By Ian Bremmer
May 16 Scandal has visited the Obama
administration, and thanks to the media narrative it's larger
than the sum of its parts.
With a talking-point imbroglio after Benghazi, the IRS's
discriminatory practices and the Justice Department's
procurement of Associated Press phone records, the Obama
administration and its allies are right to be worried.
But those of us invested in U.S. growth have little reason
to fret. The past few years have proved that dysfunction in
Washington has almost no effect on America's attractiveness to
investors. As the yields on U.S. Treasury bonds prove, America
continues to be the place for investors to park their money.
That's because petty politics don't control the fate of the
In major emerging markets, politicians have to behave to
appeal to investors. In capitals like Moscow, Delhi and
Pretoria, this is largely an act of optics, but it's an
important one for countries trying to earn the trust of
investors who see opportunity, but not necessarily stability.
For further proof of developing countries' precarious
position, look to Bangladesh, where a country's economy has been
threatened by its politicians' negligence before, during and
after the country's latest garment industry catastrophe.
Things are not nearly as volatile in the United States, and
they won't be even if the Obama scandals metastasize. Growth has
already been moving in the right direction, and the Unites
States doesn't need a pristine Obama administration to ensure
that it continues.
On energy, the Obama administration has wisely shifted
regulation to the state level, allowing states such as Texas,
Oklahoma and North Dakota to create drilling jobs even as a
state such as New York wrestles with the environmental impact of
fracking. This has helped control unemployment and keep energy
prices down, and solidify the country's long-term energy
security. Nothing about that is likely to change.
On trade, Obama has led a remarkably pro-free trade
administration, despite critics who say otherwise. His
administration is remaking international trade architecture away
from a failed Doha round and toward transatlantic and
transpacific partnerships. None of that changes, either.
Finally, Congress has not actually been that dysfunctional
recently - and the recent scandals should not set it back.
Policy items such as immigration reform, tax reform or
another debt ceiling extension are framed by congressional
On immigration, it's a political win for both parties, one
that has been driven by a bipartisan Senate initiative, not the
Now that Senate tax chief Max Baucus has announced his
retirement, his focus has shifted from a grueling 2014
reelection campaign to his legacy: a bid for comprehensive tax
reform. That gives us motivated committee chairs in the Senate
and the House, where David Camp, chairman of the House Ways and
Means Committee, has already pushed for a revenue-neutral reform
effort. Congress needs to raise the debt ceiling so as not to be
remembered for crashing the economy - and Republicans will be in
a position to tie its passage to reasonable demands (perhaps
even tax reform).
With Congress finally making progress, an embattled Obama
administration won't hurt, and could even help, the passage of
these measures. That's because the administration's problems are
just that - the administration's. If the 2014 coattail strategy
becomes less palatable for congressional Democrats facing
re-election, Democrats may be more eager to cut a deal with
Republicans so they can run on their legislative accomplishments
instead of their association with the president. Similar logic
applies to a harried Obama, who may be more willing to get
behind new legislation in the hopes of diverting attention from
That a floundering Obama administration doesn't necessarily
equate to a floundering country is an uplifting story.
Washington is working as it should - ills affecting the
executive branch can largely be contained therein. The
congressional agenda and the health of the American economy
don't have to suffer along with it.