Why We're Ungovernable, Part 8: Washington Shuts Down, Rome Falls

By: John Rubino | Mon, Sep 30, 2013
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This week both Italy and the US saw their ruling coalitions splinter. First Italy:

Italy's Coalition Teeters as Berlusconi Allies Walk Out

Italian Prime Minister Enrico Letta's government teetered on the verge of collapse after allies of former leader Silvio Berlusconi, led by Deputy Premier Angelino Alfano, said they planned to quit the cabinet.

The nation's leaders stopped short of dissolving the five-month-old administration, invoking procedure and scheduling a meeting between Letta and President Giorgio Napolitano today for about 6 p.m. in Rome.

Berlusconi, 77, said he will push for snap elections, while Letta plans a confidence vote in parliament on Oct. 1 or 2 to seek a new majority. Napolitano, 88, said dissolving parliament would be a last resort, Ansa reported.

Letta's government has been torn apart by legal troubles facing Berlusconi, whose criminal tax-fraud conviction subjects him to expulsion proceedings in parliament. Letta needs 24 votes in the Senate to secure a new majority without Berlusconi, Corriere Della Sera reported. To do so, the premier must win over opposition lawmakers or convince members of Berlusconi's People of Liberty party to abandon their leader.

"Everything suggests that the coalition is compromised," Federico Santi, an analyst with Eurasia Group, said in an e-mail. "The most likely outcome is early elections, but the timing would be uncertain."

Political turmoil has plagued Italy, the world's third-biggest debtor after the U.S. and Japan, throughout the euro financial crisis. Markets have calmed since European Central Bank President Mario Draghi's July 2012 promise to protect the single currency.

Berlusconi, forced out as prime minister in 2011, brought down his successor, Mario Monti, in December 2012. The fragmented parliament elected in February has been incapable of enacting a program to pull Italy from its two-year recession.

Now the US:

Republicans' Shutdown Fight Exposes Simmering Civil War

An intraparty tug-of-war, largely confined to campaign primaries during the past three years, is exposed on the national stage as Republicans challenge each other on tactics as a government shutdown looms, coming as early as tomorrow.

"The circus created the past few days isn't reflective of mainstream Republicans -- it projects an image of not being reasonable. The vast majority of Republicans are pretty level-headed and are here to govern," said Representative Michael Grimm, a New York Republican.

"This is a moment in history for our party to, once and for all, put everything on the table. But at some point we're going to come together and unify," Grimm said, adding that the "far-right faction" of the party "represents 15 percent of the country, but they're trying to control the entire debate."

It's a civil war that has beset the party before, as base activists grow impatient with established leaders they claim have grown complacent in the anti-government fight. The results can be unpredictable, perhaps more so this time given that it's taking place 13 months before the next election.

Goldwater '64

The rise of Barry Goldwater in 1964 as the Republican presidential nominee ended in the landslide election of Democratic President Lyndon Johnson. A revolt led by Newt Gingrich, then a Georgia congressman, culminated in the 1994 Republican takeover of the U.S. after 40 years in the minority.

Gingrich, who became House speaker, and his majority prompted the 1995-96 partial government shutdowns, which dimmed the party's approval ratings and fueled the re-election of President Bill Clinton.

"This is a battle that has been under way slowly since 2010 and is now coming to a head," said David Redlawsk, a political science professor at Rutgers University in New Brunswick, New Jersey. "This is part of a bigger question about what that party is going to be. That may have major repercussions in another year."

The fight in Congress today is between members who want to avoid the fate of Gingrich's majority and those convinced that conditions have changed to their advantage.

Health Law

"I've been elected to fight for the people back home, wherever that takes us," said Representative Mark Meadows, a North Carolina Republican. "We're united in our efforts to do all we can to avert a shutdown. We're trying to offer a compromise." Meadows said the health-care law "is not ready for prime time."

The tactics of a group of Republicans are causing angst among some established party leaders and fundraisers who worry that the infighting is obscuring what could otherwise be a winning political moment.

Fundraiser's Concern

"I fully understand where the Tea Party and like-minded people are coming from, that Obamacare is a tragically flawed law and it's not good for the country, but I would also have to add that shutting down the government is not a good for the country," said Fred Malek, a Republican fundraiser.

High Stakes

House Speaker John Boehner of Ohio has less pressure to exert on members than outside groups urging confrontation, Schnur added. "Boehner can take away a committee assignment -- these groups can take away their jobs," Schnur said.

Keith Appell, a consultant whose clients include Tea Party-aligned groups, said "if they cave again they're looking at multiple primaries in the spring and their base sitting home in the fall, in a base election. Caving is not an option."


Some thoughts

From a US point of view, it might seem a little insulting to be compared to Italy's corrupt old-world dystopia. But our situations are actually pretty similar. Italy is just further along.

Once a country settles on a dominant policy like socialism or militarism, the major parties lose the ability to hold their internal coalitions together because their ideas and beliefs don't differ meaningfully from those of other major parties. So the factions inside each big party that don't like the dominant theme splinter off into smaller, sometimes highly-eccentric parties. Each election then becomes an exercise in rebuilding what was once an internal coalition.

That's Italy's current situation (but not just Italy's; see what's happening in Germany). All the major parties pretty much agree that the government should do everything and control everyone, so there are numerous smaller parties built around peripheral issues. The drama is thus between rather than within parties, with a cobbled-together governing coalition trying to bind enough smaller groups to make a functional majority. When this fails, the government falls. It doesn't matter why they're arguing (I don't actually know an am sure it's trivial). The point is that their disagreement can collapse the government.

In the US, because the two big parties still appear to represent different worldviews and policies, the various subgroups (lawyers, public sector workers, military personnel, libertarians, businesspeople, immigrants, etc.) mostly remain inside one party or the other. But as the two parties coalesce around a single set of policies that include ever-higher government spending, never-ending foreign intervention, and unlimited domestic spying, big sections of the Republican coalition are increasingly appalled at what they're being asked to sign off on.

Libertarians, for instance, are being asked to allow the government to borrow trillions of dollars more - when they don't believe in government borrowing as a concept - to fund a range of domestic and foreign policies that in their opinion shouldn't exist in the first place. Religious conservatives, meanwhile, are being asked to fund a health care law with provisions they find offensive along with a growing list of other disturbing social and economic policies.

Each group has begun to wonder if keeping the big tent standing is worth the price. It appears that a significant part of the House of Representatives has decided that it's not and has, in effect, withdrawn from the party and decided to force the government to live within its means.

So in effect the US is going through something very similar to Italy, where a crucial part of the governing coalition has taken its ball and gone home. But the Italians have the advantage of being used to dealing with coalitions that dissolve and re-coalesce every few years. For the US this might be uncharted territory, and while it will no doubt be resolved in favor of the dominant set of policies, it will be repeated, with ever-greater amplitude, until the republican party fragments and the libertarians, Tea Partiers and fundamentalists form smaller parties in which they're comfortable.

The same thing will happen to the democrats as soon as they're out of power, when those in favor of the surveillance state and those against it realize that their differences are fundamental and irreconcilable.

This sets the stage for a "freedom coalition" that will make US politics interesting again.

 


The previous articles in this series can be found here:

Why We're Ungovernable
Why We're Ungovernable, Part 2: Battle Lines
Why We're Ungovernable, Part 3: Gridlock and the Fiscal Cliff
Why We're Ungovernable, Part 4: Hollande's Short Honeymoon
Why We're Ungovernable, Part 5: Japan Would Be Manageable If Only
Why We're Ungovernable, Part 6: Here Comes the Debt Ceiling
Why We're Ungovernable, Part 7: Italy Does Chaos With Style

 


 

John Rubino

Author: John Rubino

John Rubino
DollarCollapse.com

John Rubino

John Rubino edits DollarCollapse.com and has authored or co-authored five books, including The Money Bubble: What To Do Before It Pops, Clean Money: Picking Winners in the Green Tech Boom, The Collapse of the Dollar and How to Profit From It, and How to Profit from the Coming Real Estate Bust. After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a currency trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He now writes for CFA Magazine.

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