Our So-Called Foreign Policy: The Ukraine War Has Entered a New Phase. Will U.S. Policy?

Tags

Antony J. Blinken, Biden, diplomacy, Lloyd Austin, Our So-Called Foreign Policy, Russia, Ukraine, Ukraine-Russia war, Volodymyr Zelenskyy

Remember the wonderful opening lines of the first installment of Peter Jackson’s masterful film adaptation of The Lord of the Rings trilogy? In case you’re not a fan of J.R.R. Tolkein’s Middle Earth writings, they went like this: “The world is changed:  I feel it in the water, I feel it in the earth, I smell it in the air.”

They came to mind to me today upon reading some of the big national media headlines on the course of the Ukaine war.

Like this from The New York Times: “As Russia Forges Ahead, Europe Recaluclates.”

And this from The Wall Street Journal: “Ukraine Fears Defeat in East Without Surge in Military Aid.”

And this plea from a Washington Post opinion column: “We can’t let Ukraine lose. It needs a lot more aid, starting with artillery.”

In fact, this theme began appearing even before this morning.

Like the Los Angeles Times’ claim that “Momentum shifts in Ukraine war as Russia advances in the Donbas.”

And then there’s the news that’s been dribbling out from Kyiv on Ukrainian casualties – numbers that had been very closely held. But on May 31, President Volodymyr Zelenskyy stated that his country’s military was losing up to 100 killed and 5oo wounded each day. Just over a week later, Zelenskyy aide Mykhalo Podolyak pegged the daily battlefield deaths at between 100 and 200 – which presumably means a higher wounded count, too.

Don’t get me wrong: None of this means that Ukraine is doomed to defeat at the Russian invaders’ hands. But it sure looks like we’re a long way away from the heady days of just one and two months ago, when

>U.S. Defense Secretary Lloyd Austin was declaring that the Biden administration and most of the rest of the world believed that Ukraine “can win” the struggle;

>when Secretary of State Antony J. Blinken endorsed the goal of ensuring that the Ukraine invasion turned into a “strategic defeat” for Russia; and

>when Defense Department spokesman John Kirby stated that “We want Ukraine to win this fight [with Russia] and we are doing everything we can here, at the Department of Defense, to make sure they have the capabilities to do that.”

And the apparent shift in the war’s momentum, especially in Ukraine’s east, adds urgency to questions that understandably receded in importance when a victory by Kyiv seemed much more plausible.

Principally, President Biden recently stated that his goal was moving “to send Ukraine a significant amount of weaponry and ammunition so it can fight on the battlefield and be in the strongest possible position at the negotiating table.” Yet how will he reconcile the likelihood that the continued heavy combat bound to result from these efforts on the one hand, with the determination he expressed on the other hand — in the same article — to keep the war within Ukraine’s borders and thereby avoid a direct U.S.-Russia military confrontation that could all too easily escalate to the nuclear level?

How will he decide when Ukraine is armed well enough to negotiate successfully? And how does the President’s reference to arming Ukraine to maximize its chances in peace talks dovetail with his position that his “principle throughout this crisis has been ‘Nothing about Ukraine without Ukraine.’ I will not pressure the Ukrainian government — in private or public — to make any territorial concessions. It would be wrong and contrary to well-settled principles to do so”?

From a purely tactical standpoint, if Ukraine continues refusing even to consider compromises on territory or on sovereignty, (which could include the issues of membership in the North Atlantic Treaty Organization or the European Union) then how important — let alone successful — could any negotiations be?

From a broader standpoint, does Mr. Biden really believe that Ukraine should call all the shots related to this crisis once the conflict enters the diplomatic phase? And why would he keep deferring to Ukraine even though he’s implicitly acknowledged that the United States has its own crucial interests – chiefly avoiding a wider war and direct superpower conflict – that aren’t necessarily identical with Ukraine’s goals? 

At the same time, it’s possible that the President doesn’t believe that the war is in a new phase at all.  And he may be right. If that’s the case, though, he’d be well advised to level with the American public, because the kind of lengthy stalemate and lack of an exit strategy this conclusion implies means that there’s no exit strategy for the surging oil and gasoline prices, consequently worsening overall inflation, and higher federal spending brought on by the conflict, either.      

(What’s Left of) Our Economy: Is the New (April) U.S. Trade Report a False Dawn?

Tags

Advanced Technology Products, Biden, Census Bureau, China, Donald Trump, exports, goods trade, imports, Made in Washington trade deficit, manufacturing, non-oil goods trade deficit, services trade, South Korea, stimulus, supply chains, Switzerland, tariffs, Trade, trade deficit, Zero Covid, {What's Left of) Our Economy

Although today’s new official figures showed a major dropoff in the U.S. trade deficit between March and April, and the results came from a normally encouraging combination of more exports and fewer imports, the Census data also show that big caveats and questions are hanging over these results and how enduring they might be.

First and foremost, the improvement in the combined goods and services deficits, and all virtually all the trade balances comprising it, could be resulting from a dramatic slowdown in U.S. economic growth. Second, the latest decline in the chronic and huge U.S. goods trade gap with China surely stems from Beijing’s recent over-the-top (but surely temporary) Zero Covid policies, which have further snagged already tangled up supply chains. And third, large revisions in some of the numbers (especially for services trade) inevitably cast some doubt as to their reliability lately.

In fact, these features of the report – along with the still-near historic levels of many of these trade deficits and other usually typical gap-widening developments like a strong U.S. dollar and still-astronomical levels of economic stimulus from Washington – are telling me that my prediction last month of higher deficits to come will age pretty well.

Not that the narrowing of the trade gap in April was bupkis. The combined goods and services deficit fell 19.11 percent from March’s all-time high of $107.65 billion (which itself was revised down a hefty 1.96 percent) to $87.08 billion. This level was the lowest since December’s $78.87 billion and the nosedive the biggest since December, 2012’s 19.85 percent.

And as just mentioned, the improvement came from the right combination of reasons. Total exports hit their third straight monthly record, rising 3.49 percent from an upwardly revised (by 0.99 percent) $244.11 billion to $252.62 billion

Overall imports, meanwhile, tumbled 3.43 percent from their record $351.79 billion to $339.70 billion. The total was the second biggest ever, but the decrease was the greatest since the 13.16 shrinkage during pandemic-y and recession-y April, 2020.

The trade shortfall in goods was down 15.04 percent from a downwardly revised (by 1.04 percent) $126.81 billion in March to $107.74 percent in April. This level, too, was the lowest since December’s $100.52 billion, and the 15.04 percent sequential tumble the biggest since April, 2015’s 15.09 percent.

Goods exports rose sequentially by 3.57 percent in April, from 170.04 billion to a third consecutive record of $176.11 billion. And U.S. purchases of foreign goods sank by 4.38 percent on month in April, from a downwardly revised (by 0.65 percent) record $296.85 billion to $283.84 billion (as with total imports, the second highest result of all time). The decrease was the biggest since the 12.79 percent drop in that pandemic-y April, 2020.

But even the above sizable revisions paled before those made for services trade. The March surplus was upgraded fully 4.48 percent, from $18.34 billion to $19.16 billion, and the April figure grew by another 7.83 percent to $20.66 billion – the highest level since December’s $21.66 billion.

Services exports (apparently) deserve much of the credit. They reached an all-time high of $76.52 billion. This total bested May, 2019’s previous record of $75.41 billion by only 1.46 percent, but the milestone is significant given the outsized hit suffered by the service sector worldwide during the pandemic period.

April services exports, moreover, rose 3.30 percent from March’s $74.07 billion – a total that itself was revised up by 4.23 percent.

Services imports set their third consecutive monthly record in April, rising 1.73 percent, to $55.86 billion, from March’s upwardly revised (by 4.19 percent) $54.19 billion.

A big April fall-off also came in the non-oil goods trade deficit – known to RealityChek regulars as the Made in Washington trade deficit, because by stripping out figures for oil (which trade diplomacy usually ignores) and services (where liberalization efforts have barely begun), it stems from those U.S. trade flows that have been heavily influenced by trade policy decisions.

This shortfall decreased by 14.72 percent in April, to $108.68 billion, from March’s downwardly revised record $127.42 billion. The drop was the biggest since March, 2013’s 16.74 percent.

The enormous and persistent manufacturing trade deficit retreated in April from record levels, too. But even though the month’s $124.41 billion shortfall was 12.71 percent lower than March’s all-time high $142.22 billion, and even though the monthly decline of 12.71 percent was the biggest since pandemic-y February, 2020’s 23.09 percent, this deficit was still the second biggest ever.

April’s manufactures exports of $109.36 billion were 4.03 percent lower than March’s record $113.96 billion, but were still the second best total on record. Ditto for the month’s manufactures imports, which tumbled 8.85 percent from their March record of $256.18 billion to $233.50 billion.

Another April fall-off from a record monthly deficit came in advanced technology products (ATP). After ballooning by 73.65 percent sequentially in March, to $23.31 billion, the recently volatile gap narrowed in April by 21.50 percent, to $18.30 billion.

Both the better manufactuing and ATP trade figures surely stemmed at least in part from the Zero Covid policies that interfered with so much industrial production from China. The U.S. goods deficit with the People’s Repubic, however, narrowed by just 10.02 percent on month in April, from $34 billion to $30.57 billion. Even so, the level was the lowest since last July’s $28.56 billion.

U.S. goods exports to China were down on month in April by 16.25 percent (their biggest drop since February, 2021’s 278.85 percent), from $13.38 billion to $11.20b. This total is the lowest since last September’s $11.03 billion.

The much greater amount of U.S. goods imports from China plummeted 11.82 percent n month in April, from $47.37 billion to $41.77 billion – the lowest level since last July’s $40.32 billion.

Also notable – breaking a pattern going back several years — the 10.02 percent April monthly drop in the U.S. goods deficit with China was smaller than the month’s sequential decline in the non-oil goods deficit (14.72 percent). And on a yar-to-date basis, the China deficit is up only slightly less (27.59 percent) than the non-oil deficit (28.95 percent). So the next few months’ worth of data may shed some light on whether the Trump (now Biden) tariffs on China are losing their effectiveness, or whether the last few months’ numbers are anomalies.

Other significant April results for individual U.S. trade partners: The goods deficit with South Korea set a new record of $4.09 billion – 23.79 percent higher than March’s total of $3.30 billion and 21.70 percent greater than the old record of $3.36 billion set last September.

And the goods deficit with Switzerland cratered in April by 67.63 percent, to $2.89 billion, from March’s $8.93 billion level. The percentage shrinkage of this bilateral trade gap was the biggest since September, 2018, when a $1.22 billion U.S. deficit turned into a $149 million surplus.

Following Up: Podcast On-Line of Latest National Radio Radio Interview on Tariffs and Inflation

Tags

Biden, CBS Eye on the World with John Batchelor, China, economics, Following Up, Gordon G. Chang, inflation, Janet Yellen, tariffs, Trade

I’m pleased to announce that the podcast is now on-line of my appearance last night on “CBS Eye on the World with John Batchelor.” The segment features John, me, and co-host Gordon G. Chang discussing a bad recent idea that can’t seem to be killed off entirely – the proposal to fight lofty U.S. inflation by cutting tariffs on some goods imports from China. Here’s the link.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Making News: Back on National Radio Tonight Talking China Tariffs and Inflation…& More!

Tags

Biden, Biden administration, Breitbart.com, CBS Eye on the World with John Batchelor, China, GDP, Gordon G. Chang, inflation, Janet Yellen, John Carney, Making News, tariffs, trade deficit

I’m pleased to announce that I’m scheduled to return tonight to “CBS Eye on the World with John Batchelor.” The segment, slated to air at 11:15 PM EST, will feature John, me, and co-host Gordon G. Chang discussing a bad recent idea that can’t seem to be killed off entirely – proposals to fight lofty U.S. inflation by cutting tariffs on some goods imports from China.

You can listen live at this link, and as usual, I’ll be posting a link to the podcast as soon as one’s available.

In addition, it was great to see my latest post on the trade deficit’s damaging impact on the shrinkage suffered by the U.S. economy in the first quarter of this year cited last Thursday by Breitbart.com‘s John Carney. Here’s the link.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Im-Politic: No Abortion or Gun Control Boosts Yet for Democrats’ Midterms Chances

Tags

Biden, Congress, Democrats, fivethirtyeight.com, generic ballot, Im-Politic, midterms 2022, polls, RealClearPolitics.com, Republicans

Have President Biden and Democratic members of Congress been handed two big political gifts during this midterm election year in the form of the leaked Supreme Court draft decision rescinding abortion rights and the mass shootings in Buffalo, New York and Uvalde, Texas?

I found that argument pretty compelling when the news broke about the likelihood of the Court overturning its 1973 Roe v. Wade ruling – at least in terms of igniting some enthusiasm among Democrats and Democratic-leaning voters and therefore greater turnout from groups who’ve had little to cheer for many months. And I can see where the outrage understandably sparked by the more recent gun violence (and especially the Uvalde massacre of grade schoolers) might produce the same effect given Republicans’ strong opposition to significant new gun control measures.

There’s certainly enough time between now and the fall for abortion and gun violence to help prevent major Democratic losses – or for Republicans to mess up royally in any number of ways either on these or other issues. But for now, the consensus of the nation’s pollsters is that there’s no sign of significant voter shifts yet, and precious few signs of any voter shifts.

Some of the most revealing surveys on these scores deal with Americans’ views of the state of the nation, and whether it’s improving or worsening. When polls show the latter view dominating, that’s clearly bad for incumbents – this year meaning the Democrats, who narrowly control both the House and Senate. And that’s exactly what’s been happening since the abortion draft was reported the evening of May 2, and since the Buffalo killings took place on May 14.

According to the widely followed RealClearPolitics.com average of surveys gauging Americans’ views of the country’s direction, on May 3, respondents believing the country is on the “wrong track” topped numbers believing it’s on the “right track” by 33.4 percentage points. By May 14, it had grown to 41 percentage points. And as of yesterday, the wrong track’s edge had widened to 47.8 percentage points.

It could well be too early to assess Uvalde’s impact, but since that May 24 nightmare, the wrong track’s lead increased slightly from 45.6 percentage points to yesterday’s 47.8.

Another telling set of polls tries to measure what’s called the generic Congressional vote. It gauges whether respondents say they’re more likely to support a Democratic candidate for Congress all else equal (including who’s running in their own district or state), or a Republican hopeful. Here the results look better for the Democrats. On May 3, RealClearPolitics reports, its average of surveys showed the Republicans with a 4.1 percentage point edge. By May 14, however, the GOP margin had slipped to 3.9 percentage points, and by May 27 (the latest data available), that lead had been cut by more than half – to 1.9 percentage points.

Nonetheless, another polling compilation, by the website fivethirtyeight.com, shows a much more stable Republican lead. In fact, between May 3 and May 6, it remained at 2.6 percentage points, and dwindled only to 2.2 percentage points by May 30. (Just FYI, fivethirtyeight doesn’t track the country’s direction.)

Moreover, some pretty well established conventional political wisdom holds that any lead for the Republicans in such surveys is bad news for the Democrats, because Congressional races are of course held district-by-district and state-by-state, of course, and because both the Constitution’s system for apportioning representation and population trends have created a built-in Republican advantage in recent decades. So history lately teaches that unless the Democrats hold a big generic ballot lead, the November will bring them the cruelest news.

Due to the seemingly endless rush lately of headline developments like those above, and due to what seems to be the American public’s increasingly short attention span, big Republican gains in this year’s midterms may seem especially uncertain. And perhaps the abortion and especially gun control effects just need more time to develop. But the favorable numbers for the GOP on both the country’s direction and the generic ballot seem especially impressive, and encouraging offsetting public opinion trends for the Democrats on other issues that could be at least as important (e.g., inflation and immigration) are getting harder and harder to find.

Our So-Called Foreign Policy: Still ISO a Coherent Biden China Strategy

Tags

Antony J. Blinken, Asia-Pacific, Biden, Biden administration, China, climate change, Cold War, decoupling, Indo-Pacific, Jimmy Carter, national interests, Our So-Called Foreign Policy, rules-based global order, Soviet Union, strategic ambiguity, Taiwan

In June, 1978, then President Jimmy Carter laid out in a speech the tenets that were going to guide his strategy toward the Soviet Union at a time when East-West tensions were mounting. His clear aim during this key juncture of the Cold War was telling Moscow what kinds of actions it could take to make sure that superpower rivalry was “stable” and even “constructive,” and what kinds would be sure to place it on a “dangerous and politically disastrous” path.

Unfortunately, the speech was widely considered to be such a confusing word salad that rumors quickly spread claiming that what Carter read were drafts from the hawkish and dovish groups of his advisors that he simply stapled together. This rumor turned out to be untrue (at least according to this study of Carter’s foreign policy), but the fuzziness of Carter’s bottom line surely helped ensure that U.S.-Soviet relations continued worsening for most of the remainder of his one-term presidency, largely because the Soviet Union became more aggressive – especially when it invaded Afghanistan.

I bring up this historical episode because Secretary of State Antony J. Blinken just gave a speech laying out the tenets of the Biden administration’s strategy toward China. It, too, seeks to ensure that today’s superpower relationship becomes more stable rather than move ever closer to conflict, but it looks just as incoherent as Carter’s address – and just as likely to produce the outcome it’s trying to prevent.

But I’ll start with a problem that was only barely detectable in Carter’s speech but that’s bound to undermine Mr. Biden’s efforts to deal with China successfully: a failure to identify American interests precisely and concretely. To be sure, the Carter speech wasted a great deal of verbiage on Soviet activity that never held any potential to endanger U.S. security or prosperity – especially in sub-Saharan Africa. Eventually, however, the President specified that “We and our allies must and will be able to meet any forseeable challenge to our security from either strategic nuclear forces or from conventional forces.”

These kinds of specific objectives were at best secondary themes of Blinken’s. Instead, his emphasis from the get-go was on defending and reforming “the rules-based international order – the system of laws, agreements, principles, and institutions that the world came together to build after two world wars to manage relations between states, to prevent conflict, to uphold the rights of all people.”

Not only can this definition of U.S. interests way too easily turn into a formula for wasting America’s considerable but ultimately finite resources on an infinite number of international troubles having nothing to do with the nation’s safety or well-being. But good luck motivating the American population and its military to fight or even sacrifice for an objective this gauzy.

At the same time, the kind of ambivalence so broadly conveyed by Carter toward the Soviet Union permeates the picture drawn by Blinken of China. For example, the Secretary argued that China

>”is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it.  Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years”:

>rather than using its power to reinforce and revitalize the laws, the agreements, the principles, the institutions that enabled its success so that other countries can benefit from them, too…is undermining them.  Under President Xi, the ruling Chinese Communist Party has become more repressive at home and more aggressive abroad”:

> “has announced its ambition to create a sphere of influence in the Indo-Pacific and to become the world’s leading power”;

> is “advancing unlawful maritime claims in the South China Sea, undermining peace and security, freedom of navigation, and commerce….”

> “wants to put itself at the center of global innovation and manufacturing, increase other countries’ technological dependence, and then use that dependence to impose its foreign policy preferences.  And Beijing is going to great lengths to win this contest – for example, taking advantage of the openness of our economies to spy, to hack, to steal technology and know-how to advance its military innovation and entrench its surveillance state”;  and

> is “trying to cut off Taiwan’s relations with countries around the world and blocking it from participating in international organizations.  And Beijing has engaged in increasingly provocative rhetoric and activity, like flying PLA aircraft near Taiwan on an almost daily basis.”

In all, according to Blinken, “The scale and the scope of the challenge posed by the People’s Republic of China will test American diplomacy like nothing we’ve seen before.”

So given these malign aims and actions, how could Blinken also insist that

> “We don’t seek to block China from its role as a major power, nor to stop China…from growing their economy….”;

> “We know that many countries – including the United States – have vital economic or people-to-people ties with China that they want to preserve.  This is not about forcing countries to choose.  It’s about giving them a choice….”;

> ”The United States does not want to sever China’s economy from ours or from the global economy – though Beijing, despite its rhetoric, is pursuing asymmetric decoupling, seeking to make China less dependent on the world and the world more dependent on China.”; and that

> “as the world’s economy recovers from the devastation of the pandemic, global macroeconomic coordination between the United States and China is key – through the G20, the IMF, other venues, and of course, bilaterally.”

That last point, and a companion Biden administration argument about climate change, seem compelling – at least superficially. But think about it for a moment: Why would anyone holding the view of China’s hostile actions and intentions laid out by Blinken expect any meaningful cooperation from Beijing on anything?

Even on climate – that supposedly quintessential threat that respects no bordes – it logically follows that the kind of Chinese leadership depicted by Blinken will be working overtime to ensure that China minimizes any sacrifices it makes to prevent dangerous warming, and maximize those required of everyone else. Consequently, the most effective way to spur China to do its share and therefore boost the odds that the climate problem actually gets solved is to deny Beijing the economic power to stay off the hook.

There’s a big (and in my view, legitimate) debate currently underway over whether the United States should continue its longstanding policy of “strategic ambiguity” regarding defending Taiwan from China, or explicitly pledge to do so, as President Biden may or may not have done a week ago (and not for the first time). But there shouldn’t be any debate over whether America’s underlying strategy toward the People’s Republic should be as completely ambiguous – not to mention as nebulous – as the approach just articulated by Blinken.

Our So-Called Foreign Policy: Louder Talk and Still Too Small a Stick

Tags

alliances, allies, Biden, China, Constitution, defense budget, Finland, Lippmann Gap, NATO, North Atlantic treaty Organization, nuclear umbrella, Our So-Called Foreign Policy, Sweden, Taiwan, Ted Galen Carpenter, treaties, Ukraine, Walter Lippmann

The foreign policy headlines have been coming so fast-and-furiously these days that they’re obscuring a dramatic worsening of a big, underlying danger: The dramatic expansion spearheaded lately by President Biden in America’s defense commitments that’s been unaccompanied so far by a comparable increase in the U.S. military budget. The result: A further widening of an already worrisome “Lippmann Gap” – a discrepancy between America’s foreign policy goals and the means available to achieve them that was prominently identified by the twentieth century journalist, philosopher, and frequent advisor to Presidents Walter Lippmann.

The existence of such a gap of any substantial size is troubling to begin with because it could wind up ensnaring the nation in conflicts that it’s not equipped to win – or even achieve stalemate. As I wrote as early as March, 2021, a Gap seemed built in to Mr. Biden’s approach to foreign policy from the beginning, since he made clear that America’s goals would be much more ambitious than under the avowedly America First-type presidency of Donald Trump, but also signaled that no big increase in America’s defense budget was in the offing.

Since then, Biden aides have expressed a willingness to boost defense budgets to ensure that they keep up with inflation – and therefore ensure that price increases don’t actually erode real capabilities. But no indications have emerged that funding levels will be sought that increase real capabilities much. Congressional Republicans say they support this kind of spending growth to handle new contingencies, but the numbers they’ve put forward so far seem significantly inadequate to the task.

That’s largely because most of them have strongly supported Biden decisions greatly to broaden U.S. the foreign military challenges that America has promised to meet. As for the President, he’s specifically:

>not only supported the bids of Finland and Sweden to join the North Atlantic Treaty Organization (NATO), but stated that the United States would “deter and confront any aggression while Finland and Sweden are in this accession process.” In other words, Mr. Biden both wants to (a) increase the number of countries that the United States is treaty-bound to defend to the point of exposing its territory to nuclear attack, and (b) extend that nuclear umbrella even before the two countries become legally eligible for such protection via Congress’ approval. It’ll be fascinating to see whether any lawmakers other than staunch non-interventionists like Kentucky Republican Senator Rand Paul question the Constitutionality of this position; and

>just this morning declared that he would use U.S. military force to defend Taiwan if it’s attacked by China even no defense treaty exists to cover this contingency, either, and even though, again, there’s been no Congressional approval of (or even debate on) this decision.

This Biden statement, moreover, lends credence to an argument just advanced by my good friend Ted Galen Carpenter of the Cato Institute – that although Ukraine has not yet joined NATO officially, ad therefore like Taiwan lacks an official security guarantee by the United States, it may have acquired de facto membership, and an equally informal promise of alliance military assistance whenever its security is threatened going forward.

As a result, Ted contends, “the Biden administration has erased the previous distinction between Alliance members and nonmembers” – and set a precedent that could help interventionist presidents intervene much more easily in a much greater number of foreign conflicts without Congressional authorization, let alone public support, than is presently the case.

To be sure, lots of legal and procedural issues have long muddied these waters. For example, the existence of a legally binding treaty commitment doesn’t automatically mean that U.S. leaders will or even must act on it. Even America’s leading security agreements (with the NATO members, Japan, and South Korea) stipulate that the signatories are simply required to meet attacks on each other in accordance with their (domestic) constitutional provisions for using their military forces.  (At the same time, breaking treaties like these, all else equal, isn’t exactly a formula for winning friends, influencing people, and foreign policy success generally. As a result, they shouldn’t be entered into lightly.)

Further complicating matters: America’s constitutional processes for war and peace decisions have long been something of a mess. The Constitution, after all, reserves to Congress the power to “declare war: and authorizes the legislature to “provide for the common Defense” and to “raise and support Armies.” Yet it also designates the President as the “Commander in Chief” of the armed forces.

There’s been a strong consensus since Founding Father James Madison made the argument that limiting the authority to declare war to Congress couldn’t and didn’t mean that the President couldn’t act to repel sudden attacks on the United States – that interpretation could be disastrous in a fast-moving world. But other than that, like most questions stemming from the document’s “separation of powers” approach to governing, the Constitution’s treatment of “war powers” is best (and IMO diplomatically) described as what the scholar Edward S. Corwin called a continuing “invitation to struggle.”

Undoubtedly, this struggle has resulted over time in a tremendous net increase in the Executive Branch’s real-world war powers. But the legal issues still exist and tend to wax in importance when presidential assertiveness leads to conflicts that turn unpopular.

I should specify that personally, I’m far from opposed yet to NATO membership for Finland and Sweden. Indeed, their militaries are so strong that their membership seems likely to strengthen the alliance on net, which would be a welcome change from NATO’s (and Washington’s) habit of welcoming countries whose main qualification seems to be their military vulnerability (like the Baltic states) and tolerating long-time members that have been inexcusable deadbeats (like Germany).

Similarly, as I’ve written, because American policymakers recklessly allowed the country’s semiconductor manufacturers to fall behind a Taiwanese company technologically, I now believe that Taiwan needs to be seen as a vital U.S. national security interest and deserves a full U.S. defense guarantee.

Yet I remain worried that the Biden administration’s Ukraine policy risks plunging the United States into a conflict with Russia that could escalate to the nuclear level on behalf of a country that (rightly) was never seen as a vital U.S. interest during the Cold War.

So my main concern today doesn’t concern the specifics of these latest Biden security commitment decisions. Instead, it concerns the overall pattern that’s emerging of talking loudly and carrying too small a stick – and ignoring the resulting Lippmann Gap widening. However Americans and their leaders come out on handling these individual crises, they need to agree that the responses  urgently need to close the Gap overall. Otherwise, it’s hard to imagine satisfactorily dealing with any of them on their own.

Making News: Podcast Now On-Line of Ohio Radio Interview on China Policy & the U.S. Economy — & More!

Tags

Akron, Biden, China, Gordon G. Chang, IndustryToday.com, inflation, Making News, manufacturing, manufacturing jobs, Ohio, Ray Horner, recession, tariffs, The Hill, WAKR-AM

I’m pleased to announce that the podcast of my latest radio appearance is now on-line. Click here to listen to a wide-ranging conversation last Friday between me and WAKR-AM (Akron, Ohio)’s Ray Horner.  The subjects: President Biden’s suggestion that he might unilaterally lift some of the Trump administration’s tariffs on imports from China in order to fight inflation; China’s recent devaluation of its currency; and the chances that the U.S. economy will tip into recession.

In addition, it was great to be quoted on Mr. Biden’s China trade policy in Gordon G. Chang’s May 11 op-ed for The Hill. Here’s the link.

Finally, IndustryToday.com reprinted (with permission!) two recent posts of mine – on why cutting the China tariffs is such a lousy idea (on May 10) , and on the latest (strong) official U.S. manufacturing jobs figures (on May 9).

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

Glad I Didn’t Say That! Exponentially Up — & Then Down

Tags

Biden, Dow Jones Industrial Average, Glad I Didn't Say That!, investing, NASDAQ Composite, S&P 500, stock market, stocks, Wall Street

“[T]he stock market has gone up exponentially

since I’ve been President.”

President Biden, September 8, 2021

 

Dow Jones Industrial Average Since Biden

Inauguration: +0.85 percent

 

S&P 500 Since Biden Inauguration: +1.56 percent

 

NASDAQ Composite Since Biden Inauguration: -18.16 percent

 

(Sources: “Remarks by President Biden in Honor of Labor Unions,” Speeches and Remarks, Briefing Room, The White House, September 8, 2021, https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/09/08/remarks-by-president-biden-in-honor-of-labor-unions/) President Biden, September 8, 2021

 

 

(What’s Left of) Our Economy: Why Cutting China Tariffs to Fight U.S. Inflation Looks More Bogus Than Ever

Tags

Biden, China, consumer price index, CPI, currency, currency manipulation, Donald Trump, import prices, inflation, non-oil goods, Section 301, tariffs, yuan, {What's Left of) Our Economy

As RealityChek readers may have noted, I haven’t followed the U.S. government data on import prices for a while. That’s been because global trade has been so upended for the last two-plus years by the CCP Virus pandemic and the supply chain turmoil it’s fostered. Three big recent developments warrant returning to import price numbers, though.

First, President Biden has confirmed that he and his administration is seriously considering lowering tariffs on imports from China in order to help fight inflation. Second, since early March, China has dramatically driven down the value of its currency, the yuan. Since the yuan’s value is controlled by the Chinese government, rather than trading freely, Beijing has been giving its exports price advantages over all the competition (and in the U.S. and other foreign markets as well as in its own) for reasons having nothing to do with free trade or free markets. Third, new import price statistics just came out this morning.

And developments number two and three make clearer than ever that blaming the China tariffs for any of the torrid price increases afflicting American consumers or businesses is the worst kind of fakeonomics.

In a previous post, I explained why the scant actual tariffs imposed by former President Donald Trump on Chinese-made consumer goods and remaining on them, and the negligible portion of the Consumer Price Index (CPI) they represented, couldn’t possibly move the inflation needle notably.

Further, there’s the timing issue: The Trump tariffs imposed under Section 301 of U.S. trade law were slapped on in stages between March, 2018 and August, 2019. And by their nature, each of them could only generate a one-time price change. Yet consumer inflation in America didn’t take off until early 2021. Obviously, something(s) else was (were) responsible.

China’s currency moves, moreover, show that any Biden tariff-cutting will only add more artificial price edges to those Beijing is already creating for itself – thereby recreating some of the predatory Chinese pressure that competing U.S. employers and workers had long endured before the relief granted by Trump’s tariffs.

Since early March, the yuan has weakened by fully 7.75 percent versus the dollar. And with China’s leaders facing a substantial economic slowdown that could challenge the Communist Party’s political legitimacy, don’t expect Beijing to abandon quickly any practice that could prop up growth and employment.

Those new U.S. import price data reveal that the yuan’s depreciation hasn’t much affected China’s (government-made) competitiveness yet. But as indicated by the chart below, it soon will. As you can see, for years, the prices of Chinese imports entering the American market and the yuan’s value have risen and fallen pretty much in tandem.  

In addition, according to the new import price statistics, over the past year (April to April), import prices from China have risen much more slowly (4.6 percent) than the prices of the closest global proxy, total American non-fuel imports (7.2 percent). And the Trump tariffs should be singled out as a meaningful inflation engine?

Of course, these price trends could be cited to argue that these tariffs had no notable impact on U.S. competitiveness at all. But U.S. Census data show that, between the first quarter of 2018 (when the first Section 301 Trump tariffs were imposed), and the first quarter of this year, goods imports from China fell from 2.44 percent of the U.S. economy to 2.26 percent. (And this despite a big surge in American purchases of CCP Virus-fighting goods from the People’s Republic due to Washington’s long-time neglect of the nation’s health security and the secure supply chains it requires.) During this same period, total non-oil goods imports (the closest global proxy) increased as a share of the economy from 11.35 percent to 12.41 percent. So the Trump policies must have had some not-negligible effect.

The case for reducing the China tariffs is feeble enough even without these inflation points. After all, the Chinese economy is running into significant trouble due to its over-the-top Zero Covid policy, the deflation of its immense property bubble, and dictator Xi Jinping’s crackdown on the country’s tech sector. So the last thing on Washington’s mind should be throwing Beijing a tariff lifeline. Boosting China’s export revenue also means boosting the amount of resources available to the armed forces of this aggressive, hostile great power. And none of the tariff-cutting proposals is conditioned on any reciprocal concessions from China.

Citing bogus inflation arguments is the icing on this rancid cake, meaning the tariff-cutting proposal can’t be dropped fast enough.