When it comes to the US economy, it seems the political circus is irrelevant

Last week Congress broke up for recess after failing to pass any major pieces of legislation, yet this week the Dow Jones index has gone through 22,000 – an all-time record

The economy seems to be rising above the chaos in the White House (Getty)

You sometimes wonder whether politics matters at all.

It is great to spend time in the US, particularly as an escape from the wall of sound in the UK over Brexit. But American politics? A week here in the nation’s capital makes one wonder to what extent they really matter.

Consider this: at the end of last week Congress broke up for its August recess, after one of its least successful sessions ever, in which it failed to pass any major piece of legislation – despite the Republicans having the presidency and a majority in both houses.

The President started his 17-day holiday on Friday, after six months of chaos, culminating in the firing of his chief of staff and a head of the press office leaving after just 10 days.

Unsurprisingly, Donald Trump has the lowest approval rating (37 per cent) of any president at this stage of office since the Second World War.

Yet this week the Dow Jones index has gone through 22,000 – an all-time record. It is almost as though the economy, or at least the business establishment, is giving two fingers to the politicians: we know you are hopeless, and we don’t care.

How to explain all this? The Trump presidency has generated such a wall of sound that it is hard to distinguish any clear signals, but I think there is another issue. It is simply that the people who are interested in politics, aren’t interested in economics – and vice versa.

So you get this wave of negative publicity from Washington-watchers, but that passes over the heads of people involved in business or finance. Provided the economy doesn’t tank, they don’t need the Federal Government to do anything. Ineffectual governance is fine. The system has its famous checks and balances to contain the President, and we are now seeing them in action.

All this would indeed be, if not fine, certainly acceptable – were it not for three things.

One is that there may be a shock that will need Government action. The second is that there are long-standing weaknesses in Government finances that really do need to be tackled. And third, there are a huge number of non-partisan Government programmes that are put on hold because of the inability of the President to assemble the Administration’s team.

As far as a shock is concerned, there’s not much to say. It is a case of round up the usual suspects, with I suppose a foreign policy shock at the top of the list: North Korea, the Baltics, the Middle East, or something that is not yet on anyone’s radar.

As far as economic shocks go, there are the regular concerns. What happens if US interest rates rise faster than expected? Is there a stock market crash coming in October, as that is when they usually occur? Would it matter anyway? Could there be a recession next year?

The main point here is that there will indeed be economic reverses, but it is hard to see anything like the 2008-9 collapse happening soon. There could well be serious upheaval, but systems now (unlike then) should be robust enough not to need Federal help.

The long-standing problems of US finances will become evident again in the autumn, when the debt ceiling will have to be raised for the Government to continue functioning.

Shutdowns have happened before, and eventually some deal is done. But the underlying problem remains: that the US has a poor tax system in comparison to most other developed countries. It has been impossible to make major revisions to the tax code for more than 30 years.

The result is that there are high nominal tax rates, but so many exclusions that many huge companies and many rich individuals pay very little tax at all. Reason says there should be a new tax deal. Politics will probably continue to stop it.

The new treasury secretary Steven Mnuchin said earlier this week that the Administration hoped to have a coordinated tax plan by the end of the August recess.

What he said made sense: “When we're talking about lowering the top rate, we're offsetting that with elimination of huge deductions. So for most people in the top rate, they're not going to get a tax cut.”

Whether it goes though is another matter. And if it doesn’t? Well, if a country can manage with an unsatisfactory tax code for 30 years, it can go on for a while yet.

But the longer it does so, the greater the distortions, and a President with control of Congress has a good a shot as any at bringing change. I worry that Trump will be a Berlusconi: a successful businessman-turned-politician with a huge opportunity to push through needed reforms, but who is too self-indulgent to do so.

And the third concern? It’s about the practical business of Government. There are very few people in the White House, for most appointments have not been made. So with the exception of the armed forces and to some extent the Treasury, the various departments of Government are flying blind.

If you believe Government does not matter at all, then this makes sense in a rather destructive way. Endless meddling by central Government is not too effective either; the UK has had its share of that. But a presidential office where there are simply no people to do the jobs is a Government without a mind. The President pulls a lever, but there is nothing attached at the other end.

If you are really cynical, you could argue that it is rather a good thing to have a dysfunctional White House if you have a President of doubtful competence. Better to have no-one to carry out his orders.

But there are lots of non-partisan but essential things a Government has to do, and these don’t get done. I always find it exciting to be in the US and I remain optimistic about its long-term future. But there is a curious emptiness now at the heart of the nation and that is troubling, and will remain so.