Systemic crisis at the heart of the world power: Budget dispute in the USA, but now an end to the US shutdown is in sight.

It's not just about the money: The real reason for America's self-destruction

The United States of America, the undisputed leading nation of the global economic order, is experiencing an unprecedented institutional dysfunction with the government shutdown that has been ongoing since October 1st, a dysfunction that far exceeds the usual scope of political disputes. What initially appeared to be yet another budget battle between Democrats and Republicans is proving to be a profound upheaval not only of the American economy, but of the entire fabric of democratic governance in the 21st century. The historical dimension of this shutdown is manifested not only in its now forty-day duration, which shatters all previous records, but above all in the complexity of the underlying economic and political upheavals that are being revealed in this crisis.

The economic anatomy of a political disaster

The macroeconomic impact of the current shutdown is characterized by a historically unprecedented severity that has surprised even seasoned economic experts. The Congressional Budget Office, the congressional budget agency, projects economic losses of between seven and fourteen billion dollars for the various scenarios of a four-, six-, or eight-week shutdown. These figures may seem modest in the context of an economy with a gross domestic product of roughly thirty trillion dollars, but they represent only the immediate, measurable consequences. The deeper structural damage caused by this shutdown defies simple numerical quantification. Goldman Sachs, one of the leading financial institutions, dramatically revised its fourth-quarter growth forecast downward to just one percent, after previously expecting a robust three to four percent. This drastic correction reflects not only the direct effects of suspended government activity but also the spreading uncertainty in the real economy.

The unique aspect of the current shutdown lies in its totality. While the longest shutdown in history, during Donald Trump's first term between December 2018 and January 2019, affected only ten percent of government spending, the current standstill encompasses one hundred percent of discretionary funds. This quantitative difference translates into a new qualitative dimension. The direct economic mechanism of this paralysis operates through multiple channels. First, all salary payments to nearly nine hundred thousand furloughed federal employees have ceased, while another seven hundred thousand employees deemed essential workers are forced to work without pay. The average salary of a federal employee is approximately four thousand seven hundred dollars per month. If the shutdown extends beyond December 1, the withheld wages will total twenty-one billion dollars. This sum represents not merely accounting entries, but real purchasing power that has vanished abruptly from consumer demand.

The multiplier effect of this lack of consumer spending is permeating the entire economy. Federal employees, suddenly without income, are forced to drastically reduce their spending. This affects not only discretionary consumer goods but increasingly also basic obligations such as rent, mortgages, and loan repayments. Retailers, restaurants, and service providers in regions with a high concentration of federal employees are experiencing immediate revenue losses. The region around the capital, Washington, D.C., is feeling these disruptions particularly intensely, but the effects extend far beyond this core area. Military personnel—over one million active-duty soldiers as well as more than 750,000 members of the National Guard and Reserves—are also facing unpaid salaries. The psychological strain on families who have traditionally relied on the reliability of government paychecks is shaking the social fabric of entire communities.

In addition to direct wage losses, government demand for goods and services is collapsing. Federal agencies are halting orders, postponing projects, and freezing new hires and investments. For the American economy, this translates into an abrupt drop in demand amounting to several billion dollars per week. Goldman Sachs estimates the direct effect of the lack of government activity at 0.15 percentage points of annualized growth per week. With an eight-week standstill, this effect adds up to 1.2 percentage points. There are also indirect consequences through a loss of confidence and a reluctance to invest. Treasury Secretary Scott Bessent publicly warned that economic growth for the current quarter could potentially be halved, from a previously robust three percent to a meager one and a half percent.

The forgotten victims: Federal contractors in economic no-man's-land

While media and political attention naturally focuses on the federal employees directly affected, a far more dramatic economic tragedy is unfolding in another segment: federal contractors. The American Chamber of Commerce quantifies weekly losses for small and medium-sized businesses that have contracts with the federal government at three billion dollars. In October alone, the payments at risk totaled twelve billion dollars. These figures reflect a fundamental asymmetry in the treatment of federal employees and private contractors. While the former are legally guaranteed to receive all back pay after the shutdown ends, no comparable guarantee exists for contractors.

Nationwide, 65,500 small businesses are directly dependent on federal contracts totaling $183 billion. The Professional Services Council estimates that at least one million employees of these companies are affected. Unlike furloughed federal employees, these workers cannot expect to be paid retroactively for the downtime. The work performed is irretrievably lost. For the affected businesses, this means not only lost revenue but also existential liquidity crises. Small and medium-sized enterprises typically have limited capital reserves. If payments fail to materialize for several weeks or even months, they must take out loans, cut investments, or lay off staff. In some cases, bankruptcy looms.

The geographical distribution of these economic disruptions follows clear patterns. Florida, with 3,769 small federal contractors, sees $146 million at risk every week. Pennsylvania, Texas, California, and Virginia are reporting similarly dramatic figures. This development appears particularly insidious given that many of these affected companies are located in rural and conservative regions with predominantly Republican voters. The political irony that a blockade largely supported by Republicans is hitting businesses in Republican strongholds especially hard is not without a certain historical tragedy.

Consumer sentiment in free fall: The psychological dimension of the crisis

The economic impact of the shutdown is not limited to direct spending cuts and lost wages. A potentially even more serious dimension is emerging in the psychological sphere of economic actors. The University of Michigan's Consumer Sentiment Index, an indicator of consumer sentiment compiled since the 1950s, plummeted to 50.3 points in November. This dramatic drop not only marks the lowest level since June 2022, when inflation reached forty-year highs, but also the second-lowest reading in the entire history of the survey. The survey's director, Joanne Hsu, stated unequivocally that consumers are increasingly expressing concerns about the negative economic consequences of the shutdown.

The granularity of the data reveals disturbing patterns. The index for the current economic situation plummeted to its lowest level in seventy-three years. Assessments of personal finances deteriorated by seventeen percent, and expectations for economic development in the coming year fell by eleven percent. This gloom extends across all demographic groups, age groups, income levels, and political affiliations. Only one group stands out: large shareholders with substantial equity holdings actually saw an eleven percent improvement in their sentiment, fueled by continued stock market highs. This divergence between wealthy financial market participants and the general population illustrates the growing gap in the economic realities of different social strata.

The macroeconomic relevance of these sentiment indicators stems from their predictive power regarding consumer behavior. The wealthiest 20 percent of households account for 40 percent of total consumption expenditure. As long as this group, buoyed by rising stock prices, maintains its spending, the overall economy can remain resilient. However, the middle-income bracket is also of considerable importance. Should this group, whose sentiment is rapidly deteriorating, significantly reduce its propensity to consume, growth figures risk deviating from their above-average levels. The November survey was conducted before the midterm elections, the results of which, with victories for Democratic candidates in Virginia, New Jersey, and New York City, further inflamed the political climate. The issue of affordability of living costs, particularly in healthcare, proved to be a decisive factor in the election.

Healthcare as political dynamite

At the heart of the political conflict that led to the longest government shutdown in American history lies what at first glance appears to be a technical detail of healthcare policy: the expanded tax credits for insurance premiums under the Affordable Care Act, colloquially known as Obamacare. These expanded subsidies, originally introduced in 2021 under the Biden administration and extended through the Inflation Reduction Act until the end of 2025, have dramatically reduced health insurance costs for 24 million Americans. Over 92 percent of those insured in the ACA Marketplace receive financial assistance, and for about half, the subsidies reduce monthly premiums to zero or nearly zero.

The expiration of these expanded subsidies at the end of the year threatens to escalate into a social catastrophe. The KFF, an independent health research organization, calculates that average premium payments for insured individuals would more than double, from $888 annually to $1944, an increase of 114 percent. For certain population groups, the increases are even more drastic. A sixty-year-old couple with an income of $85,000, just above the threshold for full subsidies, would face an additional annual burden of $23,000. For middle-income families, monthly premiums could rise from $1,200 to over $3,500, consuming more than a third of their household income.

The political explosiveness of this situation stems from the geographic and demographic distribution of those affected. Contrary to the common assumption that Obamacare is primarily a project of the Democratic voter base, the data reveals a surprising reality. Seventy-seven percent of those insured through the ACA Marketplace—eighteen point seven million people—live in states that Donald Trump won in the 2024 election. Fifty-seven percent of those insured are located in congressional districts represented by Republican lawmakers. Eighty percent of all tax credits, one hundred and fifteen billion dollars, went to those insured in Trump states. Particularly in southern states like Florida, Georgia, Texas, Mississippi, South Carolina, Alabama, Tennessee, and North Carolina, the majority of which did not implement Medicaid expansion, the reliance on ACA subsidies is exceptionally high.

This paradoxical situation—that Republican voters disproportionately benefit from a program their party has fought against for fifteen years—is creating significant political tension within the GOP. Several Republican congressmen from swing districts have publicly warned that the party could suffer massive losses in the 2026 midterm elections if health insurance affordability is not guaranteed. Jeff Van Drew, a Republican representative from New Jersey, put it bluntly: his party would be virtually destroyed in the elections if the issue is not resolved. Recent electoral successes by Democratic candidates, all of whom centered their campaigns on affordability, reinforce these fears. Polls show that 59 percent of Republicans and 57 percent of Trump supporters favor extending the expanded subsidies. Among the general population, support stands at 78 percent.

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Republican reform proposals in the tension between ideology and realpolitik

The Republican Party finds itself caught in a strategic dilemma. On the one hand, it has committed itself programmatically to rejecting the Affordable Care Act and has been promising an alternative for over a decade. On the other hand, a coherent counter-proposal capable of tackling the politically delicate task of depriving millions of voters of benefits they have grown accustomed to is still lacking. President Trump announced as early as 2023 that he was developing alternatives to Obamacare, whose costs had spiraled out of control. During the 2024 election campaign, he spoke only of concepts for a plan. Ten months into his second term, a concrete strategy remains elusive.

In the debate over ending the healthcare shutdown, Republican senators introduced a new approach: instead of paying subsidies to insurance companies, the funds should be distributed directly to citizens, who could use them for health savings or more flexible insurance options. Senator Bill Cassidy of Louisiana specified that the money could flow into Health Savings Accounts managed by the policyholders themselves. President Trump seized upon this idea and, on his platform TruthSocial, railed against insurance companies as money-grubbing corporations. The Republican vision aims for a consumer-centric, market-based healthcare system in which individuals have greater control over their healthcare spending.

This concept, however, is fraught with significant problems. Health savings accounts typically operate in conjunction with insurance plans that have high deductibles. While wealthy households can benefit from the tax advantages of these accounts, poorer families often lack the necessary income to contribute. The high deductibles create financial barriers to accessing medical care, which can lead to postponed treatments and higher costs in the long run. Furthermore, such models undermine the solidarity mechanisms of insurance pools. The Affordable Care Act guarantees that insurers cannot refuse or charge premiums to people with pre-existing conditions. Greater individualization of healthcare spending could erode these safeguards. Accordingly, Democratic senators like Adam Schiff of California criticized Trump's proposal, arguing that it would give insurance companies more power to cancel policies and refuse coverage to people with pre-existing conditions.

The Congressional Budget Office estimates the cost of extending expanded subsidies at 35 billion dollars annually, 350 billion dollars over ten years. Without an extension, approximately four million additional people would be left without health insurance in the coming decade. These figures illustrate the magnitude of the fiscal challenge. Republican lawmakers argue that persistently rising healthcare costs demonstrate the failure of the Affordable Care Act and that further subsidies are not economically justified. Democrats counter that premium increases stem primarily from structural problems in the healthcare system that exist independently of the ACA, and that the subsidies are a necessary corrective to keep care affordable. These diametrically opposed positions block any compromise and perpetuate the deadlock.

Mobility infrastructure: When airports become crisis zones

While abstract debates about budget items and healthcare subsidies may seem far removed from everyday reality for many citizens, the consequences of the shutdown are manifesting themselves in brutal concrete terms at one of the most visible hubs of modern infrastructure: airports. In early November, the Federal Aviation Administration ordered airlines to reduce their daily flight movements at forty major airports by an initial four percent. This order stemmed from safety concerns, as air traffic controllers, who have been working without pay for weeks, are increasingly exhausted and absent from work at alarming rates. The reduction was to be gradually increased to six and eventually ten percent. Simultaneously, the Transportation Security Administration's security checkpoints reported massive staff shortages.

The operational impact was dramatic. On the first Friday of the flight cuts, over 1,000 flights were canceled and 7,000 delayed. On Saturday, the number of cancellations rose to 1,550, with 6,700 delays. By Sunday, there were 2,800 cancellations and over 10,000 delays. This disruption hit the four largest American airlines—American, Delta, Southwest, and United—particularly hard. Three-hour lines formed at security checkpoints at some airports. Houston Airport reported wait times of up to three hours. Major cities such as Atlanta, Newark, San Francisco, Chicago, and New York experienced systematic delays. The FAA implemented Ground Delay Programs at nine airports, with average delays of 282 minutes recorded at LaGuardia Airport.

Transportation Secretary Sean Duffy warned of impending mass chaos in American air traffic if the shutdown continues for another week. The Air Traffic Controllers Union reported that between 20 and 40 percent of controllers at various facilities were absent from work. After more than 31 days without pay, these highly skilled professionals are under immense stress and exhaustion. Many have taken on side jobs to meet their ongoing obligations, further limiting their availability for their primary duties. The 14,000 air traffic controllers and 50,000 TSA employees are classified as essential workers and must remain on duty despite the lack of pay. This situation evokes parallels to the previous record shutdown of 2018/2019, when escalating staffing problems in air traffic were a major factor in the political leadership's eventual search for a compromise.

The economic costs of these air travel disruptions far exceed the direct losses suffered by the airlines. Business travelers miss meetings, supply chains are delayed, and tourists cancel trips. Regions whose economies depend on tourism and business travel feel immediate losses. The airline industry itself is losing millions of dollars in revenue daily. International travelers wanting to enter or leave the US face uncertainties that are permanently damaging the image of American infrastructure. The fact that the world's richest nation cannot maintain its air travel sends devastating signals about the functioning of its government institutions.

Food security in crisis: SNAP as a pawn in political tactics

One of the most serious humanitarian dimensions of the shutdown concerns the Supplemental Nutrition Assistance Program, known as SNAP or, colloquially, Food Stamps. This program, the nation's largest anti-hunger program, provides 42 million Americans—roughly one in eight—with an average of $187 per person per month for food. Nearly 39 percent of recipients are children and teenagers under the age of 18. For the first time in the program's 60-year history, payments were halted in early November. The Trump administration stated it could not disburse the funds due to the shutdown. Federal judges in Rhode Island repeatedly ordered the government to either pay at least some of the funds from a $4.65 billion emergency fund or find alternative sources of funding. The administration initially resisted, then announced it would make partial payments, only to halt payments again shortly thereafter.

This erratic policy resulted in bureaucratic chaos. The Department of Agriculture initially instructed states to pay out only 65 percent of the November payments. Then, following a court ruling, it ordered full payments. Some states began making the payments. Supreme Court Justice Ketanji Brown Jackson then temporarily blocked the ruling, whereupon the department instructed states to reverse any full payments and treat them as unauthorized. States that did not comply were threatened with the loss of their federal funding and financial penalties. Governors of Democratic-led states like Pennsylvania and Maryland reacted with outrage. Maryland Governor Wes Moore complained of a complete lack of clarity in the directives and accused the administration of deliberately creating chaos.

The social consequences of this policy are devastating. Millions of families who rely on SNAP to feed their children are facing existential insecurity. Local food banks and nonprofits report overwhelming demand they can barely meet. The Department of Agriculture itself warned that using the emergency fund leaves no resources for new SNAP applicants in November, for disaster relief, or as a buffer against a possible total shutdown of the program. The prospect of the nation's largest anti-hunger program collapsing is unprecedented. Historically, even the toughest budget battles have respected basic food assistance. Using food assistance as a political tool crosses moral and humanitarian boundaries that should be sacrosanct in developed democracies.

The economic implications extend beyond the individual hardships of recipients. The Department of Agriculture estimates that every dollar spent on SNAP generates 1.5 dollars of economic activity. SNAP recipients spend their benefits directly at supermarkets, grocery stores, and local retailers. This multiplier effect supports jobs in retail and food production. The loss of eight billion dollars in monthly SNAP expenditures removes massive demand from local economies. Retailers in lower-income areas, whose customers rely heavily on SNAP, face drastic drops in sales. Some may be forced to lay off staff or close stores. The irony of a government that promotes economic growth systematically draining demand from the economy is not without a certain absurd logic.

Fiscal policy disruption and the illusion of control

Beyond the current standstill, this crisis reveals the deeper structural dysfunction of American fiscal policy. The United States national debt crossed the symbolic threshold of 38 trillion dollars on October 23rd. This mark was reached just two months after the 37 trillion mark was surpassed. The acceleration of debt aggregation is evident: while it took a year for the debt to increase from 35 to 36 trillion, the jump from 37 to 38 trillion took only eight weeks. Michael Peterson, president of the Peter G. Peterson Foundation, a nonpartisan organization for fiscal sustainability, stated that the nation is accumulating debt faster than ever before. The structural deficit, adjusted for cyclical fluctuations, points to fundamental imbalances between revenues and expenditures.

The Congressional Budget Office's analysis projects that federal spending will rise from 23.3 percent of gross domestic product (GDP) in 2025 to 26.6 percent in 2055. Revenue, on the other hand, will increase only slightly, from 17.1 percent to 19.3 percent of GDP over the same period. This gap implies that deficits will continue to expand in the coming decades. The debt-to-GDP ratio, the ratio of total debt to GDP, is already around 120 percent and could reach 200 percent by 2047. Economists using the Penn-Wharton Budget Model calculated that financial markets would no longer accept a debt-to-GDP ratio exceeding 200 percent, as confidence in the sustainability of the debt could collapse. At this point, financing crises, skyrocketing interest rates, and, in the extreme, sovereign default would be imminent.

The One Big Beautiful Bill Act, signed by President Trump in July, exacerbates this problem. The law combines extensive tax cuts with partial spending reductions. The permanent extension of the 2017 tax breaks, additional reductions for corporations and the wealthy, and populist measures such as tax exemptions for tips and overtime pay significantly reduce government revenue. At the same time, some spending programs were scaled back, including $300 billion in cuts to education funding and the reversal of $500 billion in green energy subsidies. Net spending cuts amount to about $1.1 trillion over ten years. However, the Congressional Budget Office estimates that the law will increase the overall deficit by $2.8 trillion. Other analysts predict up to $6 trillion in additional debt.

This fiscal strategy embodies a fundamental contradiction. On the one hand, political actors proclaim the necessity of balanced budgets and fiscal responsibility. On the other hand, they pass laws that dramatically increase debt. The structural causes of this imbalance lie in the political economy of budgeting. Tax cuts are politically attractive because they generate immediate benefits for voter groups. Spending cuts, however, provoke resistance from affected interest groups. The combination of declining revenues and rising expenditures, particularly for social programs in light of the aging population, creates a fiscal time bomb. Interest payments on the national debt are rising rapidly. In fiscal year 2025, interest payments increased by 89 billion dollars compared to the previous year. With interest rates continuing to rise and the debt burden growing, debt servicing could soon consume larger budget items than defense or social programs.

The three major rating agencies have downgraded the US credit rating or issued negative outlooks in recent years, explicitly citing unsustainable fiscal trajectories and recurring political gridlock. These downgrades increase the risk premiums investors demand for US Treasury bonds, further raising financing costs. The international appeal of the US dollar as a reserve currency could erode in the long term if doubts about the nation's fiscal stability persist. The price of gold, a traditional indicator of declining confidence in fiat currencies, reached historic highs in 2025, at times exceeding $4,000 per ounce, a year-on-year increase of more than 50 percent. This flight to precious metals signals profound uncertainty about the future value stability of paper currencies and the reliability of government fiscal structures.

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Institutional erosion and the failure of democratic norms

The deepest and perhaps most threatening dimension of the current shutdown lies not in the quantifiable economic losses or the social hardships, however severe these may be. The ultimate danger manifests itself in the creeping erosion of democratic institutions and the hollowing out of those unwritten norms that make the functioning of representative systems possible in the first place. Government shutdowns are not an inherent phenomenon of democratic rule. In most developed democracies, automatic budget rollovers exist to ensure that the government remains functional even in the absence of parliamentary agreement on new budgets. The United States chose a different path, one that has repeatedly led to funding gaps since the 1976 reform of the budget process. Of the twenty funding gaps since 1976, ten resulted in actual shutdowns with furloughs of government employees.

This cluster of events is not a random quirk of the political calendar, but rather an expression of a systematic transformation of political culture. The increasing polarization between Democrats and Republicans, both among political elites and the electorate, has made compromise increasingly difficult. Partisan identity dominates policy considerations. Affective polarization—that is, emotional rejection and hostility toward the opposing party—has reached historic highs. Polls document that supporters of both parties perceive the other side not merely as political rivals, but as an existential threat to the country. This demonization of the other side, in the eyes of many activists, legitimizes almost any means to advance their own side, including violations of democratic norms.

The Senate filibuster, a procedural rule that requires a sixty-vote majority instead of a simple majority for most bills, acts as an institutional amplifier of these gridlocks. While historically the filibuster served as a tool to protect minorities and promote bipartisan compromise, in this era of extreme polarization it has degenerated into a routine instrument of obstruction. President Trump repeatedly called for the filibuster's abolition to allow the Republican majority to govern unchecked. Democrats countered that they needed the filibuster to protect fundamental rights and programs like ACA subsidies. Both sides are no longer instrumentalizing parliamentary processes as mechanisms for deliberative decision-making, but rather as weapons in political guerrilla warfare. The phrase "nuclear option" for abolishing the filibuster by simple majority underscores the military-confrontational rhetoric that permeates the political discourse.

The normalization of government shutdowns as a tool of political pressure marks a worrying development. Before 2013, the last shutdown occurred in 1996. Since then, four more have taken place, including the current one. This acceleration reflects the increasing willingness of political actors to jeopardize the functioning of the state in order to pursue partisan goals. The idea of ​​mutual tolerance—that one recognizes the legitimacy of the political opponent and respects their democratically acquired power—is eroding. Likewise, the norm of institutional restraint—that is, the self-restraint of not pushing formal powers to their absolute limits in order to preserve the system's functionality—is fading. Political scientists warn that the collapse of these soft guardrails of democracy is an indicator of democratic regression.

Empirical research documents that supporters of both parties are increasingly willing to tolerate or even support violations of norms if they benefit their own side. Experiments show that voters in polarized societies trade democratic principles for partisan advantages. These findings point to a fundamental shift in political culture. Democracy is no longer understood as an intrinsic value, but rather as an instrumental arena where the primary objective is the victory of one's own group. The differences between the parties manifest themselves not primarily as a conflict between Democrats and authoritarians, but in diverging conceptions of democracy. Republicans tend toward an anti-elitist, populist understanding of democracy that is skeptical of bureaucracy and expertocracy. Democrats more strongly favor technocratic, professionalized forms of governance and emphasize institutional checks and balances. These fundamental divergences in conceptions of democracy make it difficult to establish common normative ground on which compromises could flourish.

Geopolitical implications and the weakening of American credibility

The internal turmoil of the American fiscal crisis extends far beyond the nation's borders and affects the geopolitical standing of the United States. As the leading power in the Western alliance system, guarantor of the liberal world order, and anchor of the global financial system, the US bears a responsibility that transcends national particular interests. Its inability to maintain basic governmental functions sends devastating signals to allies and rivals alike. Authoritarian regimes in China, Russia, and elsewhere are using American dysfunctions as propaganda material to proclaim the superiority of their own systems. The People's Republic of China, which combines its economic and technological catch-up with strategic patience and long-term planning, can point to the chaotic situation in Washington to support its claim that Western democracy is in crisis.

Allies in Europe and Asia are watching American developments with growing concern. The reliability of the US as a security guarantor, trading partner, and stabilizer of the international system is being called into question. If the American government is not even able to keep its own airports operational or feed its citizens, how can it possibly manage complex international crises? The perception of American weakness emboldens revisionist powers to challenge the status quo. The credibility of military assistance pledges suffers when the US military goes unpaid for weeks. The appeal of the American model as a blueprint for developing and transition countries diminishes when the system is so obviously dysfunctional.

The fiscal situation exacerbates these strategic dilemmas. Exploding debt limits the scope for international engagement. Military interventions, economic aid, and diplomatic initiatives all require financial resources. A state groaning under its debt burden and politically paralyzed cannot formulate and implement a coherent foreign policy. The structural dependence on foreign creditors, particularly China and Japan, which together hold over two trillion dollars in US Treasury securities, creates potential vulnerabilities. Should these creditors begin to reduce their holdings, it could trigger an interest rate spiral that would further worsen the fiscal situation. The weapon of financial interdependence cuts both ways: while the US remains powerful due to the size and liquidity of its markets, its debt simultaneously increases its vulnerabilities.

The shutdown and the underlying fiscal problems also reflect the prioritization of domestic struggles over international responsibility. American policy is increasingly inward-looking, driven by identity politics and distributional conflicts. This introversion leaves a vacuum in the international order that other actors are attempting to fill. China is expanding its influence through the Belt and Road Initiative, Russia is acting more aggressively in its neighborhood, and regional powers such as Turkey, India, and Saudi Arabia are pursuing more independent strategies. The United States, historically the dominant power in the postwar era, is implicitly withdrawing, not primarily through explicit strategic decisions, but through internal paralysis. The long-term consequences of this development could include a realignment of international power relations in which American hegemony is a thing of the past.

Future scenarios and the question of resilience

The end to the current deadlock, foreshadowed by the progress made in the Senate on Sunday, will not resolve the underlying problems. The compromise provides interim funding until the end of January, merely postponing the fundamental disputes. The issue of ACA subsidies remains unresolved, with the promise of a later vote whose outcome is uncertain. The structural fiscal imbalances persist. The political polarization will not disappear. Democratic norms will not be restored overnight. The nation faces a choice between several development paths with profoundly different consequences.

A pessimistic scenario envisions a continuation of the current trajectory. The fiscal situation deteriorates steadily, as neither substantial spending cuts nor tax increases are politically feasible. The debt-to-GDP ratio rises relentlessly, and interest payments become crushing. Recurring budget crises and shutdowns become the new normal, as each party tries to coerce the other. Trust in government institutions erodes further, leading to declining tax compliance, reduced public sector recruitment capacity, and diminishing legitimacy of the political system. International investors lose confidence in U.S. Treasury bonds, triggering a financial crisis. The economy enters prolonged stagnation with rising inflation, a stagflation scenario that would be politically difficult to manage. Social tensions escalate as different segments of the population blame each other. Political radicalization intensifies, with populist and extremist movements gaining ground.

A more optimistic scenario posits that the severity of the current crisis represents a turning point, prompting political actors to reconsider their approach. Moderate forces in both parties might recognize that continued confrontation is detrimental to everyone and seek bipartisan compromises. A broad fiscal agreement, similar to the reforms of the 1980s and 1990s, could combine tax reforms with spending cuts to stabilize the debt trajectory. Reforms to the fiscal process could introduce automatic continuation mechanisms that would structurally prevent shutdowns. A revival of democratic norms, fueled by civic engagement and media accountability, could ease the political climate. Economic growth, driven by technological innovation and productivity-enhancing investments, could alleviate the fiscal pressure by generating higher revenues. A return to constructive politics would restore international trust and strengthen America's geopolitical position.

A realistic middle scenario combines elements of both extremes. Structural problems remain unresolved, but catastrophic collapses also fail to materialize. The nation operates in a state of permanent suboptimal functionality, characterized by muddling through. Periodic crises are managed through last-minute compromises or temporary emergency measures, without addressing their root causes. The fiscal situation deteriorates gradually, but dramatic adjustments are not required until the distant future. Political polarization remains high, but destructive excesses are limited by countervailing forces. The economy grows at a below-average rate, with recurring periods of weakness, but without total collapse. The international role of the United States shrinks relatively as other powers catch up, but an abrupt loss of hegemony does not occur. Paradoxically, this scenario of gradual erosion without acute catastrophe could pose the greatest danger, as the creeping deterioration does not generate sufficient pressure to initiate fundamental reforms.

The resilience of the American system has historically often been underestimated. The US has survived civil wars, world wars, economic depressions, social upheavals, and political scandals. Its institutions have proven flexible and adaptable. The economy has demonstrated remarkable regenerative capacity. Society has integrated diverse waves of immigration and fostered cultural vitality. This historical experience fuels a certain optimism that current challenges can also be overcome. At the same time, the decline of other empires serves as a cautionary tale. No hegemony lasts forever. Complacency and institutional sclerosis have repeatedly led to the downfall of once-powerful civilizations. The question is not whether the US has problems, but whether its political system possesses the capacity to recognize, acknowledge, and address them.

The moment of truth for American democracy

The current government shutdown in the United States is far more than just another budget battle between opposing political camps. It exposes the profound structural dysfunctions of a political economy trapped in fundamental contradictions. Fiscal unsustainability, characterized by exploding debt and structural deficits, clashes with a political culture that is either unable or unwilling to make the necessary adjustments. Parliamentary architecture, originally designed to foster compromise, has degenerated in this era of extreme polarization into an instrument of mutual obstruction. Democratic norms, the informal rules of political competition, are eroding under the pressure of identity-based mobilization and affective polarization.

The economic costs of this shutdown are substantial, but ultimately manageable in an economy the size and diversity of the United States. The up to fourteen billion dollars in direct losses, the millions in unpaid wages, the disruption of supply chains and infrastructure will be partially recovered once the shutdown ends. The psychological scars on federal employees, the despair of families without food aid, the missed business opportunities for entrepreneurs are harder to quantify and repair. But these damages, too, will heal with time. The real threat lies deeper. It manifests itself in the normalization of the abnormal, in the acceptance of dysfunction as a permanent state, in the habituation to political paralysis.

A nation that cannot maintain its basic governmental functions—that cannot feed its citizens, pay its employees, or operate its infrastructure—gradually loses the legitimacy of its institutions. This delegitimization is insidious and often imperceptible, but cumulatively destructive. When citizens lose faith in the state's ability to fulfill fundamental tasks, they withdraw, disengage, and seek private alternatives. Tax morale declines, recruiting qualified personnel for public service becomes more difficult, and compliance with laws and regulations diminishes. A state that continually disappoints its citizens undermines its own foundations. The United States is at a point where the accumulation of such disappointments could trigger a qualitative transformation that alters the very nature of American democracy.

The coming years will show whether American politics possesses the capacity for self-correction. Historical precedents offer both cause for hope and concern. In the past, the nation overcame existential crises through bold reforms and charismatic leadership. The New Deal era under Roosevelt, the Civil Rights Movement, and the fiscal consolidations of the 1990s demonstrate that change is possible. At the same time, examples of failed empires show that historical greatness is no guarantee of future relevance. The dynamics of decline, once set in motion, can be difficult to reverse. American democracy faces perhaps its greatest test since the Civil War. Not military confrontation, but institutional erosion and fiscal disintegration define the current crisis. The response to this challenge will determine whether the American century remains an episode in history or whether institutions can be revitalized for a new age.

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