America’s Booming Economy is a Huge Foreign Policy Asset
Biden should highlight the next steps in his plan for boosting America’s competitiveness in the world as he touts America’s recent economic successes at home.
President Joe Biden delivers his State of the Union address Tuesday night, and he’ll do so with strong economic winds in America’s sails. There’s been good news as of late: America’s economy created 517,000 new jobs in January and pushed unemployment to 3.4% — the lowest rate in more than 50 years — while forecasts for the global economy have improved as well.
Indeed, Biden has a number of strong selling points about what he’s been doing to jumpstart and then overhaul the engine driving America’s economy that he can tell all Americans. Biden should use his speech to remind Americans and the rest of the world how America’s economy, despite some continued challenges, remains an unrivalled engine of abundance and prosperity.
He can also use this moment to explain how America’s economic revival could produce wins for American workers and businesses while America rebuilds diplomatic and economic ties with like-minded partners overseas. It’s this extra step — linking domestic and foreign policy — where Biden can extend and strengthen his argument, but his team has some important policy work to do to back up the case.
Public investments and inclusive patriotism fueling prosperity at home
Biden gave a preview of the themes in his emerging re-election narrative last week in speeches in Baltimore and New York highlighting the impact massive infrastructure investments passed with bipartisan support in 2021 are having on America and its ability to compete in the world.
Laced with anecdotes about his father talking about the importance of work, Biden made an impassioned plea in terms that connect well with working Americans:
That’s what this project and others like it across the country are all about. It’s about making investments in America’s cities, towns, heartlands in rural America. It’s about making things here in America again. It’s about good jobs. It’s about the dignity of work. It’s about respect and self-worth. And it’s about damn time we’re doing it.
Biden placed these investments in the wider global context, arguing how investing in things like infrastructure and research and development are helping Americans stand stronger in the world:
For too long, we’ve talked about asserting American leadership and building the best economy in the world. But…to have the best economy in the world, you have to have the best infrastructure in the world — that’s not hyperbole; it’s a fact — to get products to market, to create thousands of good-paying jobs.
For most of the last century, we led the world by a significant margin because we invested in our people. We invested in ourselves. We invested in research and development. Along the way, we stopped. We used to rank number one in the world in research and development. Now we rank number nine. China used to rank number eight. Now it ranks number two.
The risk of losing our edge as a nation and China and the rest of the world catching up is real. For decades, the backbone of America — the middle class — has been hollowed out. Too many good-paying manufacturing jobs moved overseas because labor was cheaper. Jobs moved overseas and factories closed down. Once-thriving cities and towns became shadows of themselves, what they used to be.
With bipartisan support in Congress, Biden passed three bills worth $2 trillion and focused on investing in America’s infrastructure, semiconductor chip production, research and development in new technologies, and clean energy. Some of these measures will take years to implement, and they are already rebuilding America’s economic engine.
Expect to hear more about this Tuesday night and during the coming year.
Without control of the House after the 2022 midterm elections, Biden faces a tougher uphill battle passing legislation. Biden’s advisors have been reportedly divided over how much to talk in the State of the Union address about his unfinished agenda on rebuilding America’s social safety net, including proposals on childcare and improving access to education.
But there is one area that Biden would do well to focus on: making the case for how America’s strong economic revival on his watch —12 million jobs created during his first two years in office — combined with the continued public investments America will make offer new pathways to strengthen economic partnerships with forward-looking partners around the world.
Linking America’s national industrial policy with opportunities for cooperation in the world
Three top Biden advisors took time out of their busy schedules to rebut arguments made in a recent Economist magazine article that some of these American investments are troubling foreign allies because some see them as “zero-sum.”
National Economic Council director Brian Deese, Biden national security advisor Jake Sullivan, and John Podesta, a senior advisor on clean energy innovation and implementation, made the case for linking these domestic actions on clean energy with global steps:
To put it simply: the more these fledgling technologies are adopted in America, the more prevalent they will become in other regions as well. In fact, we support our allies and partners investing in these industries and advancing their own plans in co-ordination with us. As President Joe Biden has said, we can harmonize our economic and trade approaches, create high-paying jobs and tackle the climate crisis — and not at each other’s expense.
This is all easier said than done in the real world. Three questions Biden and his team need to address in advancing this vision:
1. How will this approach address the major hurdle presented by America’s own political divisions?
America’s partners around the world remain concerned about the excessive political divisions they see within America, and America’s global competitors and adversaries seek to exploit those divisions regularly. Across wide parts of the Western Hemisphere, in key Asian countries such as Japan and Indonesia, and among many close U.S. partners in the Middle East, countries express more uncertainty about America’s strategic reliability than they did at the end of the Cold War.
Doubt will likely continue to increase the more America’s political leaders play games the debt ceiling and risk undermining the economic successes achieved over the past few years. If other countries are hedging their bets because they see risk and uncertainty coming from America’s political dysfunction, then it makes it harder for those countries to simply sign up for what the Biden administration is outlining.
2. What role will the U.S. private sector play in advancing this national industrial policy?
Most jobs in America are in the private sector, and the latest job growth on Biden’s watch comes not just from the public investments he will highlight, but also America’s innovative entrepreneurialism. Many leaders in the private sector are looking for signs of what public officials are gearing up to do to support American businesses and workers on a wide range of issues, including immigration, at a time when millions of jobs in America remain unfilled.
It’s one thing to announce the general contours of a new national industrial policy and spark mostly academic, backward-looking debates about things like neo-liberalism; it’s another thing to build coalitions to get achieve the stated goals of advancing a new economic model that others will follow if we just build it — and America’s private sector is a key partner in this effort, necessarily.
3. How can America build new economic partnerships at a time of extreme strains on the international system from geopolitical competition?
The international system is fragmenting into different blocs with a rising China and an aggressive Russia undercutting the global system and leading many of America’s partners to hedge economically and strategically. This complicates the efforts outlined by Deese, Sullivan, and Podesta in stitching together the political economies of countries with America’s game plan. Just consider the practical complications in implementing a global minimum tax.
Nevertheless, a good case can be made for America’s staying power, particularly in the economic realm. China has major vulnerabilities and continues to make unforced errors, like its latest foreign policy fiasco with the spy balloon that floated across and riveted an attention-deficit disordered America for several days.
President Biden is well positioned to craft an argument that links America’s economic revival at home and takes an abundance agenda global by working closely with like-minded partners around the world. His State of the Union speech tomorrow night offers an excellent opportunity to make that connection.