Foreign Policy For The Middle Class

President Joe Biden has said it. Antony Blinken has said it. Jake Sullivan has said it. “Foreign policy for the middle class.” I think I’ve heard Kamala Harris say it too. It comes from a report that Sullivan and others wrote while he was at the Carnegie Endowment.

Yesterday (March 3) Secretary Blinken gave a speech, “A Foreign Policy for the American People.” It looks like that speech is an upgraded version of the report. What I take from the report and the speech is that the Biden administration is bringing a new approach to foreign policy, and, more importantly, that they can change. I’ll work through the speech in a later post, but here’s the report.

 “Foreign policy for the middle class” combines two concepts not usually combined, but the two interact in many ways. The report highlights these interactions and attempts to provide ways to make those interactions more favorable. International trade is an obvious point of contact, but others are addressed in the report as well.

The report has eleven authors, about evenly divided between foreign policy and economic experts, some expert in both. The team is bipartisan, with a tilt towards Democrats. Part of the study was a survey of people in Colorado, Nebraska, and Ohio to determine how they saw the connection between their economic prospects and foreign policy. The three states were chosen to represent different aspects of the American economy: Colorado, resource extraction; Nebraska, farming; and Ohio, industrial. Of course, there is overlap among the categories. The surveys were published separately but are not referenced in the report.

The report defines “foreign policy” and “middle class” on page 9.

“Foreign policy” in this study serves as shorthand for foreign, defense, development, international economic, trade, and other internationally oriented policies perceived by those interviewed for the project as impactful to their economic well-being.

The report takes its definition of “middle class” from the Pew Research Center: a middle-income range for a family of three of $48,505–145,516. That range was adjusted for the cost of living in the three states.

Those interviewed for the project often described a “middle-class standard of living” as the ability to secure a job with adequate pay and benefits to meet their monthly expenses, tend to their families’ medical needs, buy a car, own a home, help their kids pursue decent postsecondary school education, take an annual vacation, save for retirement, and not be saddled with crippling debt.

The preface notes why it’s important to link the middle class and foreign policy. Despite the conflation of racial antagonism with economic issues by Donald Trump and others, the United States faces real economic issues, particularly the expanding income gap and uneven opportunities for participating in the economy. It is the interplay of foreign policy with those issues that the report attempts to address.

A 68-page report by 11 authors cannot work through that interplay and provide detailed recommendations for action. The authors lean toward recommendations; some justification is offered, but the organization of the report is unclear in its purpose and uneven in its treatment. Exploring the links between domestic politics and international relations is important. Too many Americans believe that 10% of the national budget or more goes outside the country, when the total Department of State and aid budgets are more like 1% of the whole. Globalization isn’t going away, so we need better ways to deal with it and get the public behind the policies relating to it.

Unfortunately, this report can’t be used in this way. I’ve puzzled over it for several weeks now and can’t distill a message beyond “Foreign policy for the middle class.” Which I’m hearing less frequently. It’s significant that the administration isn’t distributing thousands of copies of the report.

Let me throw up my hands and list the main ideas. If you are interested in polls, the material from Colorado, Nebraska, and Ohio may be worth perusing if it is released. By and large, according to the report, the people polled in Colorado, Nebraska, and Ohio see interconnection with the world as a good thing but have reservations. In a later post, I may make suggestions on how the report might have been better.

Their overall conclusions:

• First, the prime directive of everyone in the foreign policy community— not just those responsible for international economics and trade—should include developing and advancing a wide range of policies abroad that contribute to economic and societal renewal at home.
• Second, foreign and domestic policymakers need to collectively redress the country’s growing distributional challenges. The broad middle class and those struggling to join it do not benefit enough from the fruits of global economic growth and market access. And they also bear too much of the burden of global shocks and dislocations and of the trade-offs that come with foreign policy–related decisions made in Washington.
• Third, the policy community needs to adopt a more collaborative, integrated approach to domestic and foreign policy making and to embrace more policy innovation.

The COVID-19 pandemic exacerbates many of these issues, but it also provides impetus to make the recovery match the goals of a foreign policy for the middle class.

Pages 6 through 33 deal with why previous approaches are found wanting and explaining the approach. To summarize those 27 pages, I’ll assume that yes, we need a new approach.

• The global pandemic provides an opportunity for changing policies. Much of this discussion is consistent with the American Rescue Plan now in Congress. Much needs to be done at home.
• How to expand international trade so that it benefits all sectors of the economy. The report recognizes this as a hard problem. Trade agreements like the United States-Mexico-Canada Agreement (USMCA) should be reviewed for their effects on various economic sectors in deciding whether similar agreements should be sought. Public hearings could be held throughout the country as major U.S. trade policy decisions are being formulated and finalized.
• US trade laws should be modernized to improve responses to unfair trade practices such as state subsidies that lead to overcapacity. Trade enforcement authorities are spread across the government, which makes it harder to provide a clear and decisive response. Likewise, conflict resolution in international trade needs to be improved.
• Close gaps in national tax and regulatory frameworks and in labor and environmental protections. These gaps allow practices that undermine the middle class. Large multinationals can reduce their tax liabilities and erode tax bases at home. Gaps in regulatory frameworks allow large, dominant firms to engage in anticompetitive practices. Gaps in labor and environmental practices give firms leverage against US labor and allow them to avoid the cost of polluting. (p. 40)

Of course we must have a National Competitiveness Strategy (NCS), which, the report says, will drive policy innovation (p. 42). The record of such things, particularly when focused on an abstraction, is not encouraging.

• The NCS would drive both public and private investment in industry. The bulk of the investment would be private, and more creative policies are needed to stimulate that investment. Suggestions are given, like competition among communities for government grants that would stimulate private investment (p. 45).

The report focuses correctly on small and medium enterprises (SMEs) as centers of job creation. They need to be helped to compete globally. US Export Assistance Centers need to be beefed up. Export promotion needs stronger internal coordination within the federal government (p. 47).

Chapter 4 begins with the idea of foreign policy protecting the middle class from “the worst happening.” That last is not explicitly defined. Seven points to protect the middle class (p. 49):

1. Bolster U.S. diplomatic leadership to mobilize effective global action and better advance middle-class interests.
2. Manage strategic competition with China to mitigate risk of destabilizing conflict and counter its efforts toward economic and technological hegemony (Summary on p. 53).
3. Anticipate risks in a digital future and improve international policy coordination to reduce the threat of a digital crisis and promote an open and healthy digital ecosystem.
4. Boost strategic warning systems and intelligence support to better head off costly shocks and build up protective systems at home.
5. Shift some defense spending toward R&D and technological workforce development to protect our innovative edge and enhance long-term readiness.
6. Strengthen economic adjustment programs to improve the ability of middleclass communities to adjust to inevitable changes in the pattern of economic activity.
7. Safeguard critical supply chains to bolster economic security.

The international affairs budget must be preserved, but so must the defense budget. “Major defense cuts are unwise.” A defense of continuing the defense budget at current levels is on p. 58. The report does not come to terms with the great disparity in the two. Production of essential goods must be brought back to the US. Increased R&D funding in the national laboratories and elsewhere is a response to technological competition.

The recommendations are fairly standard for a report of this type. Many of the recommendations are good. The report is something that might be used to urge Congress to support legislation. It can also serve as a checklist for the public to watch the direction of the administration.

The recommendations change little in any fundamental way. Whether the public can be engaged is an open question, although it will take more than this report to do it. The framing of the report and the use of the slogan by top Biden officials indicate a willingness to change.

Cross-posted at Balloon Juice