or other parts of the country.
Part of the compromise agreed between Democrats and Republicans will mean automatic cuts in defence and in healthcare for the elderly if Congress is unable to agree on alternative cuts. In the medium term, this means that US military capacity will reduce, and will be more focused on America’s own immediate interests.
Europe will have to take more responsibility for its own defence, and work out what threats it wants to equip itself to deal with on its own, and what threats it will simply have to ignore.
Adventures, like the bombing of Libya, will require a bit more thought. The defence provisions of the EU treaties may acquire a higher profile, and Nato may become less important.
The cuts in healthcare entitlements will hopefully force reductions in the costs of health services, which are much greater in the US than they are in Europe. Vested interests in medicine and law have driven American health costs up to a completely unsustainable level.
But by coming so close to the brink of default, Congress has created uncertainty about the reliability of US securities. This may lead to higher interest rates in the US.
And that could have a knock-on effect on borrowers in Europe because the interest rates on US federal bonds set the floor for interest rates.
Former taoiseach John Bruton was EU ambassador to the US from 2004-2009