Last Thursday, the United States Congress abandoned efforts to find consensus on a way to avoid automatic budget cuts.
Although both Republicans and Democrats professed willingness to compromise and pursue a balanced and pragmatic approach, the two political parties adhered rigidly to their ideological economic fundamentalism.
Sequestration requires 5.1 per cent automatic cuts amounting to US$85 billion. The Congressional Budget Office estimates that if sequestration remains in place there would be job loss of 750,000 during the remainder of 2013.
This is a blow to an economy struggling to regain economic momentum, having grown by the statistical error of 0.1 per cent in the fourth quarter of 2012. It is the American people who will suffer most from this political gridlock because the cuts will affect a wide range of public services and employment, including in the armed forces.
The statement by Mr Hobart Rowan — that "the wounds to our economic health and to our (US) national pride have been largely self-inflicted" — is as true today as it was 20 years ago when he first said it.
This US policy could retard the economic recovery of the world economy, with deleterious repercussions for Caribbean tourism which garners almost 70 per cent of its visitors from the US.
The sticking point is the Republican theological fixation with not increasing taxes. Increasing tax revenue could be executed in a manner that excludes the poor and middle class by asking the super-rich to contribute slightly more to support the Government.
Mr Warren Buffet is correct when he says that the rich can and should pay more without jeopardising investment and wealth. The sacrosanct view that if taxes are increased there will be less expenditure and lower levels of economic activity is simplistic. Higher tax revenue simply accrues to the public sector which spends it on employment, consumption of goods and on public investment.
The resort to expenditure cuts has been proven throughout recorded economic history to be a prescription for deflation. This deflationary approach is undesirable, because it can worsen an already anaemic economy. Indeed, mistimed deflationary policies contributed to and compounded the Great Depression of the 1930s.
That experience caused the birth of modern economics based on the recognition that the way out of economic recession was not automatic deflation, but judicious stimulus.
Naturally, fiscal deficits financed by borrowing cannot go on indefinitely, otherwise it creates a debt problem which then requires fiscal contraction. Neither deflation nor unsustainable expansionary policies will create economic growth, as Jamaica has belatedly realised.
The United States is a unique case and can continue to finance its budget deficit, hence the sequestration is economic ideology trumping economic policy.
This man-made economic setback is taking place because of hubris and pride in "not blinking". The intransigence of political parties engaged in this futile jousting is difficult to understand, because it will produce economic hardship when the layoffs start after the mandatory 30-day notice.
Meanwhile, the American public is impatient for action which will increase employment and improve their standard of living. Maybe if the budget cuts started with the salaries of members of Congress economic sense would prevail.