Those Stubborn Facts: White House Misinformation on the Debt Ceiling

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Biden, Congress, debt ceiling, federal budget, Kevin McCarthy, Those Stubborn Facts

House Speaker Kevin McCarthy “threatened to be the first one to default on the debt, which would throw us in a gigantic recession and beyond, unless he gets what he wants the budget.”

– President Biden, April 18, 2023

 

Times since 1978 alone that Congress has paired debt ceiling hikes with other legislation: 32

 

(Sources: “Remarks by President Biden on Actions to Help Families Access Care and Support Care Workers and Family Caregivers,” Speeches and Remarks, Briefing Room, April 18, 2023, Remarks by President Biden on Actions to Help Families Access Care and Support Care Workers and Family Caregivers | The White House and “US debt ceiling: A ‘clean’ increase is not the rule,” Reuters, May 1, 2023, US debt ceiling: A ‘clean’ increase is not the rule | Reuters)

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Our So-Called Foreign Policy: A Call to Return to Failed U.S. China Strategies

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alliances, allies, Barack Obama, Biden, China, Donald Trump, engagement, FOREIGNPOLICY.com, George W. Bush, Indo-Pacific, intellectual property theft, Michael J. Green, national security, Our So-Called Foreign Policy, Paul Haenle, tech transfer, TPP, Trans-Pacific Partnership, World Trade Organization, WTO

When it comes to China-related issues in particular, supposed American experts who have long completely missed the mark have developed a head-exploding habit of assuming that they have anything useful to say on the matter going forward. Here’s a recent example.

Now these failed economic and foreign policy establishmentarians have hit new heights (or is is “depths”?) of chutzpah. As laid out in this article last week on FOREIGN POLICY magazine’s website, two typical figures are now attacking President Biden’s approach to the People’s Republic for taking too Trump-ian a turn, and blaming his alleged mistakes on learning the wrong lessons from the records of pre-Trump Presidents.

Whereas both the Biden and Trump teams, they write, have accused their predecessors of naively assuming that “engagement would lead to a democratic and cooperative China,” in fact, since the initial Nixon Era opening to Beijing, American leaders have fully understood that China’s democratization could never be a foregone conclusion, and have always “combined engagement with strategies to counterbalance China through alliances, trade agreements, and military power.” In other words, far from being disastrously pathetic failures, America’s pre-Trump China policies were actually as successful as was humanly possible,  And current leaders should emulate some of their principal choices. 

Even the administrations of George W. Bush and Barack Obama, they continue, which faced a China whose wealth and power had begun growing stunningly, had foreseen the possibility of Beijing turning more aggressive, and responded to warning signs exactly as events prescribed. Further, their decisions to stay on an engagement track as well were entirely shrewd and responsible. After all, major potential benefits could still plausibly be expected – because during those years, “the question of how China would use its growing power was open to shaping.”

Indeed, say authors Michael Green (a former Bush-ie) and Paul Haenle (previously both a Bush-ie and Obama-naut), a harder line at that time would have amounted to a policy of “strangling China” that also would have been opposed by major allies and the American people, “both of whom mainly saw China as a partner [and] would not have supported containment and decoupling.“

All that went wrong was that that darned current Chinese dictator Xi Jinping assumed power and, well, just ruined everything with his belligerently expansionist aims and actions, and his reversal of much Chinese economic liberalization. The 2008-09 financial crisis didn’t help, either, according to Geen and Haenle, because it convinced Beijing that “the West was declining and the East is rising.”

All the same, say Green and Haenle, the Biden administration should

>recognize that the two immediate pre-Trump presidents had the security side of China policy fundamentally right with their strategy of maintaining and strengthening U.S. alliances with major Asian countries (an odd recommendation since that’s what Mr. Biden is already trying to do); and

>on the economic side, “reconstruct some of the economic statecraft that underpinned U.S. strategies toward China in the past” – principally reviving the World Trade Organization (WTO) as “an important tool to hold China to account” for its predatory practices and joining the current version of the Trans-Pacific Partnership (TPP), which can “bring the weight of almost two-thirds of the world economy to the table in demanding reciprocal agreements from China” and “force Beijing to play by the rules or lose hundreds of billions of dollars in trade as tariffs and market barriers among the rule-abiding economies went down.”

But these arguments only strengthen the case that Green, Haenle and their ilk should be kept as far away as possible from U.S. policymaking toward China.

Regarding security issues, their contention that Bush-Obama hedging was responsible and understandable ignores all the ways in which China had been undercutting U.S. national security interests long before the Age of Xi began in 2012. For example, it played a key role in creating Iran’s nuclear weapons program starting in the mid-1980s. It’s been a major supporter of North Korea’s economy – and therefore an enabler of Pyongyang’s nuclear weapons development for decades. And it’s beefed up its military presence in the South China Sea – including island grabs that violate international law – for nearly as long.

And Green and Haenle seem to need some improved calendar-reading skills, as financial crisis-borne hubris to which they attribute much of Beijing’s recent bellicosity dates from 2008-09 – three to four years before Xi became China’s top leader. Against this backdrop, it’s glaringly obvious that, judged by actual results, the various hedging statements and even counter-measures mentioned by Green and Haenle counted for exactly squadoosh.

In addition, there’s compelling evidence that the Chinese thought so, too. As I reported in 2018, a former U.S. Chief of Naval Operations (the Navy’s senior-most officer) has stated that his Chinese counterpart told him that “he thought the United States would have a more forceful reaction when China began” one of its key island-building phases during the former’s tenure – during the Obama years.

P.S. – this behavior doesn’t exactly jibe with the notion that Beijing was blown away by Bush-Obama alliance-rallying, either.    

If anything, the Bush and Obama China economic policies were worse, at least in terms of long-run security impact. Both presided virtually passively as

>China’s economic predation helped produce trade surpluses that put literally trillions of dollars at Beijing’s disposal to devote to its military buildup and prevent any guns versus butter tensions from emerging;

>China stole intellectual property seemingly at will, which supercharged weapons development, too; and

>U.S. multinational companies felt perfectly free to transfer cutting-edge defense-relevant technology to Chinese partners that were first and foremost agents of the Chinese state, and to teach perhaps hundreds of thousands of Chinese employees and students how to use this knowhow – and ultimately how to develop more on their own.

As for the authors’ economic recommendations, they’re simply laughable. The TPP, after all, contained a wide-open back door through which goods with lots of Chinese content could enter the proposed free trade – largely because none of the other TPP signatories wanted to disrupt production chains in which China plays a key role.

Meanwhile, that robust China-Asia/Pacific trade and investment, plus the difficulty that Mr. Biden has run into in mobilizing support outside Europe against Russia’s invasion of Ukraine is telling all but the willfully deaf that the United States will suddenly become able to increase the WTO’s effectiveness against China’s mercantilism. 

As Green and Haenle suggest, being able to learn from both mistakes and successes is one of life’s most valuable skills.  Sadly, all that their article demontrates is either that they can’t tell the difference, or that they stubbornly refuse to.

Following Up: Why the U.S.-South Korea Summit Was Incredibly Weird I

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Alan Beattie, alliances, allies, Biden, China, deterrence, extended deterrence, Financial Times, Following Up, Indo-Pacific, North Korea, nuclear weapons, realism, reciprocity, sanctions, semiconductors, South Korea, technology, Yoon Suk Yeol

Consistent with cutting-edge astro-physicis – and the last few decades of Marvel comics story-telling – I’m sure that among all the infinite number of universes in a “multi-verse” comprising creation, there’s one in which South Korea somehow genuinely has no reason to believe it has any obligation to comply with U.S. wishes in exchange for protection against complete destruction or enslavement by fanatically totalitarian North Korea.

I’m also sure that that universe isn’t the one we inhabit. Which is why it’s so whacko that Financial Times columnist Alan Beattie begs to differ, and that his editors evidently had absolutely no problem with this argument. And that’s only the lesser of two jaw-dropping new developments related to last week’s summit between President Biden and his South Korean counterpart Yoon Suk Yeol, which I analyzed in this post. Nonetheless, that’s the focus of today’s post. Tomorrow’s will deal with the second.

To be clear, I’m not contending that the South Koreans should be grateful to Washington for anything.

As a self-styled foreign policy realist, I’ve long held that countries can be counted on to act first and foremost in their own self-interest, and indeed should – in fact, unapologetically. I’ve taken many of my cues here from the Founding Fathers, who also considered the world to be far too dangerous to ground strategy in considerations of sentiment. So that puts me in pretty good company IMO. 

Moreover, South Korea is emphatically no exception, first because it lives in an exceptionally dangerous neighborhood; and second, because as I explained last week, its semiconductor manufacturing prowess gives it some clout vis-a-vis the United States.

Nor am I arguing that the U.S. commitment to defend the South has ever stemmed from anything other than a regard for its own security or independence or prosperity – even though I’ve disagreed until very recently (because of semiconductor manufacturing-related national security issues) with this characteristically globalist definition of national interest.

Instead, I’m arguing that, given the decision by Washington to protect the South even though its strategy of extended deterrence has recently exposed the United States to the risk of nuclear attack on the American homeland, it’s entirely reasonable for America to seek some South Korean help in meeting a different challenge. In this case, it’s helping Washington limit the technological progress that could enable China to attain military parity – and at some point even superiority – over the United States, and thereby undercut declared vital U.S. national interests throughout the Indo-Pacific region and even beyond.

But Alan Beattie? He writes that it’s “galling when Washington expects you to take economic hits for geopolitical gains when it’s not always willing to do the same itself.”

One fatal flaw in Beattie’s argument is the claim that the United States is asking South Korea to sacrifice some earnings (resulting from the major revenues it earns by supplying semiconductors and other high-value inputs to China’s huge electronics industry) without offering to pay any price for containing China itself.

What he ignores is how the Biden administration tough’s curbs on the investment and operations of America’s own semiconductor and chip-making equipment companies are costing them economically, too. Instead, he focuses on the electric vehicle manufacturing provisions of the Inflation Reduction Act, which require South Korean auto companies to produce key components in the United States in order to qualify for subsidies.

Yet these provisions apply not only to all foreign auto-makers, but to America’s as well.  And even if they were being applied in a blatantly discriminatory manner, however, it’s not as if South Korea wouldn’t still be getting a heckuva deal from its alliance with the United States. Beattie blandly describes the benefits to the South as “maintaining relations with the US….” Of course, as I stated above, it’s really about its national freedom and very survival.

Again, as a realist, I respect South Korea’s right to define its own interests however it wishes, and to act accordingly. But should I – or anyone – agree with Beattie that Washington’s desire for some South Korean reciprocity is “galling,” or excessively steep? It sounds like Beattie’s actual position is that any U.S. effort to leverage its commitment to defend South Korea is unreasonable – especially if it might interfere with the decades of hyper-globalization that the author tends to lionize uncritically, even though they’ve unmistakably fueled the dangerous rise of Chinese power. Can that be a serious basis for conducting diplomacy?

But from Beattie’s scathing tone, it’s also apparent that he’s condemning this kind of transactional approach to foreign policy for deeply personal reasons as well – likely the transparently childish view that the United States, or maybe just the Anglo-phone countries, should be above this sort of crassness, and that even if international relations aren’t comparable to a sporting event, where the real world stakes are modest, they should act as if they are – whatever the risks.

Thankfully, the Biden administration is steadily (though not fast enough for my tastes) thinking in more adult terms and recognizing – like the Trump administration before it – that one-way-street alliances no longer make sense from America’s standpoint (if they ever did). In this instance, moreover, South Korea could easily conclude that containing the tech prowess of a gigantic totalitarian and increasingly aggressive neighbor serves its own interests quite handily, too.

Tomorrow’s post will describe that aforementioned even more befuddling – and possibly more worrisome – consequence of the Biden-Yoon summit.

P.S. Full disclosure:  Beattie has blocked me on Twitter because he believed that my stances on immigration policy partly reflected anti-Muslim prejudices. So clearly he’s not my favorite journalist.  

Our So-Called Foreign Policy: U.S. Microchip Failures Have Now Worsened its Korea Nuclear Dilemmas

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allies, Biden, China, deterrence, extended deterrence, North Korea, nuclear weapons, Our So-Called Foreign Policy, semiconductors, South Korea, Taiwan, tripwire

As needs to become clear to U.S. leaders as South Korea’s president visits the United States, America’s loss of global leadership in the knowhow needed to make the world’s most advanced semiconductors now could expose the United States to nuclear attack from not one but two adversaries in East Asia.

The first threat of course comes from China, and stems from the possibility that it invades Taiwan. Because the island is the undisputed champ in manufacturing the most powerful chips, a Beijing victory could give it access to technology that’s crucial for making state-of-the-art weapons today, and for generations to come. And because that prospect, rightly in my view, is seen in Washington as an unacceptable threat to U.S. security, independence, and prosperity, the Biden administration has apparently decided to defend the island if the Chinese military moves.

The huge problem with this policy – which hasn’t been announced formally but has been mentioned in various seemingly off-the-cuff statements by Mr. Biden – is that success may require U.S. nuclear weapons use, and the Chinese have the forces to retaliate by attacking the American homeland with their own nukes. Maybe the possibility of a U.S. counter-strike on China would deter Beijing from pressing its nuclear buttons. But maybe it wouldn’t.

The threat that’s come into focus in recent days comes from North Korea and the target is South Korea – which unlike Taiwan is a full-fledged U.S. treaty ally that enjoys a longstanding and clearly stated American nuclear guarantee. Moreover, as is also not the case with Taiwan, the United States will find it exceedingly difficult to avoid nuclear weapons use if the North invaded the South. Worse, that’s so even if America ultimately concludes that South Korea’s security isn’t worth risking nuclear attack from a Pyongyang arsenal that’s smallish but could be able right now to reach American soil.

That’s because, as I’ve described repeatedly, American leaders have decided to bolster the credibility of the U.S. deterrent by stationing tens of thousands of American ground troops right in the way of any North Korean attack. The idea is to convince the North that to prevent its superior conventional forces from overwhelming the Americans, a U.S. President would launch his own nukes to destroy the invaders and likely the whole of North Korea.

This aim of intimidating the North with nuclear threats made sense when the United States had an enormous nuclear arsenal and Pyongyang was nuke-less. It even made sense when North Korea’s stockpile was even smaller than at present, and much less impressive. But due to the North’s recent progress and consequent current or imminent ability to vaporize an American city – or two or three – the U.S. nuclear guarantee, and the continuing presence of U.S. forces in the South whose vulnerability could force Washington into a damaging nuclear exchange, looks positively masochistic.

As a result, I’d argued for many years at least for withdrawing the tripwire and thereby increasing the odds that an American President would initiate a nuclear conflict with the North. Yes, South Korea could well be lost. But the United States itself would be saved from catastrophe. And of course South Korea could eventually respond by building up its own conventional military and going nuclear itself. Am I eager to see the roster of foreign nuclear weapons states expand? Of course not. But would this be better than the annihilation of Los Angeles or San Francisco or Seattle? That’s even a question?

It’s possible, however, that semiconductor-wise, South Korea might be as valuable as Taiwan. And if it’s still behind, it’s semiconductor manufacturing capabilities certainly aren’t far behind. (See this post for a sense of how complicated it is to determine who’s ahead.) Much more certain – the South is considerably ahead of American industry.

I’m not so much concerned that if the South felt abandoned, its microchip prowess would fall into the hands of the North Koreans. I’m much more concerned that a South Korea that’s decoupled from the United States security-wise would keep helping China develop its own semiconductor industry by building more and more advanced chip factories in the People’s Republic. It’s not just a distinct possibility, it’s a virtual certainty because China’s immense electronics industry is an immensely important customer for these South Korean chip manufacturers – just as it is for the U.S. semiconductor companies and chip equipment manufacturers that are equally guilty of strengthening China.

But the U.S. firms’ China operations and plans are now significantly restricted by the Biden administration’s tough sanctions. Even though it’s a U.S. treaty ally, South Korea has enacted no such curbs, and is still resisting American pressure to join Washington’s containment campaign. If the South feels cut loose by America, it’s not likely to sell China its crown jewel microchip tech. But as noted above, keeping on its current course could be damaging to major U.S. interests, too.

And that’s not even the end of the Biden administration’s current dilemmas. For there’s plenty of evidence that, despite the tripwire U.S. forces on their soil, South Korea’s leaders and its people no longer believe the Americans will ride to their rescue, or ride hard enough to risk nuclear war. So in principle, the United States could be stuck with the worst of all possible worlds – forced to maintain its current, nuclear war-risking approach to defending South Korea in hopes of preserving some semiconductor leverage with the South, but lacking the clout to gain meaningful South Korean support for limiting China’s tech progress. Reportedly, President Biden has decided to handle the situation with more energetic efforts to reassure the South.

Alternatively, South Korea could decide that it still doesn’t trust Washington, build its own nuclear weapons anyway, and feel even freer to go its way on China.

I can envision various scenarios in which all these needles are threaded to America’s advantage for the time being – and perhaps longer. But there are no guarantees. Meaning that the big takeaway is that when it comes to critical technologies, there’s no substitute for a Do It Yourself determination to maintain American leadership to avoid needing to rely on the kindness of strangers (and even allies) – or as is the case now, to restore it.

Our So-Called Foreign Policy: Thinking Straight About Ukraine and Taiwan

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Baltics, Biden, China, credibility, deterrence, extended deterrence, NATO, North Atlantic treaty Organization, nuclear weapons, Our So-Called Foreign Policy, Russia, semiconductors, strategic ambiguity, Taiwan, Ukraine, Ukraine War, vital interests, Vladimir Putin

A flurry of developments in the last few days has underscored my frequently made and related points that

(a) America’s Ukraine policy is the height of recklessness because it’s courting any risk of nuclear war on behalf of a country whose fate it stlll doesn’t consider a vital interest; and

(b) the common claim that the best way to protect (genuinely vital) Taiwan is to beat help Kyiv defea Russia is nonsensical – and dangerously so precisely because of that nuclear war risk.

The evidence that Washington doesn’t view Ukraine as vital? Its continued refusal to admit it into the North Atlantic Treaty Organization (NATO), the longstanding U.S. security alliance. As explained repeatedly on RealityChek, for decades, the NATO allies have been protected not only by an American pledge to come to their defense whenever needed, but by a U.S. nuclear umbrella. This arrangement aimed at deterring attack by convincing potential aggressors that a such an assault on attack on any of them would trigger – if necessary – a response with the most destuctive weapons ever created and therefore their total annihilation.

And since the resulting nuclear conflict would threaten America’s very existence as well, this policy of “extended deterrence” was bolstered by the stationing of relatively small U.S. conventional forces directly in harm’s way. Their purpose – lending credibility to the American nuclear threat by leaving a President no choice but to push “the button” to save them in the likely event of their being overrun by a superior foe.

Given the literally existential stakes involved, U.S. leaders would need to be literally crazy to adopt such policies to defend countries whose loss would not pose literally mortal threats to American survival, independence, or prosperity. That’s why not every country on earth enjoys NATO-like protections.

But Ukraine lately has been a weird – and indeed absolutely perverse – exception. U.S. policy is clearly running some nuclear war risk – not by deploying any combat forces in the country (some auditors of weapons shipments are officially on the ground) but by deploying major forces in the immediate vicinity of a conflict that could well spill over borders and engage them.

At the same time, the United States still opposes admitting Ukraine as a NATO member and therefore extending to Kyiv that nuclear guarantee. Indeed, according to a Financial Times piece last Thursday, the Biden administration even opposes setting up a timetable for Ukrainian membership.

Reportedly, the main reason is fear of further provoking Russia, and increasing the odds of potentially catastrophic nuclear weapons use. But of course, if Ukraine is vital enough to be risking nuclear war already – due to the next-door military deployments – then what’s the problem? Would a NATO admissions announcement really worsen that risk materially?

If so, U.S. officials strangely haven’t made that argument. And if so, why is that even a consideration? When a truly vital interest is endangered, those are exactly the risks that by definition are worth running. In fact, when a truly vital interest is endangered, why not pour in U.S. forces to try turning the tide decisively?

Instead, the real reason is surely that U.S. leaders understand that Ukraine isn’t vital at all, but have decided to run not-trivial nuclear war risk anyway in hopes of threading a needle. I’m still waiting for a convincing explanation of why that strategy isn’t terrifyingly irresponsible.

One common answer: Preventing Russian success in Ukraine will best protect the nearby NATO countries – and at zero nuclear war risk because there would be no need for them to invoke the explicit nuclear guarantee they do enjoy.

That’s not a crazy argument. But this reasoning still leaves the United States in the bizarre (and needlessly dangerous) position of running non-trivial nuclear war risk to protect a non-vital country in order to avoid any nuclear war risk to protect countries that are deemed vital.

This argument is weird not least because – logically anyway – it credits the U.S. nuclear umbrella with little or no effectiveness. Why else would proponents believe that, having subdued a country with no explicit U.S. nuclear guarantee, Russia would inevitably attack a country with one? Along with tripwire forces?

This argument also ignores Russia’s failure to attack these very NATO countries. And it’s so far let them alone even though, especially in the case of the Baltic countries, they’re immediate Russian neighbors and in 1940 were officially absorbed into the old Soviet Union. They also contain big ethnic Russian  populations. That may not strike Russian dictator Vladimir Putin as an historical justification for re-gaining them as strong as that which he cites for Ukraine. But it’s still no doubt significant in his mind. It’s hard to avoid crediting the NATO nuclear guarantee for this success.

Which brings us to Taiwan. Unlike Ukraine, it’s genuinely vital to the United States. Unless you want to chance living in a world where China controls the global supply of semiconductors, and the technology needed to manufacture the most advanced versions of these chips. These rapidly improving devices are the building blocks of all the computing and communications systems central to the weapons that will soon dominate war-fighting, and of future innovation in the military and civilian worlds alike (including in artificial intelligence). Not so incidentally, increasingly advanced semiconductors will determine whether your privacy remains private.

Ukraine hawks of course insist that frustrating Russia there will help deter China from attacking Taiwan as well. And it’s true that Taiwan doesn’t enjoy a nuclear guarantee from the United States. It’s not even a formal treaty ally. But bilateral defense relations have recently moved much closer, and President Biden has several times promised that the United States will in fact move to defend the island against Beijing (see, e.g., here), removing much of the “strategic ambiguity” that has marked American policy for decades.

And these kinds of measures – which include a weekend statement from a Congressional Republican leader endorsing such actions, too – will deter China much more effectively than anything that happens in Ukraine for a very simple reason: Combined with such specific steps, and likely follow-ons, Taiwan very importance makes them credible.

With Ukraine, the opposite proposition obviously holds: Because it was never vital, U.S. efforts to prevent an invasion failed. For high stakes commitments to achieve low stakes goals are inherently non-credible.

Importantly, making grandiose promises to achieve transparently less-than-grandiose goals is no way to build or maintain credibility worldwide, either.  Instead, it’s much likelier to create or reenforce impressions of stupidity or pigheadedness – not good looks when last I checked.

The argument that going too far down the above Taiwan road needlessly creates too much risk can’t be dismissed out of hand. But even if it increases the odds of World War 3, because Taiwan is vital – and unless the word is meaningless –  going further down the road (including with symbolic gestures like the meeting in California between House Speaker Kevin McCarthy and Taiwan’s president) can’t be ruled out, either.

Like so many foreign policy and national security questions, though, “how far” – and trying to thread that needle – is a matter for legitimate debate. But because Ukraine isn’t vital, assuming any nuclear risk on its behalf has been a foolhardy, potentially suicidal blunder. And indisputably so – at least for anyone without a death wish.

Our So-Called Foreign Policy: The U.S. Keeps Enabling European Free-Riding on Ukraine & Defense Generally

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allies, Biden, burden sharing, defense spending, EU, Europe, European Union, free-riding, Kiel Institute for the World Economy, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, Ukraine, Ukraine War

Twenty-three years ago, I published an article (which you can download here) on defense burden-sharing in the America’s premier national security alliance, the North Atlantic Treaty Organization (NATO), titled “Promises, Promises.” I borrowed the title from a 1968 Broadway musical that was ultimately about cynically made pledges because I thought it was perfect for a study that documented how NATO’s European members kept welshing on their vows to raise their defense spending to serious levels – and how the real blame ultimately rested with an overly indulgent United States.

Twenty-three years later, the first major war in Europe since 1945 keeps dragging on, and fresh evidence makes clear (a) that the Europeans (both inside and outside NATO) remain defense deadbeats; and (b) that a prime reason remains their so-far-well-founded confidence that they can rely on the United States to pick up any slack.

Not that no burden-sharing progress has been made at all. As NATO itself just reported, seven members (including the United States) have now met the guideline of spending at least two percent of their national economic output on the military. That’s up from three in 2014.

Just three problems here. First, NATO has thirty members, meaning that the vast majority are still skimping on defense. Second, the two percent guideline was agreed to in 2014. Even had no Ukraine War broken out, that would be a pretty modest move in nine years. With a conflict raging in Europe itself, it’s minimal at best. And in fact, only one NATO country crossed that two percent threshhold since the Russian invasion – Lithuania, which is located awfully close to the war zone.

Third, the NATO guideline is just that – an aspiration, not a hard-and-fast promise, let alone something contained in a legally binding treaty. And reportedly, there’s scant enthusiasm among alliance members for raising it.

Of course, in this Ukraine War era, defense spending isn’t the only contribution that can be made to Europe’s security, and NATO isn’t the only grouping capable of helping out. But the widely followed “Ukraine Support Tracker” compiled by Germany’s Kiel Institute for the World Economy shows that after some brief, belated signs that countries in the European Union (EU – whose members contain both most NATO countries and others on the continent) were collectively stepping up with both military and mainly economic aid for Ukraine, these countries have begun slacking off again in relative terms.

As the Kiel analysts put in their February 21 update:

“Over 2022, the US led the way with major support decisions for Ukraine, with EU countries following with some delay and overtaking the US in the meantime with their total commitments. With additional data now collected (November 21 to January 15), the US again takes the lead.”

The specific numbers? “With additional pledges of nearly 37 billion euros in December, the Americans have earmarked a total of just over 73.1 billion euros for Ukraine support. For the EU, the comparable figure is 54.9 billion euros.”

My “Promises, Promises” article documented in detail that the European NATO members kept free-riding on the United States because Washington repeatedly all but told them that America’s commitment to Europe’s defense would remain unchanged whatever the allies did spending-wise.   

These days, President Biden has also essentially invited the Europeans to free ride by repeatedly declaring that the United States would stand with Ukraine against Russia’s aggression – as he expressed it most recently last month in Poland – “no matter what.”  

Foreign policy realists (a group that should include you as well as me) aren’t mainly bothered by the flagrant unfairness of this situation. As long as it’s tolerated by the United States, free-riding is arguably in the interests of the NATO allies – and ultimately that’s what realists believe foreign policymaking should be all about (though allied leaders might usefully ponder the possible limits of even American patience).     

Instead, the main concern is pragmatic. In the end, allies are worth having only if they can be counted on to join a fight if one breaks out. At the very least, how can any military engage in any useful planning without knowing what forces will be available? Allies like the NATO free-riders, which plainly aren’t ready to make significant sacrifices on behalf of common security during peacetime, seem anything but dependable in the event of hostilities. That’s something Mr. Biden urgently needs to think through before his Ukraine policy creates the acid test.        

(What’s Left of) Our Economy: A Deceptively Calm January for U.S. Trade?

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Advanced Technology Products, ATP, Biden, Buy American, Canada, CCP Virus, China, Donald Trump, European Union, exports, Federal Reserve, goods trade, imports, India, Inflation Reduction Act, infrastructure, Japan, Made in Washington trade flows, manufacturing, monetary policy, non-oil goods trade, semiconductors, services trade, stimulus, Taiwan, tariffs, Trade, trade deficit, Ukraine War, Zero Covid, {What's Left of) Our Economy

Pretty calm on the surface, pretty turbulent underneath. That’s a good way to look at yesterday’s official release of the U.S. trade figures for January. Many of the broadest trade balance figures moved little from their December levels, but the details revealed many multi-month and even multi-year highs, lows, and changes – along with one all-time high (the goods deficit with India).

The combined goods and services deficit most strongly conveyed the impression of relatively calm trade waters. It rose sequentially for the second straight month, but only by 1.61 percent, from a downwardly revised $67.21 billion to $68.29 billion.

The trade shortfall in goods narrowed, but by even less – 0.69 percent, from an upwardly revised $90.71 billion to $90.09 billion.

More volatility was displayed by the services trade surplus. It sank for the first time in two months, from upwardly revised $23.50 billion (its highest monthly total since December, 2019’s $24.56 billion – just before the CCP Virs’ arrival stateside) to $21.80 billion. Moreover, this shrinkage (7.26 percent) was the greatest since last May’s 11.05 percent.

Meanwhile, total U.S. exports in January expanded sequentially for the first time since August. And the the 3.41 percent rise, from a downwardly revised $249.00 billion to $257.50 billion was the biggest since April’s 3.62 percent.

Goods exports in January also registered their first monthly increase since August, with the 6.02 percent improvement (from a downwardly revised $167.69 billion to $177.79 billion) the biggest since October, 2021’s 9.09 percent.

Services exports dipped on month in January, from a downwardly revised $81.32 billion to $79.71 billion. And the 1.98 percent decrease was the biggest since last January’s 3.05 percent. But the December total was the highest on record, and the seventh straight all-time high over the preceding nine months, so January could be a mere bump in the services export recovery road.

On the import side, total U.S. purchases from abroad advanced for the second straight month in January, with the 3.03 percent increase (from a downwardly revised $316.21 billion to $325.79 billion standing as the biggest since last March’s 9.64 percent.

Goods imports were up, too – from a downwardly revised $258.40 billion to $267.88 billion. The climb was the second straight, too, and its 3.67 percent growth rate also the biggest since March (11.00 percent).

Services imports in January were up for the first time since September, but by a mere 0.17 percent, from a downwardly revised $57.81 billlion to $57.91 billion.

Also changing minimally in January – the non-oil goods deficit (which RealityChek regulars know can be considered the Made in Washington trade deficit, since non-oil goods are the trade flows most heavily influenced by U.S. trade agreements and other trade policy decision. The 0.32 percent month-to-month decline brought this trade shortfall from $91.97 billion to $91.68 billion.

Since Made in Washington trade is the closest global proxy to U.S.-China goods trade, comparing trends in the two can indicate the effectiveness of the Trump-Biden China tariffs, which cover hundreds of billions of dollars worth of Chinese products aimed at the U.S. maket.

In January, the huge, longstanding U.S. goods trade gap with China widened by 7.01 percent, from $23.51 billion to $25.16 billion. That third straight increase contrasts sharply with the small dip in the non-oil goods deficit – apparently strengthening the China tariffs critics’ case.

Yet on a January-January basis, the China deficit is down much more (30.82 percent) than its non-oil goods counterpart (14.07 percent). The discrepancy, moreover, looks too great to explain simply by citing China’s insanely over-the-top and economy-crushing Zero Covid policies. So the tariffs look to be significantly curbing U.S. China goods trade, too.

U.S. goods exports to China fell for the third straight month in January – by 5.05 percent, from $13.79 billion to $13.09 billion.

America’s goods imports from China increased in January for the second straight month – by 2.55 percent, from $37.30 billion to $38.25 billion.

Revealingly, however, on that longer-term January-to-January basis, these purchases are off by 20.50 percent (from $47.85 billion). The non-oil goods import figure has actually inched up by just 0.71 percent – which also strengthens the China tariffs case.

The even larger, and also longstanding, manufacturing trade deficit resumed worsened in January, rising for the first time in three months. The 2.83 percent sequential increase brought the figure from $113.61 billion – the lowest figure, though, since last February’s $106.49 billion.

Manufacturing exports declined by 3.01 percent, from $105.71 billion to $102.52 billion – the weakest such performance since last February’s $94.55 billion.

The much greater value of manufacturing imports rose fractionally, from $219.31 billlion to $219.36 billion – also near the lows of the past year.

In advanced technology products (ATP), the trade gap narrowed by 11.36 percent in January, from $18.45 billion to $16.35 billion. The contraction was the third in a row, and pushed this deficit down to its lowest level since last February’s $13.42 billion.

ATP exports were down 8.78 percent, from $35.16 billion to $32.07 billion – their lowest level since last May’s $31.25 billion. And ATP imports sank by 9.68 percent, from $53.60 billion to a $48.42 billion total that was the smallest since last February’s $42.44 billion.

Big January moves took place in U.S. goods trade with major foreign economies, though much of this commerce often varies wildly from month to month.

The goods deficit with Canada, America’s biggest trade partner, jumped by 39.02 percent on month in January, from $5.09 billion to $7.07 billion. The increase was the second straight, the new total the highest since last July’s $8.47 billion, and the growth rate the fastest since last March’s 47.61 percent.

But the goods shortfall with the European Union decreased by 10.83 percent, from $18.36 billion to $16.37 billion. The drop was the third straight, the new total the lowet since last September’s $14.44 billion, and the shrinkage the fastest since last July’s 19.97 percent.

For volatility, it’s tough to beat U.S. goods trade with Switzerland. In January, the deficit plummeted 42.07 percent, from $2.28 billion to $1.32 billion. But that nosedive followed a 77.84 percent surge in December and one of nearly 1,200 percent in November (from a $99.9 million level that was the lowest since May, 2014’s $45.3 million).

Also dramatically up and down have been the goods trade shortfalls with Japan and Taiwan. For the former, the deficit plunged by 30.33 percent in January – from $7.09 billion to $4.94 billion. But that drop followed a 20.58 percent increase in December to the highest level since April, 2019’s $7.35 billion.

The Taiwan goods deficit soared by 52.44 percent in January, from $2.80 billion to $3.68 billion. But this rise followed a 33.65 percent December drop that was the biggest since the 43.18 percent of February, 2020 – when the CCP Virus was shutting down the economy of China, a key link of the supply chains of many of the island’s export-oriented manufacturers.

Finally, the goods deficit with India skyrocketed by 106.55 percent in January, from $2.41 billion to that record $4.99 billion. That total surpassed the $4.44 billion shortfall the United States ran up with India last May, but the more-than-doubling was far from a record growth rate. That was achieved with a 146.76 percent burst in July, 2019.

Since the widely forecast upcoming U.S. recession seems likely to arrive later this year (assuming it arrives at all) than originally forecast, the trade deficit seems likely to continue increasing, too. But that outcome isn’t inevitable, as shown by the deficit’s shrinkage in the second half of last year, when America’s economic growth rebounded from a shallow recession.

The number of major wildcards out there remains sobering, too, ranging from the path of U.S. inflation and consequent Federal Reserve efforts to fight it by cooling off the economy, to levels of net government spending increases (including at state and local levels), to the strength or weakness of the U.S. dollar, to the pace of China’s economic reopening, to the course of the Ukraine War. 

On balance, though, I’ll stick with my deficit-increasing forecast, since (1) I’m still convinced that the approach of the next presidential election cycle will prevent any major Washington actors from taking any steps remotely likely to curb Americans’ borrowing and spending power significantly for very long; and (2) I’m skeptical that even the strong-sounding Buy American measures  instituted by the Biden administration (mainly in recently approved infrastructure programs and semiconductor industry revival plans, and in the green energy subsidies in the Inflation Reduction Act) will enable much more substitution of domestic manufactures for imports – least in the foreseeable future.          

Our So-Called Foreign Policy: Is America Really Back with Anyone?

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allies, America First, Biden, Biden administration, developing countries, Donald Trump, Gallup, globalism, liberal global order, Our So-Called Foreign Policy, polls, public opinion, Ukraine, Ukraine War

As RealityChek regulars might have noticed, I haven’t been writing about too many polls lately. The reason? As I explained at the end of last year (here and here) , most were badly off-base on crucial issues that shaped the results of the U.S. midterm elections – especially abortion.

But some new Gallup findings (on a non-political issue) merit an exception. Not that this survey, like way too much polling on foreign policy, hasn’t suffered major problems of its own. All the same, since the claim that “America is back” has been foundational to President Biden’s approach to world affairs, it’s striking that Gallup on Friday reported results suggesting that fewer Americans believe this than they did during the Trump administration.

I write “suggest” because the wording of the relevant question is pretty vague. “In general,” respondents were asked, “how do you think the United States rates in the eyes of the world — very favorably, somewhat favorably, somewhat unfavorably or very unfavorably?”

Of course, this could mean anything from “as a reliable ally” to “as a great place to live,” to “the world’s strongest (or wealthiest) country.” If true, though, whatever the criteria, these Gallup data indicate deep public’s skepticism that Mr. Biden has achieved one of his central foreign policy goals: reversing a dangerous erosion of America’s international popularity stemming from the “America First-style policies pursued by his predecessor.

As the President sees it, this boneheadedly selfish posture threatened to destroy the network of international institutions and above alliances that – consistent with the globalist approach to world affairs he has always supported – considers crucial ingredients for foreign policy success.

But Mr. Biden hasn’t convinced many Americans of these related propositions, reports Gallup. During time in the White House so far, between 48 and 49 percent of American adults said that their country is viewed either “very favorably” or “somewhat favorably” “in the eyes of the world,” with the “verys” coming in at just seven percent in early 2021, 2022, and 2023 alike.

The total unfavorablys ranged from 50 to 51 percent in these years, with the “very unfavorablys” standing at 14 percent, 16 percent, and 17 percent in 2021, 2022, and 2023, respectively.

Although not terrific, these numbers are hardly a disaster, either. But the funny thing is that they’re a good deal worse than the results recorded during the presidency of America First-y, selfish, xenophobic etc Trump.

In Trump’s first year as President (2017), the share of respondents stating that the United States was viewed either “very” or “somewhat favorably” by the rest of the world totaled only 42 percent – a big drop from the 54 percent reported in the final year of Barack Obama’s administration (2016). But in the next three Trump years, the overall favorably percentages rose to 55, 58, and 60 percent.

Moreover, the “very favorably” responses in 2018, 2019, and 2020 stood at seven, 12 and 13 percent, respectively. – also higher than those of the Biden years.

Also awfully interesting: During Trump’s four years in office, the share of American respondents telling Gallup that they believed foreign leaders “had respect” for him increased from 29 percent to 37 percent. The third reading for Biden’s administration showed that 37 percent of respondents also believed that foreign leaders respected him. But that 2023 result is down from 58 percent in early 2021, at the outset of his presidency.

In addition, these Gallup statistics need to be seen in some noteworthy context. For on top of that evidence that Americans aren’t impressed with the payoff of Mr. Biden’s globalist campaign to repair a national reputation supposedly shredded by Trump, there’s considerable evidence that the rest of the world isn’t, either.

The most revealing sign is the international reaction to the President’s efforts to rally global support against Russia’s invasion of Ukraine. Long-time security allies, even in neighboring Europe, continue free-riding, with this widely followed scorecard revealing that overall U.S. aid to Ukraine still exceeds that provided by all European Union countries combined. Developing countries, meanwhile, keep displaying indifference – at best – despite Mr. Biden’s repeated insistence that global security, prosperity, democracy, and the liberal global order are all stake.

In other words, as opposed to taking seriously the evident Biden assumption that popularity matters decisively in international affairs, practically every other country is acting as if its own particular national interests are paramount. That can only reasonably be read as a major hint that this administration should stop harping so much on America being back (especially for others’ benefit) and revive more of an America First mindset.

Glad I Didn’t Say That! Germany Dodges Biden Bullet (Or Did It?)

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allies, Biden, economic aid, geopolitics, Germany, Glad I Didn't Say That!, miitary aid, Olaf Scholz, Ukraine, Ukraine War

“German Chancellor Set for Heat From Biden Over Ukraine Ammunition Supplies: What to Watch”

—Bloomberg.com, March 3, 2023, 12:01 AM EST

 

“Biden Lauds Germany’s Military Aid to Ukraine in Scholz Meeting”

– Bloomberg.com, March 3, 2023, 3:17 PM EST

 

(Sources: “German Chancellor Set for Heat From Biden Over Ukraine Ammunition Supplies: What to Watch,” by Arne Delfs and Michael Niemaber, Bloomberg.com, March 3, 2023, Biden Ukraine Talks With Scholz on Ammunition, China: What to Watch – Bloomberg and “Biden Lauds Germany’s Military Aid to Ukraine in Scholz Meeting,”by Justin Sink and Akayla Gardner, Bloomberg.com, March 2, 2023, Biden Lauds Germany’s Military Aid to Ukraine in Scholz Meeting – Bloomberg)

Our So-Called Foreign Policy: Biden Shows How Not to Make the Case for His Ukraine Policy

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Biden, Common Sense, deterrence, geography, national interests, NATO, North Atlantic treaty Organization, nuclear weapons, Our So-Called Foreign Policy, Russia, Soviet Union, Thomas Paine, Ukraine, Ukraine War, vital interests, Vladimir Putin

Not that any more evidence was needed, but President Biden’s speech last week in Warsaw, Poland illustrated perfectly why his Ukraine war policy has been so reckless. Unless you think the United States should court nuclear war risk for a song.

Speaking just ahead of the first anniversary of Russia’s, to an audience that he knew would include his own countrymen as well as the large local crowd that assembled to hear him, the President could have said something on the order of:

“If Putin takes any part of Ukraine, he’ll go after our NATO allies and the rest of Europe next, placing his military just an ocean away from U.S. shores”; or

“If Putin takes any part or all of Ukraine, his dominance of the Black Sea region will be a giant step toward inevitable global conquest”; or

“If Putin takes any part or all of Ukraine, he’ll control minerals and other natural resources vital to the U.S. economy, and hold America hostage.

Or the President could have mentioned all these points to make the case that Ukraine’s independence per se is a vital U.S. interest for all sorts of specific reasons. He wouldn’t even have had to explain why, if that’s the case, it wasn’t admitted to the NATO alliance years ago, which would arguably have deterred the Russian attack in the first place by extending it the protection of America’s full nuclear arsenal – as befits a genuinely vital interest.

After all, who was going to call out this whopping inconsistency in his policy? A Regime Media deeply convinced of the globalist claim that the security of literally every country on earth is a vital U.S. interest, whether it’s an official American ally or not?

But Mr. Biden’s speech included none of these arguments. In fact, he’s never made these arguments. Instead, in Warsaw, he continued bloviating about Russia’s foes facing “fundamental questions about the commitment to the most basic of principles.  Would we stand up for the sovereignty of nations?  Would we stand up for the right of people to live free from naked aggression?  Would we stand up for democracy?”

And about the “eternal” stakes being “A choice between chaos and stability.  Between building and destroying.  Between hope and fear.  Between democracy that lifts up the human spirit and the brutal hand of the dictator who crushes it.  Between nothing less than limitation and possibilities, the kind of possibilities that come when people who live not in captivity but in freedom.  Freedom.”

There’s a good reason of course that Mr. Biden has never made specific, interest-based arguments for deep involvement in the Ukraine war – because when it comes to the United States, they’re just so much hokum. In fact, they’re even hokum-y for much of Europe even though it’s in Russia’s neighborhood. Because surely those in its Western half know that for decades during the Cold War, they were nearly as unaffected as Americans by the Soviet Union’s domination not just of Ukraine, but of all of Eastern Europe. And if they don’t, they should.

In the 1777 pamphlet The Crisis that so systematically and eloquently advocated for American independence, Thomas Paine faulted Britain for a “natural temper to fight for a feather” – that is, for vainglory rather than necessity or even significant tangible advantage. Consequently, that country “for centuries past, [had] been nearly fifty years out of every hundred at war with some power or other” and consequently had become a full partner in “the dismal commerce of death” and “the war and desolation [that] have become the trade of the old world.”

The thirteen colonies, by contrast, enjoyed advantages, resulting from geographic distance and consequent remoteness from European power politics and diplomacy, that afforded them “a retreat from their cabals.”

Clearly, this isn’t 1777, but the Atlantic is still a formidable geopolitical barrier; Ukraine is very far away; the United States today, unlike the Thirteen Colonies, is no military pygmy; and the power whose designs Mr. Biden would have the nation resist “as long as it takes” can create an ample nuclear “commerce of death.”

Opponents of the President’s Ukraine policy aren’t arguing that the oceans (or other circumstances) mean that the United States has no vital interests abroad. Instead, they’re insisting that, especially in a nuclear age, these interests be defined with precision and with a tight focus on considerations where the cost/benefit ratio is overwhelming weighted to the latter, not on gauzy appeals grounded in simple emotion. Mr. Biden’s failure to justify his approach to Ukraine in anything close to these terms is compelling evidence that this interest-base case simply doesn’t exist, and that the farther he proceeds down this road, the greater the needless peril to which he’s exposing America.