Biden Wants a Foreign Policy That Puts Middle-Class America First

(Bloomberg Businessweek) -- Joe Biden has followed the path of many American presidents in bringing his own foreign policy brand into office. His “foreign policy for the middle class” is less pithy than Donald Trump’s “America First.” But for a world trying to gauge the U.S.’s new leadership—and an electorate with an uneasy relationship with globalization and other disruptive economic forces—it may be just as consequential.

Biden’s promise to the world is reengagement, whether on issues from which the U.S. has been absent, such as climate change, or in multilateral institutions his predecessor sought to blow up, such as the World Health Organization. But national security adviser Jake Sullivan and other senior aides are also making it clear that doesn’t portend a return to a pre-Trump model.

The big idea is that since the end of World War II, Washington has gradually shifted from policies that fostered middle-class prosperity to ones that furthered the interests of multinational corporations and investors. That, of course, is the same economic grievance that Trump harnessed to win the presidency in 2016—the elites sold us out. The consequences of that perceived betrayal are by now familiar: rising inequality, stagnant median household incomes, and employment shocks caused by the rise of China and technological change.

In the wake of Trump’s victory, some graduates of the Obama administration including Sullivan embraced the idea that U.S. policymakers had failed for too long to acknowledge the fallout from globalization. As Trump unleashed his trade wars, jeopardizing long-standing international alliances in the name of the American worker, the Obama graduates were teaming up with centrist Republican policy veterans to devise an alternative.

Among the efforts was the establishment of a bipartisan task force under the auspices of the Carnegie Endowment for International Peace, a Washington, D.C., think tank where Obama’s former commerce secretary, Penny Pritzker, chairs the board of trustees. The stated goal when it convened in 2018: come up with ideas for a foreign policy that works better for the middle class.

At the helm were two people now in senior roles in the Biden administration: Salman Ahmed, a member of Obama’s National Security Council who’s been brought in to oversee the State Department’s policy-planning function, and Sullivan, who advised Biden on national security matters when he was vice president.

The group laid out their recommendations in a 90-page report released in September. Among other things, it called for the drafting of a “national competitiveness strategy” to coordinate both public and private investment and stay ahead of China. Another suggestion: broadening the scope of international trade negotiations to address issues such as currency swings and tax incentives that spur companies to shift production offshore. One overarching theme was the need for greater coordination between foreign and domestic policy so the U.S. does a better job of equipping workers with the skills they need to adapt to big shifts in the labor market. In some cases that means international priorities taking a back seat to domestic ones, an idea the Biden administration has endorsed early on.

“We have to put ourselves in a position of strength to be able to deal with the challenges we face around the world,” from the “great power” battle with China to nuclear proliferation, Sullivan told a Jan. 29 U.S. Institute for Peace forum in which he repeatedly emphasized the need for a focus on domestic problems.

What a foreign policy for the middle class will mean in practice remains an open question. Through spokespeople, both Sullivan and Ahmed declined requests for interviews. But other members of the Carnegie task force insist that what the Biden administration is pursuing is more than just a reframing of past internationalist policies or a relabeling of Trump’s “America First.”

For the report, researchers traveled to Colorado, Nebraska, and Ohio to sound out middle-class Americans on topics ranging from defense spending and foreign aid to trade and tariffs. What they heard was neither great enthusiasm for Trump’s brand of protectionism nor the slavish devotion to free markets that came before, says task-force member Tom Wyler, who served as Pritzker’s top international economic adviser at the Commerce Department and now works for her investment firm, PSP Partners LLC. That means the world ought to be ready for a U.S. that has a sharper view of its own economic interests, Wyler says. “I don’t think you are going to see this administration trade off the bread-and-butter economic issues for strategic priorities,” he says.

Also emerging from the task force’s work was a recognition of past missteps. In hindsight the proper U.S. response 30 years ago to globalization fueled by China’s rise, the growth of the internet, and the rapid decline in transportation costs would have been a congressionally mandated flood of public investment in education, infrastructure, and R&D, says task force member Christopher Smart, an alumnus of the Obama National Security Council who’s now chief global strategist at investment bank Barings. “Is that a realistic scenario of what could have happened? Probably not,” he says. “But it’s probably what should have happened.” So why not make it happen now, as Biden has proposed?

A preview of Biden’s approach could be found in the documents accompanying a “Buy American” executive order the president signed on Jan. 25. The decree itself did little more than close loopholes that allow exemptions from rules requiring federal departments to buy U.S.-made products. But the press release also noted the administration was “committed to working with partners and allies to modernize international trade rules—including those related to government procurement—to make sure all countries can use their taxpayer dollars to spur investment.”

That was an acknowledgment that U.S. trading partners have long argued “Buy American” provisions violate international trade rules. It also could be read as a preamble to a broader discussion about subsidies, an issue that’s sure to come to the fore as governments search for ways to boost domestic production of medical equipment and pharmaceuticals.

A Biden administration looking to change the rules of engagement may be able to find common ground with European allies with their own middle classes to appease. French President Emanuel Macron, for one, faces 2022 elections and needs a more durable way to respond to the economic anxieties articulated by the Yellow Vest protesters.

Some progressives seeking a broader remake of U.S. policy and institutions such as the World Trade Organization worry Biden will focus too much on wooing allies alienated by Trump. “I hope it won’t just be that—four years of soothing people’s ruffled feathers,” says Thea Lee, head of the progressive Economic Policy Institute. Then again, Lee adds, the crises Biden inherited from Trump offer an opportunity. “It certainly creates the space for building something new.”
 
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