Postcard from the edge of the default that no one noticed

Ordinary Americans were not as concerned about their country's close economic shave as they should have been.

A week before the US debt ceiling deadline expired, the reality suddenly hit. I halted my fingers on my computer keyboard and said to myself: “Why bother? If global chaos erupts next week, who will want to read any article I write?”

Congress wouldn’t really be that stupid and foolhardy ... would it?

But throughout the following week, even as the frightening prospect grew increasingly likely, it often seemed as if I was one of the few non-politicians who noticed.

A friend who helps run the software at JPMorgan Chase said that none of her colleagues were paying attention to the issue, beyond a flurry to upgrade the systems for a potential trading frenzy. Employees in a large New York engineering firm (a company reliant on government contracts), occasionally glanced at CNN on the TV in the office kitchen as they refreshed their coffee. Then they would just roll their eyes, shrug and return to work.

When I asked several editors, teachers and musicians in their late twenties and early thirties, they looked at each other in a bit of confusion. “I don’t understand it,” one of them finally answered, “but I figure the government will figure it out.”

Nor did investors appear to take the risk seriously. The Dow Jones Industrial Average rose steadily until Tuesday, two days before deadline day.

Certainly, there was a torrent of news articles about the effect of the simultaneous crisis and the shutdown of the federal government. Children with cancer could no longer enrol in clinical trials of new drugs. Scientists had to abandon time-sensitive research in Antarctica. Families of American service members killed in action lost their benefits, until the public outcry forced Congress to restore that funding.

However, there were far fewer stories about the much more serious consequences of shirking America’s debt obligations.

Economists, financiers, business leaders and foreign government officials sternly warned the US not to default. The official Chinese news agency Xinhau even called for dumping the dollar as the world’s reserve currency.

But the voters didn’t flood their elected officials with petitions or stage big rallies. Instead, Americans continued to make holiday plans, schedule business conferences and organise charity walks. So why were people so blasé?

“It’s too unbearable,” my friend at JPMorgan said. She couldn’t even listen to the radio any more.

Of course people were busy with their daily lives. Moreover, they were tired of the same nonsense in Washington year after year.

A billing clerk at a large urban newspaper, who actually was paying attention, opined that, unlike the shutdown of government services in their own towns, “no one thinks it affects them”. While the financial ramifications would undoubtedly erode their retirement savings, she added, ”people don’t think about their savings accounts every day”.

Surely people who were civic-minded enough to volunteer on a political campaign would be alert to government-related news. So on the day before D-Day, which also happened to be the day of a special election to fill a vacant US Senate seat from New Jersey, I stopped by the campaign office of Cory Booker, the candidate who was favoured to win. (He did.) I asked the half-dozen volunteers there what they thought of the debt crisis.

“Why?” one man retorted dismissively. “Do you own Treasury bills?”

His implication was that unless I actually held the kind of investments whose rates would be directly affected, it shouldn’t matter to me. “No,” I replied, “but I live on this planet”.

Ultimately, I think this lack of voter interest is part of the reason so many members of Congress were willing to play with fiscal fire. Politicians figured they could grandstand and try to use the crisis as fodder for future campaign advertisements, without suffering any career consequences.

After Congress finally passed the necessary legislation, some of the more moderate Republican senators said they hoped their colleagues had learnt a lesson in the art of the politically possible.

We will find out soon enough whether they or the voters have learnt anything. This deal expires in January for the budget and February for the debt limit.

Fran Hawthorne is a US-based author and journalist who specialises in covering the intersection of business, finance and social policy