6 min read

Contactless Payback

Pompeo's shift on US-Taiwan relations is a huge oar in the water for Biden
Contactless Payback

Outgoing Secretary of State Mike Pompeo dropped a diplomatic bombshell casually over the weekend in a move designed to tie the Biden administration’s hands:

“Today I am announcing that I am lifting all of these self-imposed restrictions.  Executive branch agencies should consider all “contact guidelines” regarding relations with Taiwan previously issued by the Department of State under authorities delegated to the Secretary of State to be null and void.”

The traditional pretense of the One China policy adopted by President Carter, a necessary shift to ‘acknowledge’ the mainland’s claim to Taiwan, is being ripped up without a formal change in US policy (yet). Once government-to-government contacts are allowed and the deference to Beijing’s claims visibly erodes, it’s really hard to put the genie back in the bottle. For one, you can’t imagine Jake Sullivan and the National Security Council — about to embark on an assurance tour behind the scenes that will dwarf whatever Obama’s team had to do in 2009 — would relish the thought of convincing key partners and allies in the Asia-Pacific that we’re engaged and willing to cooperate and collaborate to stick to our commitments by immediately rolling back the policy change. For another, the emergent anti-China consensus in Washington is becoming the both the new litmus test and the new totem onto which both parties are going to try and tack whatever pet policy agenda they can muster to appear tough, supportive of American labor and/or jobs, and serious about un-mucking the damage to the country’s credibility abroad over the last 4 years. Finally, it’s a concrete step that offends Beijing as much as possible, discouraging them from taking a more forgiving view of Biden’s intentions coming into office.

Pompeo’s announcement is clearly a last ditch campaign device. He can use his China and Iran track record to try and avoid scrutiny for his absolute loyalty to Trump as it’s fast become a liability for anyone with 2024 aspirations so long as the Republican Party’s “deep” institutionalists — the fundraisers and hellraisers with the right policy pedigree and rhetoric in the tack the party under W. took — still carry considerable heft. But much more importantly, Pompeo’s maneuver sets up the new foreign policy team to face reality: Biden’s China policy can’t undo what Trump’s done, and by extension, a great deal of his choices will be about style and execution rather than the general stance or even approach Trump’s team has laid out. Not only does China get a vote in US policy, but the consensus on the Hill has been shifted so decisively into “we gotta get em” mode that the White House will be burned fast for appearing weak.

Take the incoming chair of the Senate Committee on Foreign Relations Bob Menendez. Working in tandem with Democratic Majority Leader Chuck Schumer and 9 other Democratic Senators, Menendez sold the LEADS act last September — a bill offering $350 million in spending dedicated to improving US competitiveness against China — with the following rhetoric:

“This moment demands a strong, strategic response that can begin to rebuild American leadership and invest in our ability to out-compete China in the generation ahead.

“This moment demands a strong, strategic response that can begin to rebuild American leadership and invest in our ability to out-compete China in the generation ahead . . . This bill seeks to do three things: (1) invest in American competitiveness; (2) invest in American alliances and partners; (3) invest in our values, and (4) invest in our economic statecraft and ensure China pays a price for its predatory actions.”

It’s tough to see deepening our overt ties with a democratic Taiwan as contradicting the aims set out by Democrats concerned about the lack of values in Trump’s foreign policy. Further, the Democratic caucus in the Senate largely stands behind a push to reach a comprehensive trade deal with Taiwan to enhance our relative competitiveness with China. Once we’re doing that, we’ve abandoned the fiction of a One China policy and are, in fact, trying to create a larger business constituency to lobby for pro-Taiwan policies. It’s not just that Biden could fast look weak walking anything back. His own party’s China policies have quickly become a mirror image of Trump’s in substantive terms, with the distinctions lying largely in style, execution, and area of focus rather than substantive aims, criticisms of China, or concerns. After all, it was Bernie Sanders who killed the TPP during the 2016 primaries, throwing Obama’s regional foreign policy aims into chaos and ensuring that no matter who won the election, US policy would lose its most important source of multilateral advantage to compete regarding trade. In short, Pompeo is handing the Democrats cover to push for domestic spending, investments into infrastructure and skills retraining, as well as research to achieve things they want to domestically while sticking to an aggressive values line on China as much as he’s “tying their hands.” Ironically, if Democrats take the bait hook, line, and sinker, it’ll be that much harder for Pompeo to differentiate himself in 2024.

Post-COVID recovery imbalances are going to loom large over Biden’s policy options. The US trade deficit hit a 14-year high in November. That was 2006, when rapidly rising oil prices, a large credit-fueled consumer expansion producing better growth rates than with many US trade partners, and before China would even countenance CNY appreciation meant the deficit had to soar. The delisting of several Chinese firms on the NYSE on security grounds per a Trump executive order went ahead after a mixup briefly reversed the decision, prompting China to retaliate in kind and move to exclude US firms from Chinese financial markets. Biden himself has committed to maintaining the existing tariff regime and Phase 1 trade deal cut by Trump after coming into office, both out of an abundance of caution but also because he’s recognized that it’s good politics and a useful starting position for future negotiations. It’s not substantively why she got the role, but you have to guess that Biden’s team knew appointing Katherine Tai — a Taiwanese-American fluent in Mandarin — to act as US Trade Representative was part of that opening negotiating gambit.

It’s a sad truth for progressive politics that a ‘Cold War’ with China is the best thing the Left could hope for pushing through domestic reforms that reduce inequality, support wage and broader economic growth, increase labor’s bargaining power, and address systemic failings of the American system. If it doesn’t realize this soon, it’ll lose its best chance to try and use the budget reconciliation process to tag progressive spending items with Democrats like Joe Manchin fawning over targeted $2,000 checks instead of stopping to ask just how many people wouldn’t benefit from the income support, whether the massive increases in administrative complexity and cost introduced by trying to means-test COVID aid are worth it, and why they can’t just try and tax it back in a one-off later when things have normalized. In a weird way, Pompeo has crippled Biden’s room for maneuver on Taiwan — one of the most salient issues in the US-China relationship — but gifted Democrats the rationale of prosecuting a Cold War more effectively by investing at home.

That’ll take a backseat to defeating COVID and kickstarting the recovery. As of last month, over 85% of the American public was worried about the economy and crucially, 72% of Trump voters believe that $600 is too little. There is no appreciable political downside to spending as much as possible on recovery as fast as possible given the interest rate at which deficits are being financed at the moment. But while Pompeo and the outgoing national security team think they’re too clever by half — Pompeo just labeled the Yemeni Houthis a terror group for good measure — they’ve handed Democrats a cudgel to keep both houses and keep legislating in hopes of heading off Trumpist candidates in 2024. Leave it to Trump nominees to shoot themselves in the foot at the same time they think they’re winning. We’ll see if Democrats are smart enough to grab this chance while it lasts. The insurrection at the Capitol building changed the politics of the moment drastically. It’s no time to make small plans.

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