When Greece's sovereign-debt crisis threatened the euro's survival, US officials called their European counterparts to express bewilderment at their inability to resolve the issue. Now, the tables have turned, with American leaders receiving such calls. The most recent threat of a US debt default has been avoided, but only temporarily.
Another battle looms early next year, when the US government's debt ceiling will have to be raised again.
In Europe, the lack of a political union, which could enable countries to share debts, is widely blamed for the crisis. But the US crisis suggests political union may not be the answer for managing sovereign debt.
For weeks, Republicans in the House of Representatives threatened to stop the government extending its borrowing authority beyond Oct 17 so they could challenge laws already enacted by Congress and upheld by the Supreme Court.
In the euro zone, the disagreement centres on how debts were incurred and whether they contravened agreed debt limits.
In the United States, the bone of contention has been how the funds will be used.
But the difference should not overshadow what is really at stake: democratic self-governance in an age of high public debt.
In 1773, the so-called Sons of Liberty staged the Boston Tea Party under the slogan, "No taxation without representation". And America's founders clearly regarded legislative control over the budget as a key pillar of democratic governance.
Debt 'undermines' democracy
Taxation remains the main source of government revenue in most developed countries. But the role of debt finance has been growing and, with it, the need to refinance old debt when total expenditure, including debt service, exceeds total revenue.
Broad access to deep and liquid international debt markets has enabled policymakers to bypass some of the most challenging aspects of democratic governance.
Rather than tackle thorny questions about how to allocate limited resources, democratic governments seem to believe that they can have it all: low taxes and ample debt finance to fund wars or electorate-pleasing programmes. Growing debt burdens suggest this form of cheap politics has run its course.
But the problem runs deeper than that. Excessive reliance on debt finance has undermined basic tenets of democracy, with government finance increasingly determined not by electoral cycles and political deliberation, but by repayment schedules.
In times of economic growth, debt finance provides an easy escape from difficult choices. But when the economy falters, creditors and those willing to entertain the prospect of default can impose their will on everyone else.
Abuse of debt ceilings for partisan gain
Creating viable institutions for managing public debt in a democracy is difficult. The mechanisms currently on offer are treaty-based, constitutional and statutory debt ceilings, pegged as a ratio of GDP, or, as in the US, established in nominal terms.
Treaty-based debt ceilings are largely toothless, as Europe's experience suggests.
Constitutional debt limits have yet to be tested in an emergency, when new funding is needed quickly. And, as the impasse in the US demonstrates, political minorities with effective veto power can abuse statutory ceilings.
Indeed, to the extent that reliance on debt finance undermines self-governance, debt-ceiling abuse for partisan gain becomes more likely.
The problem is that democracies have yet to learn how to manage debt effectively. While political union may stabilise the euro, it will not sustain or strengthen democracy unless Europe's leaders address this critical failing.
Even the world's oldest continuous democracy is not immune to the erosion of self-governance.
Commitments never to raise taxes have left the US dependent on debt finance and, more frightening, on those who are ready to veto refinancing it. 2013 PROJECT SYNDICATE
Katharina Pistor, professor of law and director of the Center on Global Legal Transformation at Columbia University, is the 2012 Max Planck Research Award co-winner.