Martijn Konings discusses what the debt ceiling crisis tells us about shifts in power taking place in American politics and its relation to government spending and taxation.
It isn't surprising they came up with this last-minute deal because there was a lot pressure on Democratic and Republican leaders to avoid default. Not all the details are entirely clear or out in the open, and it seems to leave a lot of major issues to be dealt with in the future. So it's quite hard to figure out who the winners were in this process.
For Obama, the major benefit is that some controversial issues will be pushed out until the next election. But the imposition of these austerity measures on his administration means it will be much harder for him to pursue some of his key political commitments in the next few years. So that's a significant blow.
The Republicans appear to have gotten more of what they wanted, but at the same time, there appears to be a quite a significant risk of major cuts to the military, which is surprising and not something the Republican leadership will be happy about.
And this speaks to the tremendous influence of the Tea Party. Republican leaders initially thought they could harness this movement to their own purposes, and now they realise they are not quite as capable of controlling it as they thought they were. It has forced them to pursue options they're probably not all that thrilled about.
So in terms of traditional political lines of division, things have gotten quite confusing.
The immediate emergency has been dealt with, but the politics around this issue are likely to start again in full force at a later date.
I was surprised to see that cuts to Medicare and Social Security aren't deeper than they seem to be, but the way the debt reduction process is set up it seems that this could still happen at a later point.
The longer-term issue is that Republicans have discovered they have a legal instrument they can use to exact major concessions. This could remain an issue for years to come, and there is no reason the Democrats won't use it on a Republican president in turn.
The debt ceiling has become extraordinarily politicised, and the effects of this will be quite unpredictable. After all, the political debate in the US has a way of making quite dramatic turns (just a couple of years ago politicians were talking about the need to regulate Wall Street and now everyone is concerned about the massive size of government).
There is a risk that the US dollar will suffer from this in the long run.
Groups like the Tea Party and Americans for Tax Reform now have a tremendous sense of their own influence, so in that sense the current situation represents something of a populist victory. But it's hard to say there have been any real winners here.
It's been a great deal of political theatre that has gotten out of hand, and I don't think it has done anyone any good.