No one ever went broke overestimating the capacity of the US Congress to screw things up. So this week’s failure of Washington’s “supercommittee” to agree on a modest plan of fiscal tightening was hardly a surprise. Washington is a long way from turning sensible – let alone super.
It might therefore be wise to bet on even worse gridlock as both parties dig in their heels for next year’s general election.
The equal temptation will be to dismiss Capitol Hill’s latest circus act as irrelevant. And yet, as the slide in the Dow Jones and the rise in US Treasury bond prices implied, there could be real-world consequences. Just as there are signs of a nascent US recovery, Washington may be about to douse whatever anaemic growth prospects are on offer.