Thursday 11 Aug 2022 | 06:59 | SYDNEY
Thursday 11 Aug 2022 | 06:59 | SYDNEY

US budget deal and the rise of China


Hugh White

16 November 2012 08:35

Bob Carr must be pleased, but also a little embarrassed. Bob Zoellick, Republican foreign-policy heavyweight, has used a line from Carr as the peg for a substantial essay in the latest issue of Foreign Policy about the future of American power. Unfortunately, the line was one that Romney used briefly in the presidential campaign to attack Barack Obama, so perhaps he would prefer to see it forgotten now that Obama is safely back in power. I wonder if Hillary and Leon teased him about it at AUSMIN?

But there is another, more substantial reason Carr should wish that the line would be forgotten. What he said is so obviously wrong. Here is the line as Zoellick quotes it:'The United States is one budget deal away from restoring its global pre-eminence.' Carr is saying that the challenge to US global primacy comes from its fiscal problems, and if only the federal budget could be fixed, American leadership would be secure indefinitely.

I think this is clearly wrong. What challenges US primacy is not a fiscal issue but an economic one.

Of course the federal deficit is a major problem for the US, but the challenge, especially in Asia from China, is being driven by a shift in strategic weight, which in turn is driven by a shift in the relative size of the two economies. Compared to this really fundamental change in the distribution of power, America's fiscal problems are relatively insignificant. America would still face a fundamental challenge even if its budget was in healthy surplus.        

No budget deal in Washington can turn around the trends driving the rise of China, because in the end it's not about America. It's about China. Carr's mistake matters because it encourages Americans to think the opposite, which in turn reassures them that they do not have to adjust to the power shift by rethinking their role on the world, and especially their relations with China.

The really worrying thing is that he seems to have convinced Zoellick, for one, that what he said is true. This is what Zoellick’s whole essay is about, and he is among the brightest and most influential of Americans. Of course it helps that Carr's message is something Americans very much want to believe. Which is no doubt why Carr said it.

Photo by Flickr user peregrinari.