Government Shutdown: What Will it Mean for the United States in the Americas?
October 2, 2013
Early yesterday morning (October 1), the federal government officially shut down, following legislators’ failure to reach an agreement on the U.S. federal budget for the first time since 1995.
The shutdown is largely seen as yet another symptom of the paralyzing policy gridlock that has decimated Congress’s ability to properly function in the last decade. Though the Democrat-controlled Senate and Republican-led House butted heads over the Patient Protection and Affordable Care Act (or, as it is colloquially known, “Obamacare”), their refusal to meet each other halfway on an issue pivotal to the fundamental functioning of the government reminds us that the budget—and, similarly, the upcoming debt-ceiling battle—are proving themselves intractable issues.
These disputes inevitably have ripple effects throughout the hemisphere. Given our interconnectedness—particularly in the realms of immigration, commerce, energy, and security—any stall in U.S. policymaking will raise some proverbial eyebrows among our neighbors.
So as the U.S. public policy focus zeroes in on Capitol Hill and how lawmakers will dig themselves out of the shutdown, what will all of this mean for U.S. relations throughout Latin America?
Q1: What effects could the shutdown have on Latin American perceptions of U.S. policymaking?
A1: Even as many U.S. citizens remain puzzled as to why Congress has not managed to complete one of its most important tasks—authorizing the federal budget—it’s difficult to ignore how that failure will play out in relations with the United States’ closest neighbors.
Whether the result of partisan divisiveness, intransigence on policy issues, or a simple refusal to cooperate, the shutdown gives the impression of legislative inefficiency. And given the implications of existing and pending U.S. policies throughout Latin America, it can hardly be doubted that the hemisphere’s leaders are watching this process with a critical eye.
The summer’s legislative agenda, for one, was largely consumed by Congress’s efforts to reform the country’s immigration policy. Though the reform process was overshadowed in late August and early September by the chemical weapons crisis in Syria and efforts to hammer out a budget before the end of the fiscal year, our neighbors undoubtedly kept a close watch on where reform efforts might lead.
Even as hope waned that immigration reform would be finalized before 2014, the issue’s far-reaching effects for regional governments and their citizens fueled a persistent optimism that Congress would reach an agreement. But with the federal government on pause, so to speak, President Obama’s Latin American counterparts’ faith in U.S. policymaking capacity is, perhaps, on pause as well. Watching what is thought of as the world’s greatest deliberative body reach an impasse on its most fundamental operating issue does not inspire confidence in its dedication to overcome partisan obstacles on issues pivotal to our neighbors, nor does it help strengthen our credibility when we demand it of Latin American governments.
Q2: What could the shutdown mean for hemispheric financial security?
A2: While the shutdown is itself a crucial issue, many fear that its implications for another deadline, Congress’s upcoming decision on the federal debt ceiling, will be still farther reaching.
Many experts believe the federal budget fight isn’t about the shutdown alone. Rather, the real battle is about the two parties positioning themselves for a fight over the more consequential debt limit—and the leverage each party gains in the budget dispute only contributes to its bargaining power in the debt battle later this month.
While Congress’s failure to agree on a federal budget may damage perceptions of U.S. policymaking capacity, the dangers of failing to raise the debt ceiling by October 17 are still greater. Should that deadline pass with no bicameral agreement, the United States would default on its debt for the first time in the country’s history—decimating the current U.S. image as the most reliable debtor in the world.
Our neighbors could hardly look at such a development kindly. On one hand, the United States, long among the biggest creditors to Latin American governments, has historically criticized its counterparts in the region for their irresponsible spending and failure to meet their debt obligations, often using its massive influence in the global financial system to ensure the security of its own investments throughout the hemisphere. Those same governments are unlikely to respond favorably to the apparent hypocrisy of a U.S. default so similar to their own.
On the other hand, U.S. financial stability—the same stability that has underwritten the security of the global financial system since the end of World War II—is based on its reliability as a debtor. With that security in question—or, should the U.S. government in fact default on its debt later this month, crushed entirely—Latin American governments stand to lose in a big way. Facing a volatile financial system fundamentally distinct from the one any standing leaders have ever known could wreak havoc on our neighbors’ financial dealings—and, of course, on our own.
Conclusion: Yesterday’s government shutdown brings with it any number of effects on our relations with the region’s governments—chief among them the credibility the United States loses when the legislature remains hamstrung on an issue so pivotal to our own interests. That much cannot be denied. But it is important to consider the shutdown’s effect on public perceptions of the United States as well.
Having long-since moved out of the Cold War perspective that saw the United States through rose-colored glasses, Latin Americans have adopted a more pragmatic view of their northern neighbor and its place in the world. And, whether because they see U.S. power as waning or because, more than ever before, emerging powers around the world present an alternative to U.S. influence, Latin Americans decreasingly look to the United States.
The situation with Edward Snowden; Russian leadership in the Syrian chemical weapons crisis; Brazilian president Dilma Rousseff’s cancellation of her state visit—all of these speak to the challenges the United States faces abroad. With its domestic political institutions paralyzed by partisan divide, the shutdown may convince the Latin public that the U.S. government is also ill-equipped to overcome the challenges it faces at home.
With the region looking to the United States to meet expectations, will it rise to the challenge?
Carl Meacham is director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Jillian Rafferty, staff assistant with the CSIS Americas Program, provided research assistance.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2013 by the Center for Strategic and International Studies. All rights reserved.