By Fareed Zakaria, CNN

We have demonstrated to ourselves, the world and global markets that our political system is broken and that we are incapable of conceiving and implementing sensible public policy.

The actual cut to the 2012 budget, the only budget over which this Congress has control, is $21 billion out of total expenditures of $3.7 trillion – a pittance.

Everything else can and will be changed by future Congresses.

What the deal does is - once again - kick tough choices down the road, this time to a congressional super-commission that will have to come up with a larger plan to reduce debt.

And it does nothing to spur growth, without which the debt will expand well above projections.

The manner in which the deal was produced added poison to an already toxic atmosphere in Washington, making compromise even more difficult.

Democrats now feel they need to mirror the Tea Party's tactics and are becoming unyielding on any cuts to entitlement programs like Medicare. Republicans, emboldened by the success of their bullying, have closed ranks more solidly around a no-tax agenda.

But the only solution to America's debt dilemma will need to involve both cuts to entitlement programs and higher tax revenues.

Congress is more polarized than ever before...and that polarization has resulted in paralysis. More than two years into the Obama Administration, hundreds of key positions in government remain vacant for lack of Senate confirmation. The Treasury Department had to handle the global financial crisis, recession, bank stress tests and automaker bailouts, as well as its usual duties, with about a dozen of its senior positions - almost its entire top management - vacant. Senate rules have been used, abused and twisted to allow constant delay and blockage.

The filibuster, historically employed about once a decade, is now a routine procedure that allows the minority to thwart the will of the majority. In 2009, Senate Republicans filibustered a stunning 80% of major legislation. Given how the chamber is composed - two Senators per state, no matter how thinly populated - people representing just 10% of the country can block all legislation.

Is that how a democracy should function?

These dysfunctions come at a bad time. The U.S. faces intense pressures from an aging population, technological change and globalization.We need smart policies in every field.

We need to pare spending in areas like health care and pensions but invest in others like research and development, infrastructure and education in order to grow. In an age of budgetary limits, money needs to be spent wisely and only on projects that are effective.

But in area after area - energy, immigration, infrastructure - government policy is sub-optimal, a sad mixture of political payoffs and ideological positioning.

Countries from Canada to Australia to Singapore implement smart policies and copy best practices from around the world. We bicker and remain paralyzed.

If, as a result of these congressional antics, interest rates on America's debt rise by 1% - in other words, if the world asks for just a little bit more interest to lend us money - the budget deficit will rise by $1.3 trillion over 10 years. That would more than wipe out the entire 10 years of cuts proposed in the debt deal. That's the American system at work these days.

For more on this, you can read my cover story in this week's TIME Magazine or TIME.com. Also, I invite you to follow me on Facebook, Twitter and Google+ for more throughout the week.