US debt crisis and the power of the President

The last minute deal to solve the debt crisis in the US caused the credit-rating agency Standard and Poor's to downgrade the rating given to US government debt (basically saying that the US is now less likely than 14 other countries including GB to pay its debt in full).

Full analysis of the economics of this here from the BBC's Robert Peston.

Mark Mardell has a great piece explaining who the winners (the Tea Party) and the losers (Obama) are as well as a great summary of the politics of it. Essentially, S&P's decision rests on the idea that the US political system is not up to the task of dealing responsibly with the economic and financial turmoil:

"Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising US public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated".

Fundamentally the US was the world's most trusted economy and the trust in it has slipped.

Key for G&P students are the questions it raises about the extremism of the US political system, and the power of the President (or lack of it). Politics is about compromise, but the Tea Party wing of the Republican Party has made this very difficult for moderate Republicans to make the sensible choice. As S&P says:

"It appears that for now, new revenues have dropped down on the menu of policy options...

Great charts about debt here from the NY Times.

Further economic and political analysis by the Economist here. The "Too Long Didn't Read" version is that the Republican strategy of wanting to reduce the deficit by spending cuts alone doesn't make economic sense although it makes sense to the Tea Party movement, especially since they will only cut the bits of government they dislike (foreign aid) and not touch the bits they like (health care for the elderly, defence). This piece here goes into it all a bit further, including mentioning the Keynesian economics of defence spending (good for anyone doing Economics at A2).

Which also does raise questions about the power of small groups and Pressure Groups on US politics.

The Republican leadership have problems with the Tea Party movement as this piece from Mark Mardell shows; the leadership of the party doesn't want to alienate either the moderate centrist voter or the Tea Party die-hards.

The Web-site Politico has very interesting an article (admittedly predating the S&P decision) which discusses the problems facing President Obama as he heads into the 2012 election. The TLDR version is that he has a 42% job approval rating and Presidents don't win elections at this level.

Alternatively, the Economist mentions that Presidents are powerless and that "It's the Economy Stupid" which is the main factor which determines who wins.

MSNBC has an article about the power of the Tea Party here:

With the Tea Party about to play its first role in a presidential election, mainstream Republicans hope to harness its energy in campaigns nationwide, as they did in 2010. The trick is to do it while avoiding the damage of that year, when Tea Partyers cost the GOP likely Senate pickups by nominating out-of-the-mainstream conservatives in Delaware, Nevada and Colorado.

All of which should give plenty of food for thought as we head towards the next election; how powerful is the president? What influence does he have? How much can movements in parties affect
policies? How effective / extreme is Congress?

It would be almost criminal not to mention the current events whenever possible in an exam question.