No thanks to anyone

THE deficit-reduction deal that finally raised America's debt ceiling and staved off the threat of default seemed to make no one happy. “A sugar-coated Satan sandwich,” one Democratic congressman called it. Republican candidates for president lined up to denounce it.

But even less popular than the deal itself was the process that led up to it: months of partisan wrangling, broken deals and brinkmanship, with the threat of default hanging over an economy struggling to grow. “Our economy didn't need Washington to come along with a manufactured crisis to make things worse,” Barack Obama noted as he signed the deal into law on August 2nd—the day the Treasury had warned that it would run out of cash to meet its obligations.

The deal, hammered out just days before that deadline, promises $917 billion in spending cuts over the next decade in return for a two-stage increase in the debt ceiling of $900 billion. After that, a 12-member congressional committee, equally composed of Republicans and Democrats, is to find $1.5 trillion in further deficit reductions that Congress must approve by December 23rd, in return for a similar-sized increase in the debt ceiling. If the committee fails to reach agreement or its proposal is rejected, $1.2 trillion in spending cuts will be triggered, drawn equally from domestic spending and defence.

This is far from a lasting solution to America's climbing debt. Neither Republicans nor Democrats were forced to slaughter their sacred cows. Republicans kept higher taxes off the table, and Democrats did the same with the biggest entitlements: Medicaid (the federal-state health programme for the poor), Social Security (pensions) and most of Medicare, the federal health programme for the elderly. The deal also threatens to tighten fiscal policy further in 2012, when the recovery is still struggling to establish itself.

It marks, too, another deeply worrying change. The willingness of one party to use the threat of default, if not on government bonds then on other federal obligations such as pensions and pay-cheques, marked a dangerous escalation in the partisan rancour that has come to bedevil policymaking. It is not just big, controversial things like tax reform and climate change that fall victim to gridlock, but smaller, routine matters where disagreements are often slight. Since 2007 the Federal Aviation Administration has operated on no less than 20 short-term funding authorisations; the latest finally ran out on July 22nd because of a congressional dispute, forcing the layoff of thousands of workers and a halt to airport building projects (see article). Many regulatory positions remain vacant because Senate Republicans are blocking appointments to them. Free-trade agreements with Colombia, South Korea and Panama, supported by both parties, have been stalled because the Democrats want ratification linked to renewal of a worker-training programme and Republicans do not.

American politics has always been fractious; that is part of its strength. Checks and balances prevent abuse of power and compel compromise. But checks and balances combined with polarisation allow a small number of legislators to bring government to a halt. Businessmen always and everywhere complain about politicians, but what is happening now in America seriously bothers them. Daniel Kaufmann of the Brookings Institution, examining surveys by the World Economic Forum, notes that the confidence of American business executives in their legislature has fallen steadily since 2002, while that of their Canadian, British and German peers has not (see chart 1). America's ranking in an annual World Bank survey of governance indicators has also fallen steadily since 2000. It then ranked 15th for “government effectiveness”. In 2009 it was 24th.

More than anything, businesses have hated the uncertainty of the weeks of posturing over the debt, which has caused many of them to put their plans on hold. Yet now that the stalemate is resolved and the deal signed, uncertainty is still rife—because the polarisation that made the stand-off possible is as sharp as ever.

It has been a long time forming. Most congressional seats are safely in the hands of one of the two parties, thanks to gerrymandering. The real election for many congressmen is the primary, when any representative who strays too far from the party line will face a challenge from an ideological purist. The Democratic landslide of 2008 and the Republican one of 2010 have also helped to weed out many centrists. The present House, according to Congressional Quarterly, a sister publication of The Economist, is the most starkly divided yet, with even the most liberal Republican now somewhere firmly to the right of the most conservative Democrat.

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Economic weakness reinforces this dogmatism. Democrats blame the crisis on deregulation and private greed, and find it especially heartless to cut social services when the ranks of poor and jobless are growing. Republicans blame the weak recovery on misguided Keynesian pump-priming and government overreach, and think higher taxes perverse when the economy is struggling. Many on both sides conclude that their different visions of society cannot be reconciled. Voters will have to choose between them: defenders of the rich in the Republican corner, reckless spendthrifts in the Democratic one.

Les grandes illusions
Pundits and political wise men have long dreamed of a “grand bargain”, which would arrest the growth of entitlement spending while raising tax revenue by closing loopholes. It is more or less the only formula that solves America's budget woes while sharing political pain equally between the two parties. It is no coincidence that such a bargain lies at the heart of most recent bipartisan deficit-reduction schemes, including those put forward by the Senate's “Gang of Six” and the president's own fiscal commission. Both plans would have cut the deficit by roughly $4 trillion over the next decade, enough to put the debt on a downward path relative to GDP. Many hoped the debt-ceiling increase would be the vehicle to deliver it.

The debt deal's triggers are meant to be fearsome enough to prevent that kind of deadlock. But for many Republicans, voting for a tax increase would be a bigger sin than allowing vicious cuts in the defence budget. Many Democrats, in turn, think they have been too quick to compromise in recent budget battles and are determined to call the Republicans' bluff for once. Some—Mr Obama among them—welcome the idea of campaigning for next year's elections with huge and doubtless unpopular budget cuts looming, while the rich are spared any rise in taxes.

Furthermore, there is always the chance that Congress, when faced with big cuts to cherished programmes, will simply reverse itself and disconnect the triggers. Past schemes designed to instil fiscal discipline have frequently come unstuck sooner or later. The triggers are meant to be pulled on December 23rd, but if no agreement has been reached, the cuts do not take effect for over a year after that, leaving Congress plenty of time to reconsider.

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Round the country, too, there are gleams of useful reform. Both Florida and California are experimenting with less partisan forms of redistricting, which should lead to more competitive elections in which congressmen have to cater to the average voter rather than the extreme wings of their parties. If other states follow suit, it could slowly reverse the ideological duopoly that has taken over the House. Even without that, many tea-party Republicans, who won their seats in districts that were recently Democratic, have a high risk of being turfed out next year if they fail to learn the fine art of compromise.

But all that is 15 months in the future. And congressmen who have left Washington in a glow of relief and self-congratulation should have no illusions. The political dysfunctionality of America has been on display as never before, to the nation's shame. And it can still do plenty of harm to a very sick economy.