Washington's growing polarisation and legislative dysfunction

HERE we go again: The desperate sprint on Capitol Hill to prevent a government shutdown, avert a debt default, and pass trillions of dollars in government spending. It all made for a tumultuous week in the financial markets.

This was not the first time that US lawmakers had to navigate a fiscal obstacle course and engage in a fiscal chicken fight. In fact, reflecting the growing political polarisation in Washington and the ensuing legislative dysfunction, failures to enact funding legislation to finance the federal government have led to three government shutdowns, lasting 54 days in all since 2013. At the same time, under its two major political parties, the US has incurred gigantic debt over the last several years while Congress has flirted with the notion of not raising the nation's debt limit, currently at US$28.43 trillion, as a way of damaging the party controlling the White House.

But now these fights are taking place at a time when Americans have yet to recover from the volatile mix of a global pandemic and the worst economic crisis since the Great Depression, with the Covid-19 infection rate surging and with millions of Americans still out of work. Moreover, in response to these emergencies, Congress under both presidents Donald Trump and Joe Biden has given the green light to the federal government to spend trillions of dollars.