China and Japan join the international chorus complaining about US fiscal chaos

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Audio Transcript:

Marco Werman: I'm Marco Werman, this is The World. Add a top Chinese official to the list of those urging American politicians to get their fiscal act together. China's Vice Finance Minister, Zhu Guangyao, warned that failure to raise the US debt ceiling would have global ramifications. Because of this, Zhu said we naturally are paying attention to the deadlock in the US and reasonably demand that the US guarantee the safety of Chinese investments there. He also urged American leaders to take realistic and resolute steps to ensure against default on the national debt.

Daniel Drezner: That's about as helpful as if Leonid Brezhnev or Leon Trotsky suggest that.

Werman: Okay, Daniel Drezner, professor of international politics at the Fletcher School at Tufts, welcome to the program. China's comment, why is that not helpful?

Drezner: Well, you have to understand how the dynamics of this plays out in congress. Perhaps the only thing less popular in GOP house sectors in Congress than Barack Obama would in fact be China. In fact, if you've taken any look at the elections the last couple of years, China is the most favorite foreign active at bat. So the Chinese saying we would like you to do something to help us out is going, unfortunately, to many of these GOP congressman is hey, what we're doing now hurts China, maybe that's a good thing.

Werman: Well, Japan, good capitalists and we don't like bashing them, they've also made plain their frustration and concern. Why do you think both Japan and China are making so much fuss?

Drezner: Well, because they're understandably concerned. The entire global economy, no matter what you think happened after 2008, the global financial system still depends tremendously on US securities, treasury bills, to sort of be the anchor for how assets are priced everywhere else. If you're in a world where in fact you can't guarantee that interest payments on those securities will actually be made, then you're operating in a true no-man's land and suddenly there's gonna be massive amounts of financial uncertainty, thing that would make the collapse of Lehman Brothers look like a small blip by comparison.

Werman: I mean Christine Lagarde, head of the IMF, is also giving almost daily warnings of eminent catastrophe. She has her head screwed on right, we think, she's the head of the IMF, right?

Drezner: She is, but as I said, you know, GOP members of the House are certainly not going to listen to what anyone who is not an American is going to say on this. In their opinion, it's the concern of no one else, and therefore, this kind of pressure, while I understand the sentiment and to some extent what the Chinese said is not entirely unreasonable, politically if they're trying to help, the best thing they can do is shut up.

Werman: Are there any comments that a foreign body, nation, person, organization, could make that would be helpful?

Drezner: No, because in part there's actually a wing of the GOP in Congress that genuinely doesn't think that anything bad would happen if in fact, the United States defaulted on its debt. So even if you got say Christine Lagarde to give a lecture to the members of the GOP House caucus, I don't think they would necessarily believe her. And in fact, I'm sure they would be convinced that she was somehow just putting them on, so unfortunately, I would like to say that international pressure would matter, but you're talking about a world where one of the ranking members of the House Rules Committee, Pete Sessions, when pushed by a constituent about this said, 'We're not the French, we're not going to surrender.' That kind of give you the world view of what we're talking about.

Werman: Yeah, you're a professor, you must have the occasion from time to time to explain this debt business to foreign colleagues. How do you do it?

Drezner: Usually I start off by apologizing, you know, for the United States saying yeah, I'm sorry, this is kind of on us. And I then have to explain basically the way the presidential system of government works, namely the separation of powers.

Werman: If that debt ceiling is not raise, how are you going to approach your foreign colleagues? I mean is it gonna be a lot of apologizing?

Drezner: I'm considering exiling in New Zealand.

Werman: Okay, Daniel Drezner, a professor of international politics at the Fletcher School at Tufts, thanks so much.

Drezner: Thanks for having me on.

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