The United States is currently in the midst of a leverage crisis, only it is a crisis that stems from political institutions rather than economic ones. The political leverage crisis concerns Congress, the White House and the Supreme Court, and it is animated by the excessive leveraging tactics of the House Republicans, especially the extremist faction of the House Republican caucus.
"Leverage" is a concept borrowed from ancient physics referring to the property of a lever and fulcrum to create maximum force with minimum effort. It is commonly used in business to refer to the investment of borrowed money in an effort to seek outsized returns, the excess of which by economic institutions — banks especially — led to the financial crisis of 2008. But the concept can be applied — and potentially misused — in other aspects of life as well.
Leverage, as I argued in a November, 2010, Brookings Institution paper "The Age of Leverage," is morally neutral. Like dynamite, it can be used to promote good ends or harmful ends. The economic leverage crisis of 2008 was a prime example of excessive investment leverage that led to harmful ends. Banks and individuals both used leveraging in excessive ways, and in the end the center could not hold.
What is needed in the United States and global economy is a strong commitment to a "leverage mean," namely the right amount of leverage. Arguably the International Monetary Fund, the World Bank, and the G-20 are working on this notion implicitly.
But what has not been recognized is that the United States has been immersed in a severe leverage problem in our politics for years as well, and the current crisis in Washington is clear evidence that we are being harmed by the excessive use of what I refer to as "bargaining leverage" — the practice of bringing external pressures to bear on a negotiation to advance one's position.
The House Republicans are making a move that is outside of the bounds of fair play within our constitutional democracy. It is common for legislators and the president to use bargaining leverage, even to "blackmail" one another, in order to extract the concessions they want. That's what hardball politics is about.
But when a law has been passed by Congress, signed by the president, judged to be constitutional by the Supreme Court, and also given a final blessing through the re-election of the president who led the effort to pass the law — and when that law is being used as a bargaining chip to shut down the government and, next perhaps, produce an unprecedented default on the debt of the United States, then this is a case of "illegitimate blackmail."
There is a third kind of leverage that, along with bargaining and investment leverage, has become central to our time, namely "resource leverage." Individuals, companies, nonprofits, legislators, heads of state and countries leverage resources, especially information technology, in order to reach their goals.
Indeed, we have seen prominent politicians, notably Texas Republican Sen. Ted Cruz, leverage resources in order to advance their positions in the political leverage crisis. His 21-hour anti-Obamacare speech was less an attempt to persuade his colleagues by what he was saying on the Senate floor than it was a savvy play to use social media and cable news to mobilize public pressure in ways previous generations of politicians could not imagine.
Leveraging has emerged as the dominant theme of our time, and we now are experiencing a political leveraging crisis that could be as destructive as the economic leveraging crisis that we have just about surmounted.
There are various ways out of this crisis, and most revolve around the notion of "the leverage mean." Someone or some group of people must bring the "leverage mean" to bear on this political leverage crisis.
If the extremist faction of the House Republican caucus recants and gives up their excessive bargaining leverage position, then the leverage mean will have been approached if not hit. House Speaker John Boehner appears to be seeking alternative exits from the crisis, most recently by seeking to refocus the debate from the president's health care law to a broad discussion of budget and fiscal issues. If he can eventually cut a deal with the House Democrats and mainstream House Republicans, he will have imposed the leverage mean on the dynamic. This may cost him his speakership, but it would also probably get him an exalted place in American history.
If the Supreme Court is forced to resolve the stalemate, then as the most respected institution of the rule of law in the world, it will need to find the leverage mean to avert an economic catastrophe.
There are ways out of the crisis that do not involve addressing the political leverage crisis in Washington — such as a temporary government funding measure or a short-term agreement on government borrowing, the latter of which is now being championed by House leaders. But any solution that fails to establish appropriate boundaries for the use of leverage in Washington puts the nation at long-term risk.
The time is now to recognize that leveraging, though neither good nor bad in itself, is the driving theme of our time, and it has now gone out of control in our political system.
David M. Anderson is editor of Leveraging: A Political, Economic, and Societal Framework (due out in 2014 from Springer) and an adjunct faculty member at Johns Hopkins University's masters degree programs in Government and Public Management in Washington. His email is email@example.com.
- Politics and Government
- National Government
- Media Industry
- Crime, Law and Justice
- Republican Party
- Blackmail and Extortion
- Economic Organization
- Financial Markets
- Affordable Care Act
- U.S. Congress
- Heads of State
- U.S. Government Shutdown (2013)
- Johns Hopkins University
- U.S. Senate
- International Monetary Fund
- World Bank Group
- Brookings Institution