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US government shutdown: worse may yet be to come

At midnight, the United States government was shut down after Congress could not agree to a deal on changes to president Barack Obama’s signature health-care legislation, Obamacare. Around 800,000 non-essential…

US president Barack Obama has been quick to blame the Republican Party for the state of government shutdown. EPA/Jim Lo Scalzo

At midnight, the United States government was shut down after Congress could not agree to a deal on changes to president Barack Obama’s signature health-care legislation, Obamacare.

Around 800,000 non-essential government workers have been placed on unpaid leave as a result of the shutdown, which is estimated to be costing the US economy US$300 million per day.

Responding to the shutdown - the first since 1995-96 - Obama accused hardline Republican Party members of having “reckless demands” over delaying Obamacare’s implementation.

They’ve shut down the government over an ideological crusade to deny affordable health insurance to millions of Americans.

The Conversation spoke with US politics expert David Smith of the University of Sydney’s United States Studies Centre for his views on the shutdown.


What does the shutdown mean for America’s global credibility?

I think that the importance is not just the shutdown of government that’s happening now, it’s what it says about the likelihood that the United States might default on its debt sometime before the end of October. For a shutdown like this - as long as it only goes for a few days - the damage will be fairly limited, and this is the sort of thing that we’re actually used to seeing in American politics now: this is the fourth one of these stand-offs that we’ve seen in three years.

But if the United States actually defaults on its debt, the consequences could be catastrophic. This would mean - I would say at a minimum - that interest rates will spike right throughout the American system; this will completely cripple whatever economic recovery is actually happening at the moment; and this will have serious repercussions for the global economy.

The last time the United States came close to defaulting on its debt, the global financial markets actually didn’t react that badly - there was still a belief that the United States would always make good on its debts despite the fact that credit ratings agencies were saying that the US is now so politically dysfunctional that it no longer has the top credit rating, and so interest rates actually remained the same on American borrowing.

But if the US actually defaults on its debt, that might send a signal to markets that the United States is no longer a credible borrower, and given how much debt there is sloshing around in the American system, that could be catastrophic.


Based on historical precedent of past shutdowns, how long is this one expected to last?

It’s hard to make predictions. I would say that it’ll last less than a week. But that’s in the context of the debt ceiling negotiations coming up again in two or three weeks, and it might get resolved quickly because both sides will actually want to focus on that. So my guess is Republicans might actually give way on this, in order to focus on using the debt ceiling to extract things.

I think that the ultimate outcome of this may be that Republicans don’t get Obamacare delayed or defunded. They might get some sort of marginal adjustment to it. But this will be a good opportunity for Republicans to get all kinds of other things that they want, including rolling back environmental regulations and rolling back financial regulations. The Democrats may actually give these things away in order to keep Obamacare.


What has been the immediate response from the US public and media?

The immediate response has been pretty disgusted. This is the first time that this has happened in nearly 17 years. It was deeply unpopular the last time that it happened, and as well as disgust there’s also been a sense of resignation that this is actually the new normal in the American system: this level of dysfunction; that this use of government shutdown or the debt ceiling as a negotiating tactic has actually become normal.

This is why regard for Congress is so, so low at this point. Barack Obama is struggling with low approval ratings by his standards - something like 45% approval - and that’s within the range of normal for a president. The popularity of Congress overall - when this is surveyed - would struggle to get beyond 15-20%, or probably even less than that - 10-15% of the population are actually approving of the job that they’re doing. So Congress is held in very very low regard at the moment, and this is just seen as another sign of a completely dysfunctional Congress.

The nature of a government shutdown is that the effects are immediately felt by government employees, but for most people the effects don’t become obvious unless it goes on for a little while. So this might not actually affect many people’s lives if it is resolved quickly, but certainly the effect is resigned disgust.


Is Barack Obama trying to divide the Republicans along moderate and Tea Party lines? How successful do you think he will be?

What’s really going on here is that there’s no way that Barack Obama is going to compromise on his signature legislation. And he was always prepared to compromise on tax and spending, no matter how tough he talked about it. But neither he, nor Senate democrats are ever going to compromise on Obamacare. If this doesn’t pass, then there’s really a serious question about what was the point of Obama’s presidency.

In terms of the split within the Republican Party, it’s gone well beyond the point of moderates and Tea Partiers being split. The Tea Party got into the driver’s seat of the congressional Republican Party after the 2010 midterms. And that’s still where it is.

The Tea Party completely terrorise the moderates within the Republican Party to the extent that there are really hardly any recognisable moderates left in the Republican Party. There might be some kind of thinking within the Democratic Party of actually in the long term, this is a good thing: just let the Republican Party become so extreme that it’s unelectable. But it’s going to do a huge amount of damage in the meantime.

Also, there’s not really any evidence that it is going to get to the point of unelectability. Sure, the Republicans may not get a president in the White House for the next 20 years. But they were able to win the last House election without even getting a majority of the vote. And conservative Republicans are very strong at a state level, which is where a lot of the policy that they care about actually gets made.

So, letting the Tea Party dominate the Republican Party is not good from a Democratic perspective. This puts all of their policy aims in jeopardy.

Join the conversation

43 Comments sorted by

  1. Michael Shand

    Software Tester

    Great response from the person interviewed, however the question "Is Barack Obama trying to divide the Republicans along moderate and Tea Party lines?" - is insane on it's face

    Is Obama trying to split the repubs by refusing to give in to their unreasonable demands

    I don't know, am I attempting to split the bikie gang by refusing to give them my wallet?

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    1. Robert Tony Brklje
      Robert Tony Brklje is a Friend of The Conversation.

      retired

      In reply to Michael Shand

      The Republicans are clearly a split party, each members loyalty being clearly defined by what Lobbyists attend to them and with whose campaign dollars they bring to their election.
      They are only loosely held together by Republican Party specific campaign contributions, where keeping to those Party rules gets them a piece of that campaign financial action, as well as the overall Party based political campaign, especially with regard to making through the primaries.
      What will Republican politicians…

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    2. Michael Shand

      Software Tester

      In reply to Robert Tony Brklje

      Agreed, except I would suggest that if the republicans can be described as a split party then so can every party

      ie. the repubs are no more split than the democrats or labour or the coalition, they put on a united front regardless of their internal differences.....much like how some Coalition MP's are in favour of gay marriage and some are not or like how some dems see Money in Politics as an issue (Elizabeth Warren) and others do not

      The repubs are no more split than any other party really…

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    3. Caroline Copley

      student

      In reply to Michael Shand

      Yo interesting idea about dysfunction being actually sought by corporations. Anyhow we all know that our squeakily clean corporations are not above buying the system, at least Clive Palmer is upfront about that.
      Please see my post below for the serious ramifications that has.
      Its funny because I had always thought dumbing down was more of the kind of attack they require, than producing dysfunction. For example centralised control of the education system does lots of things to lots of young…

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    4. Michael Shand

      Software Tester

      In reply to Caroline Copley

      Great comment, money in politics is a serious problem, especially in Australia

      Try telling that to any of these so called academics though, you will be immediately written off as a conspiracy theorist.

      I once had an Author here tell me that giving donations to a politician in return for political favours is not corruption, that's just how politics works - when in actual fact that is the definition of corruption, it is insane

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  2. James Hill

    Industrial Designer

    The "Tea Party" might, by their actions, be recognised as "Enemies of the Republic".
    Some clarity on their motives is needed.
    If they act like enemies of democracy then perhaps they are.
    This wanton political vandalism has to have an object in mind.
    What then are the true alleigances of these people?
    In Australia about the last time this happened, a journalist for The Australian, the Late Frank Devine, a former editor of Murdoch's New York Times, wrote an article titled "Vatican in Van of New…

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    1. Michael Shand

      Software Tester

      In reply to James Hill

      The tea party can be summed up as;

      "Government is inefficient, government is wasteful, government is totalitarian, The government IS the problem....Vote for me for government!"

      The tea party folk see shutting down the government, sending hundreds of thousands of government workers home without pay, and attempting to ruin Obamacare as a win win win win

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    2. James Hill

      Industrial Designer

      In reply to Michael Shand

      Just like the Murdoch Man with "This Bad Government", when they really mean "This Bad (Secular) Democracy".
      All started with the terrible, terrible French Revolution, caused by calling a national parliament for the first time in 170 odd years, and look what happened then!
      Bad Democracy!
      Why a Papal Army and a Muslim Army had to go up together against Napoleon in Italy to protect themselves against Liberty, Equality and Brotherhood.
      Bad, Bad Democracy!
      Nearly beaten at last!

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  3. Greg North

    Retired Engineer

    I suppose they need something like a modern day Bastille Day or an Aussie double dissolution if their constitution has provision for that.
    Either way, just too much spending and printing money instead of borrowing it is no better.

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    1. Michael Shand

      Software Tester

      In reply to Greg North

      Seems they have unlimited money for defence contractors, intelligence and spying operations but Obamacare...ohhhh it's just a bridge to far

      Don't be fooled this is not about money, this is about grandstanding and irrational beliefs

      mainly the belief that universal healthcare = marxism = UN Agenda 21 = Hobbit homes

      They truely believe that universal healthcare is a stepping stone to communism

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    2. David Stein

      Businessman

      In reply to Greg North

      Greg,
      Did you read the article? This has nothing to do with 'too much spending'.
      The story is about the lunatics taking over the asylum.
      The markets have already cast their verdict on Obama's economic policies - DJIA hitting new highs, low inflation, low borrowing rates, unemployment coming down, albeit too slowly since those same Republicans stopped the stimulus far too soon.
      If anything, the fed taper is coming too soon for the markets - they want it to continue.
      If we had listened to the Chicago / Astrian austerity fetishists, we would be in deep depression right now. The purity of their ideas always trumped the real economic agenda - jobs and economic well being of all people, not just the few.
      Are you arguing against the invisible hand, and telling us the wisdom of laissez faire free markets is wrong now?

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    3. David Stein

      Businessman

      In reply to Michael Shand

      Very good comment Michael.
      The irony is Obamacare is a rather mild form of universality. It encourages people to purchase private health insurance. There is no equivalent to an Australianese medicare type arrangement, none at all.
      There are carrots and sticks - vouchers for those who cannot afford health insurance, and very small tax surcharge (1% rising to 2.5% of income) for those who choose not to purchase it. Very similar to the private health insurance surcharge pushed out by John Howard. Some socialism.
      And after all this, you are not required to purchase anything - you just pay the tax surcharge! I would have thought 1 - 2.5% is a small cost to those who would be in the emergency room in a flash when something goes wrong.

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    4. Dale Bloom

      Analyst

      In reply to David Stein

      Obviously the word “Obamacare” is a propaganda term, and it seems like something out of Big Brother.

      There are pros and cons for the “Affordable Care Act”, and a succinct list is available here.

      http://www.policymic.com/articles/55015/facts-of-obamacare-inside-look-at-the-pros-and-cons-of-the-new-health-law

      I thought the following was interesting:

      “According to a study completed by the Association of American Medical Colleges, America is projected to have a shortage of 91,500 doctors by the year 2020 due in part to an overwhelming negative view that many of them have on Obamacare. In fact, a survey completed by The Doctors Company, found that 60% of doctors feel that the pressure to reduce costs, increase volume, and improve quality will have a negative effect on patient care, causing 43% of physicians to also contemplate early retirement.”

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    5. Greg North

      Retired Engineer

      In reply to David Stein

      David, if you cannot see past the political lunacy to what is driving not just the US economy to the brink, perhaps you do need to look more broadly.
      Most of the developed world's activities are being based more and more on debt and of course with increased borrowings you would want to see something you are paying for.
      The US just printing more money instead of borrowing it is also not such a great alternative.

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    6. R. Ambrose Raven

      none

      In reply to Dale Bloom

      Just a few questions:
      - in what way does Obamacare change the relationship between doctor, patient and insurer?
      - does not the pre-Obamacare structure cause doctors [to] feel that the pressure to reduce costs, increase volume, and improve quality will have a negative effect on patient care?
      - isn't the writer of that article making a lot of assumptions about the impact and evolution ofObamacare?
      - isn't the real problem the abuse of power by the insurers?

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    7. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to R. Ambrose Raven

      Watched an interesting report on SBS news last night ... a series of vox pops with random bystanders asking them which scheme they preferred "Obama Care" of the Affordable Health Care Act. Overwhelming support for the latter .. strident even. And a near unanimous rejection of the former.

      Why? "You can just tell by the name of the thing". Can't argue with that.

      Curious thing is they are one and the same - Obamacare being the tabloided GOP characterisation - which the administration has…

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    8. Michael Shand

      Software Tester

      In reply to Dale Bloom

      "Obamacare" was a derogatory term used by the republicans to try and get people scared of the Affordable Care Act by making it sound like a socialist plot

      Obama took the word back and being quite proud of his healthcare plan adopted the term Obamacare as did many Obama supporters, esp the NAACP

      I can understand that if you don't know anything it might seem like "Big Brother" but such is the problem with being completely ignorant

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    9. Mike Jubow

      forestry nurseryman

      In reply to Greg North

      Greg, Maybe we could loan the yanks one of our constitutional lawyers to show them how to write an amendment into their constitution allowing for a double dissolution when the opposition holds up money bills. It is obviously beyond their skills so we should be able to charge a good slab or two for showing them the way to go.

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    10. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Michael Shand

      I think we must be extremely wary of any favours the tabloid meeja (and ain't that all of them) do us when they give us a cut down phrase or shorthand ... in accepting it we are accepting far more than brevity. And by accepting their terms we accept their characterisation to boot - immediately on the back foot defending 'Obamacare' instead of the Affordable Health Care Act.

      Regular chatters here will know my disdain for marketing and slogans when it comes to politics but that is not to say we can ignore it altogether ... it can be most effective at conveying the essence of the idea ... it's not the detail that wins arguments it's often the packaging - at least in the public mind.

      And we must make sure it is us doing the packaging ... the recent kerfuffle about the NDIS being a case in point. Mpore thinking and market research up front... ours not theirs.

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    11. Michael Shand

      Software Tester

      In reply to Peter Ormonde

      Definitely, agree with most of that, I don't think Obamacare falls into that category though as it was a turn of phrase created to do what you said but taken back by the people

      I am not familiar with the NDIS, I know it's the disability insurance but I am not Disabled so I really didn't care, I am still for the most part unaware of what issues it was trying to solve as I have no idea what issues disabled people face, actually you are the first person I have heard be critical of it, not that everyone else I know loves it, it just doesn't come up in my circle in the same way that medical research funding doesn't come up

      ask me about medical research funding and the only thing that comes to mind is "We should give more funding to researching medicine" - ie. Idunno, I like knowledge, society having more medical knowledge sounds good

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    12. Dale Bloom

      Analyst

      In reply to Michael Shand

      I can easily understand how Obama would welcome the term “Obamacare”, because it makes it seem the whole legislation was actually developed by him.

      It also helps hide the fact Obama would be the most ineffectual President the US has ever had.

      Here is a US President who oversaw the spending of $13 trillion dollars in 4 years as a part of QE, but at the end of that massive spending, there were more US citizens on food stamps than the entire population of Spain.

      A totally hopeless, deeply flawed and completely ineffectual US President that the US and the entire world will live to regret.

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    13. Michael Shand

      Software Tester

      In reply to Dale Bloom

      Whilst I agree with you I feel your comments are based more on ignorance and idealogy rather than reality.

      As evidenced by your initial complete lack of knowledge on the matter (See "Ignorance") in the first comment

      Me thinks you hate anyone who appears on the left more than anything else, sort of a primative tribalism

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    14. Dale Bloom

      Analyst

      In reply to Michael Shand

      There would be a lot to learn from the US.

      For example:

      How to go bankrupt while proclaiming yourself the greatest country in the world. How to preach “freedom” while spying on everyone else. How to preach “peace” while the country is awash with guns and violence.

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    15. Stephen Ralph

      carer at n/a

      In reply to Dale Bloom

      I've read all those books.

      It's part of an Anthology called "Hypocrisy for Dummies".

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    16. Peter Ormonde
      Peter Ormonde is a Friend of The Conversation.

      Farmer

      In reply to Michael Shand

      Good luck with staying fit and spry Michael ... hope you never need the NDIS.

      Yes, if uncontested the punters will grab onto the simple terminology of the tabloids - as they did with the 'Carbon Tax' - but once adopted we end up with a dumbed down defensive argument - defining what it is not.

      It gets back to this problem with governments failing to communicate their reforms ... they adopt a lazy and unprofessional route where the reform (and subsequent debate) is framed in terms set by others.

      In future I'd hope reformist governments do not use the hostile media to explain and define their reforms - but strategically plan and control such information via advertising - using these hopeless marketers they use to sell themselves in elections. They can sell toothpaste - maybe they can sell ideas and reforms. Keep the public servants and any committees well out of the way too.

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    17. Yoron Hamber

      Thinking

      In reply to David Stein

      Well, think Greg has a point there. America is the ground stone of the international banking system, although both EU, Russia, and China would like to take over. But it's not spending money on giving ones citizens a decent living that has cost the banking system.
      It's unheeded greed and profit thinking, on the international market as well as inside, single eyed looking at what is 'promised' for getting that loan without looking on if it even is plausible. I would say there's an awful lot of 'wishy…

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    18. Yoron Hamber

      Thinking

      In reply to Dale Bloom

      Didn't see about insurance companies Dale? Although much about their workload, and the way the government expect them to 'produce more health', at the same time as less, or the same amount, money gets invested into the health care system?

      It was a interesting article though, thanks for that one.

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    19. Michael Shand

      Software Tester

      In reply to Peter Ormonde

      Cheers, online comments are difficult, telling someone that you hope they don't need the NDIS in the future can be read as a kind hearted expression or a mob threat, you know, "I hope you don't need no doctors anytime soon"

      I agree about the framing issue but even when the IPCC set out and say "Warming, Overwhelming Evidence" what is reported by the daily mail is "Scientists more uncertain, say earth may be cooling?"

      So you can only blame polies so much, I agree they might not be doing their best but I fear that even if they were, that wouldn't translate across corporate media

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  4. David Stein

    Businessman

    It must seem ludicrous to Australians that US Congressional Republicans are attempting to stop Americans from purchasing private health insurance. Which is the core policy objective of ''Obamacare".
    Of course there are other excellent reforms such as the creation of a health insurance market ('exchanges') which creates a national market and lowers costs by smoothing out the externalities of smaller state based markets. Sure there are vouchers available for those that cannot afford healthcare…

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  5. Dennis M

    Author, Philosopher, Carer.

    Hopefully, the U.S. will shutdown for months, even years. The U.S. is a rogue imperial nation that is leading the world towards a nuclear war.

    It cannot be allowed to gain major control of our world otherwise we'll all be living under the heel of Big Brother.

    The U.S. is not spying on the world or trying to box in China and Russia so it can open more Coke outlets.

    Wake up, fellow citizens! Beware the Trojan Horse.

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  6. Stephen Ralph

    carer at n/a

    This is better than days of Our Lives or Santa Barbara.
    But no doubt these shows will be getting a ratings boost cos so many people are out of work.

    I'm guessing that half the US population probably agrees with the Republicans.
    This will be manna from heaven for the Tea Party, I can hear the Fundamental Christians cheering from the pews.

    Ironically for Christians their views are so far removed from the charity aspect as to be sadly laughable.

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    1. Mike Jubow

      forestry nurseryman

      In reply to Stephen Ralph

      In fact Stephen, this is one of the greatest black comedies acted out in real life in many years. Forgive me for taking the highly cynical view of the "land of the free", the upholder of world democracy, who can't even write a constitution that covers the with-holding of money bills and there-by generating a double dissolution. What a pathetic model of democracy!

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    2. James Hill

      Industrial Designer

      In reply to Mike Jubow

      To be fair Westminster had to wait till the eve of WWI to solve the problem you describe.
      So it would have been hard for The US Founding Fathers to use that as an example when writing their constitution.
      And anyway ordinary US citizens are the victims here, why the lack of empathy?
      Hate (based on fear) tends to blind.

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    3. Stephen Ralph

      carer at n/a

      In reply to James Hill

      I've just learnt tonight that in the Clinton administration the government shutdown for 28 days under the same circumstances.

      The citizenry ARE the victims in these cases.

      The hubris of the Republicans to let it get to this stage is staggering.
      But then again this is SO America.
      There is irony in that a health bill to make life better for poorer citizens is being used as a trigger to make life harder for ordinary workers and beyond.

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  7. Lee Emmett

    Guest House Manager

    How ironic, in the nation which espouses to be a great leader among democracies, it is impossible for the major parties to find middle ground to continue to govern.

    So hundreds of thousands of public servants won't be paid, for an indefinite period of time.

    The intransigence of the Republicans reminds me of the intransigence of the LNP in opposition.

    In government, the LNP is proceeding slowly, slowly, to the point of not convening parliament for ages.

    They know that with the current Senate any provocative legislation is likely to meet with opposition.

    However, if/when (mid-way through next year) the LNP has control in both houses, it will be very revealing to see the legislation introduced.

    So in Australia, although the LNP 'promised' to get rid of 12,000 public servants 'by natural attrition', next year could be a horror year for cutting services.

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  8. Dianna Arthur

    Environmentalist

    After reading this analysis of the US ideological impasse and the comments. I wondered if Australia has merely dodged a similar bullet here if the Abbott government had not won office.

    'Only in America' does not cut it - it is wishful thinking that similar acts of internal hostility on a nation cannot happen here. Complacency (AKA when people do nothing) will empower our own far-right ruled LNP towards their belief that the only good government is a small government on the proviso that the small…

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    1. Stephen Ralph

      carer at n/a

      In reply to Dianna Arthur

      Fasten your seatbelts - it's going to be a bumpy ride.

      But to where could be a good question.

      I've lately come to realise that life is a series of carpe diems.
      Whoever seizes the day (or the moment) has the magic stick -
      until the next person grabs it.

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  9. David Pearn

    Follower

    And I thought gerrymandering was a product of the Joh effect in Queensland but apparently not.
    In fact it seems the 'exceptional' nation has it down pat, at least in the 'red' states, combined with their legislative moves aimed at reducing the influence of blacks, Hispanics and other minorities it just makes me feel so proud to be 'aligned' with such a god fearing inspirational nation.....NOT!

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  10. Caroline Copley

    student

    "Conviction" is my thought for the day so I'd thought I might as well comment on the unenviable US position.
    As a female I have often been asked why I would care (e.g. about the MDB river system) and I have always assumed this was just some sort of attempt to turn me into a brainless bimbo, which as a scientifically qualified person, I must say was doomed to failure. However the other thing I realised after a while is that a lot of these type of comments not only came from musical male bimbos,but…

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