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Wishbone Spending

Apr 29, 2021
  • Tom Watkins

    President and CEO of the Economic Council of Palm Beach County, FL

The recent meeting in Alaska between Secretary of State Antony Blinken and National Security Adviser Jake Sullivan along with China’s director of the Central Commission for Foreign Affairs, Yang Jiechi, was the first face-to-face, high level meeting between the U.S. and China under the fledgling Biden administration. It demonstrated a new chapter was underway. In my own lifetime we have watched China come of age regaining its wealth and power, or fuqiang. 

Have no doubt: China has been rising – economically, technologically and militarily. The country has not only stood up, they have arrived – no longer the “little brother” in any relationship.  

The Pentagon is using the fear of China’s rise to feed the insatiable appetite of the war machine that has sucked trillions of dollars – taxpayer money that could well have gone to build up America – we have fallen far behind other industrialized and far-greater technologically-driven countries across the globe. 

There will be a battle coming between ‘guns and butter’ – investments in the American people, or new battleships, high tech and cyber war tools to build up the ever-hungry military industrial complex.  

CNN's Fareed Zakaria warns that the U.S. Pentagon has found a new reason to spend. He contends, that we are in, “the new age of bloated defense budgets – all to be justified by the great Chinese threat.” And that, “Having spent two decades fighting wars in the Middle East without much success, the Pentagon will now revert to its favorite kind of conflict, an expensive cold war with a nuclear-armed adversary.” 

Those that profit from war and allied spending will try to scare Americans into panic spending – all to “stop China.” But to be clear, stopping China’s rise at this stage of their development is the equivalent of building a chain-link fence to stop an approaching tsunami wave. It is not going to happen.  

Most of the anti-China rhetoric has focused on holding China back rather than propelling America forward. President Biden has changed this narrative and has begun the process of investing in America and average American citizens.  

America would be better served by focusing on investing in itself: improving crumbling infrastructure – from roads and bridges to air and seaports – as well as hidden assets like sewers and water pipes. Improving access to affordable Internet and expanding broadband and 5G, while investing in R&D around artificial intelligence, quantum computing and robotics is the better bet. Investing in clean energy, education, job training, and retraining opportunities from the cradle to the grave would be a shift in America’s investment priorities.  

Doing these things will create the capacity the U.S. needs to compete and win in a rapidly changing, technological future.  

America controls its own destiny. Yet, without focus and strategic investment, the U.S. is at risk of losing in the game of global leadership — and facing a future where America occupies the subordinate position on the global seesaw. That is simply unacceptable. 

This American investment strategy has already begun under President Biden’s banner of “build back better” – a political slogan followed up with $1.9 trillion in Covid stimulus spending.  

I have argued vehemently that $1.9 trillion is a good down payment on revising the investment in and the spirit of the American people.  

Coming on the heels of the $1.9 trillion Covid relief and stimulus package, an expected $2 trillion dollar infrastructure bill is next up for Washington to debate and pass. Under President Biden, if you earn over $400,000 or are a large corporation, you should expect a tax hike. Biden has reaffirmed his campaign pledge to raise taxes on these groups.  

Poor Military?  

The U.S. military is not underfunded, although it has been made to seem unpatriotic to challenge unchecked military spending. It is well known that the U.S. has significantly more nuclear warheads and aircraft carriers than China. 

Not only is the U.S. spending more militarily than China, but we spend nearly as much on our military as the eight other nations in the top 10 list of military spenders combined. 

Clearly the U.S. cannot fully let down its guard against a rising China. It has been reported that the annual increase in China’s official military spending now outpaces annual GDP growth – all a part of President Xi Jinping’s flexing China’s muscle and exerting its military might.  

Budgets – a Reflection of Priorities  

Budgets, be it your family’s or our nation’s, are statements of priorities. There are cries of investing in defense as a means of “maintaining our competitive edge.” Meanwhile, calls for domestic investments are laughed off as frivolous spending. 

Covid has wrought the sharpest and deepest economic plunge since the Great Depression onto the American people, and its pain was distributed unevenly. Upper income people – invested in the stock market – are fully recovered and now actually profiting as the economy rebalances while real economic pain is still stinging lower income, blue collar, and the working poor.  

Far too many American people have been on the losing end of America’s investment and spending priorities, for far too long. The COVID pandemic has peeled back the ugly inequity scab and the severe effect it had on marginalized peoples — low-income workers, women, and racial and ethnic minorities. 

The Brooking Institute says this is no time to curtail government domestic investment in the American people. They forcefully argue that federal relief in state and local governments, and businesses, will pay dividends for Americans by strengthening our long-term economic prospects despite raising the current deficit. They conclude, “Being timid in our policy solutions during this crisis would be a mistake.” 

Guns and Butter? 

The term ‘guns and butter’ refers to the national budget choices – setting the national priorities involved in policymakers’ allocations of resources between defense spending versus social programs. 

The arguments have already begun that America cannot afford the massive deficit spending, at least not for domestic spending. At the same time, others argue we must spend whatever it takes on military power in order to thwart China’s continued rise.  

Donald Trump, referred to as the “King of Debt”, campaigned on the promise to reduce the national debt. Then, once in office, he cut taxes for the top 1 percent of income earners and American corporations. The result? U.S. debt surged even before the pandemic as the Trump administration oversaw the third-biggest deficit increase of any president. Once again, a Democrat President took office with an economic hole left by his Republican predecessor.  

President Biden is clear, China’s rise will not come with America’s demise on his watch. He is pairing his efforts on the global front with its impacts on Main Street.  

His battle is with a strong rising China and the insatiable appetite of the military industrial complex. Biden has been fond of saying throughout his career “It has never, never, ever, been a good bet to bet against the American people." 

I am betting on President Biden to continue to bet on and invest in the American people. 

It will pay off. Simply attempting to thwart China’s rise will not. 

Biden needs to stick to his guns.  

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