The degeneration of American democracy seems an obvious conclusion to the basic premise set out there. Both parties in America are bad, they know they cannot be replaced because of the two party system, and therefore when they lose power, they can be assured they will gain it back again in a few years once people become dissatisfied with the alternative. There is no incentive for parties to better themselves because being bad at their job nets them valuable and necessary private donations from lobbyists with an interest in disabling the proper function of government.
> Both parties in America are bad, they know they cannot be replaced because of the two party system
Yes, the Democratic-Republicans and the Federalists know that they cannot be replaced because of the two party system. (Likewise, neither faces the threat of, if it fails to be replaced, being completely re-oriented in a political realignment.) It's not as if, currently, scholars disagree about whether the US is in its Sixth or Seventh Party system -- the two major parties are dominant, stable, and forever unchanging.
How come it's just a 2 party system and not a multi party system like in some European countries?