Does President Joe Biden’s decision to cut short his Asia tour after the Group of Seven summit in Japan demonstrate the unseriousness of American politics? A certain kind of observer sees the debt-ceiling fight as a spectacle ginned up by cynical opportunists endangering the republic by risking a default. Biden’s having to skip the Australia and Papua New Guinea legs of his trip to fly home and negotiate with Kevin McCarthy, in this view, is the most recent manifestation of this folly.
But the furor over Biden’s hasty return ignores the bigger worry: the administration’s failure to address the China problem. And America’s growing debt burden will prove a bigger challenge in the contest with China than a missed diplomatic trip here or there.
True, the shortened trip harms America’s standing in the region. Summits matter quite a bit in the Pacific, which seethes about Europe receiving the lion’s share of American attention. The Biden administration meant to demonstrate through the Papua New Guinea visit that “America is back,” even in the South Pacific, where China recently has made significant diplomatic inroads. Canceling that leg sends the opposite message.
But even if he kept his appointments, Biden is not addressing the region’s core concerns. Economic growth and development are the top priorities for most countries in the Indo-Pacific. The administration displays hostility to any meaningful trade agenda, however, and its half-measures, like the Indo-Pacific Economic Framework, don’t satisfy the region’s demands for growth.
For now, the president is primarily offering one of America’s remaining comparative advantages: security. The main accomplishment of the Papua New Guinea visit, where Secretary of State Antony Blinken filled in for his boss, was a new defense and maritime-security agreement—along with a cool $25 million to fight the alleged national-security threat of climate change. This pact followed other salutary developments, such as the Enhanced Defense Cooperation Agreement that the United States signed with the Philippines earlier this year and the AUKUS defense and technology agreement.
Still, whether security will remain an American advantage is up for debate. In early March, China announced that it will grow its defense budget next year by over 7 percent, to $224 billion, double the figure from a decade ago. Five days later, Biden produced his own budget, which would represents a cut in American defense spending, after accounting for inflation. The Pentagon would still get $842 billion, but American manpower costs much more than China’s does and the U.S. military has to defend the nation’s global interests. China mostly just has to tip the balance of power in one region.
Here is where domestic concerns become globally significant: China’s task will be easier if America’s debt grows too large and prevents the U.S. from reinforcing its military. The past decade and a half of quantitative easing and ultra-low interest rates has allowed many to forget that as interest rates return to their norm—the federal funds effective rate surpassed its historical average only in March—debt-service payments will rise, and spending trade-offs will become painful.
The contrast between the political leadership of the Biden era and the last time the debt pile was this high is striking. After World War II, federal debt had grown as large as America’s GDP, just as it has today, and the United States was entering into an intense geopolitical competition with the Soviet Union. Presidents Harry Truman and Dwight Eisenhower readied the country for the struggle by describing the Communist threat forthrightly, confronting it, and, despite some missteps over the long “twilight struggle,” setting the free world on a path to victory.
Part of this campaign involved putting American finances on a sounder footing. The Congressional Budget Office estimates that by the time Ike’s second term ended, federal debt had fallen back to prewar levels. Yes, some of the methods available then, such as Eisenhower’s overreliance on nuclear weapons, are no longer tenable; moreover, Social Security and Medicare were not yet the major expenses that they are now, so today’s debt cannot decline as rapidly as it did then. Surely, some of the Republican proposals in the debt-ceiling fight, such as keeping non-entitlement spending at 2022 levels or requiring able-bodied adults without dependents to work before receiving welfare, could help address the debt problem without causing much harm.
Biden is now negotiating the debt-ceiling extension, and some cuts will be on the horizon. Sounder finances will allow the nation more cushion in an emergency. But as the international situation grows more perilous, the United States will need a stronger foundation from which to defend itself and its allies. Biden is not building it.
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