17 March 2005

Pay to Play (Second Update)

Thomas Friedman weighs in this morning on the issues on which I've posted recently -- the inverse relationship between foreign debt levels and flexibility in foreign policy:
National security is about so much more than just military deployments. It is also about our tax, energy and competitiveness policies. And if you look at all these areas, the Bush team has not only been steadily eroding America's leverage and room for maneuver vis-à-vis its biggest long-term competitor - China - but it has actually been making us more dependent than ever on Beijing. Indeed, if the Bush policies were wrapped into a single legislative bill it could be called "The U.S.-China Dependency Act."

The excessive tax cuts for the rich, combined with a total lack of discipline on spending by the Bush team and its Republican-run Congress, have helped China become the second-largest holder of U.S. debt, with a little under $200 billion worth. No, I don't think China will start dumping its T-bills on a whim. But don't tell me that as China buys up more and more of our debt - and that is the only way we can finance the tax holiday the Bush team wants to make permanent - it won't limit our room to maneuver with Beijing, should it take aggressive steps toward Taiwan.

What China might do with all its U.S. T-bills in the event of a clash over Taiwan is a total wild card that we have put in Beijing's hands.

During the Cold War, foreign policy developed like a glacier accumulating ice. Positions were formulated to deal with local or temporary crises, but overall policy tended to ossify as it became based upon capturing unaffiliated states into your bloc and luring weakly-aligned states from your competitor's bloc; concerns about the propriety of the incentives offered these states were secondary to the perceived need to complete the deal successfully and maintain the political, if not moral, integrity of the bloc. Foreign policy in our era will be built around grand concepts (think, for instance, President Bush's "freedom" mantra during his recent European tour), but it will need to be more nimble than in previous eras, moving quickly from action to action in order to advance toward achievement of those overarching "grand concept" objectives.

As I've expressed before, I believe we possess the ability to do this and to do it better than any other nation, provided we also possess the collective will to play to our strengths and correct our weaknesses. I tend to disagree with Friedman's assertion that yesterday's Senate decision to tap our own Alaskan oil reserves runs counter to this objective, which I infer from today's and earlier writings that we share. Nonetheless, a growing and widespread appreciation of the burdens we place on ourselves through dependency on foreign oil and credit is a positive step. Although we may disagree for now on a solution, agreeing on the nature of the problem is an essential prerequisite to someday discovering an agreeable solution.

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