There is another side to the Republican cave-in over the debt ceiling which makes it unlikely that the 2013 debt crisis will be repeated in 2014.
President Obama may have achieved an enormous increase in status and power as a result of winning the battle but Obama has a deep underlying problem.
And that problem currently looks so serious that, in time, the Republicans may even come out on top if they concentrate on Obama’s weakness.
In simple terms the gigantic ObamaCare medical benefits program is not working. Unless it is fixed, ObamaCare will be the American equivalent of a combination of Australia’s pink batts, NBN and carbon tax. In other words the ALP mistakes but on steroids.
While a medical benefits umbrella along the lines of Australia or the UK is important for developed countries, this massive ObamaCare program could over time saddle the Americans with levels of medical expenditure that are simply not sustainable without massive rises in taxation or expenditure cuts. But that is later. The current situation is that the ObamaCare legislation goes into thousands of pages and few understand its full ramifications. But when the ObamaCare computer system came on stream earlier this year it simply didn’t work properly. A large number of people who tried to log into the system couldn’t manage it. Of those who did some even found their personal details got caught up in the wider US system and triggered the US Internal Revenue Department (our tax office) to pursue them on tax matters.
Of course these things can be fixed over time but ObamaCare is off to a bad start. Apart from computer problems its sheer complexity is creating structural shortcomings.
When you employ more than 30 people enterprises get saddled with ObamaCare charges. Accordingly those that are employing relatively small numbers are reducing their staff numbers to under 30, by retrenchment.
Others are splitting their businesses or contracting out activities. In other words all sorts of artificial events are taking place but the underlining fact is that, right now, people are losing their jobs as a result of ObamaCare.
Those who have medical insurance are finding the whole exercise a nightmare. The taxation authorities are doing what was done in Australia and beginning to pursue independent contractors with vigour, trying to make them employees.
And of course if they do that then as employees they come under the net for ObamaCare. What we are looking at in America is a massive re-run of what happened in Australia over the last decade where we had big government, big companies and big unions working together. The small business sector, which employs close to three quarters of the workforce, was isolated.
Tony Abbott understood this and won the 2013 election partly on this campaign front. The Republicans’ mistake, of course, has been to take on Obama over the huge debt issue and hope that Obama would blink. Obama held his ground and the Republicans had no other strategy but to retreat.
Indeed, had the Republicans triggered the default and/or maintained a partial government closure for an extended period, the effect on the stock market and the American economy would have seen their electoral position trashed. Fear of a voter backlash if they ‘went all the way’ must have played a big role in the reversal. It will almost certainly stop them going again.
Meanwhile, a growing number of American conservatives outside the Tea Party are fascinated by what Tony Abbott did in Australia. Just as Abbott concentrated on government weaknesses like the carbon tax, so these Republicans believe they need to concentrate on the grass roots operational difficulties with ObamaCare.
The problem with the Republicans is that unlike the Australian conservative forces, US Republicans are divided. There is no doubt that the US is becoming much more an Hispanic country. Hispanics are amongst the main beneficiaries of ObamaCare. But if operationally it is a mess and beneficiaries are losing jobs over it and/or their small businesses are being ravaged, then ObamaCare could be very dangerous for the Democrats.