Trump’s Momentous Decision

Where to, the United States?

We can lay the blame on President Trump or Biden, on Obama or Bush. We can blame Bill Clinton or even the first President Bush. Where it started is not really relevant as the world continues to spin towards a non-polar world where a superpower or even two superpowers are having little influence on war and peace. The fact remains that the United States fiscal deficit is damaging its economic influence and the unwillingness to vastly increase its military readiness is harming its diplomatic and military power. Western Europe for all its talk of increasing its military expenditures has not the demographic or economic power to provide much good to the free world. And the way they are responding to global crises like the middle east is to fall back on stale policy pronouncements like Macron’s on a Palestinian state shows that they have nothing left in the tank.

India and Pakistan are on the verge of war as the Pakistani military allegedly trained the terrorists who killed dozens in Kashmir. They are also supporting terrorists in Baluchistan – which is in parts of both Afghanistan and Iran – and Pakistan accuses India of supporting Baluchi separatists in Pakistan. These are two nuclear powers, one of which is dedicated to radical Islam and the other with one of the largest and most advanced armed forces in the world.

In Iran, the main port of the Iranian Revolutionary Guards is ablaze as a Chinese tanker filled with rocket fuel exploded, leading to not yet controllable fires that threaten to destroy the port. Israel has denied involvement and it is not yet clear if it was an accident or a planned attack. One thinks back to the Beirut port explosion caused by bad planning by Hezbollah as their armaments exploded shaking all of Beirut and causing untold damage to the city.

Putin is still hitting civilian targets in Ukraine and advancing in Kursk, with the help of North Korean troops and according to some reports, Chinese soldiers. In Gaza, Israel is attacking Hamas targets from the air, maintaining positions on the ground and threatening to send multiple divisions in to conquer Gaza once and for all – all the while hoping the military pressure will force Hamas to a deal.

China is continuing to bolster its ties with Iran and Russia and is planning its Taiwan invasion and control of the entire South China Sea.

Trump inherited these conflicts but before he decides what he wants to do about them he has to decide what he wants America’s role to be in the world. The Trump administration has to decide where America is going on the world scene and then act accordingly. Currently, it seems that they are feeling their way around the world, seeing what if any deals they can make and then figure out what to do in places where no deals can be done. Will they learn quickly that a deal between Putin and Zelensky is harder than they thought, that Hamas is not someone you can do business with and that Iran will delay until they can’t any longer? Trump has stated he expects a deal with Iran soon, but a bad deal will show the world that he has no will to fight. With China, deals are possible but like with any dictatorship they will pocket what they get and then try to take advantage of the deal to fill the goals they had to (temporarily) negotiate away to get that deal. They seem to have become more aggressive in the South China Sea.

The Trump administration has three choices as it plans the future of America in the world. The important economic aspects for the United States are the maintenance of the US Dollar as the global reserve currency, the defense of sea lanes for trade and energy. These three items cannot be relinquished if the Americans are to maintain the level of economic security and living style to which they are accustomed.

Rollback

President Reagan went from “containment” to “rollback” regarding the Soviet Union by increasing defense spending and starting to develop weapons like anti-missile defense, that the Soviets knew they could not match. He pressed the Soviets on human rights and understood that the Soviet economy would never be able to complete with America’s – or Europe’s.

A return to this attitude today would be different in its goals. It seems that looking to outspend China on defense is a non-starter and the Chinese economy, while probably not as strong as they make out, will not fall apart anytime soon. But what made Regan’s America great was its ability to grow the economy rapidly while greatly increasing defense spending making it able to project military power backed up by a strong economy. What makes this a challenge for the current administration is, as we have mentioned, both the enormity of the federal government’s deficit and the paucity of its manufacturing power.

Trump understands that he needs to restore America’s manufacturing capacity, the challenge is to do that while growing the economy and the military while reducing the federal deficit. Cutting regulation and government waste are second nature to the Trump way and that is a start. Multi-year military contracts with manufacturers is another way to go about it. But the economy must grow rapidly to reduce the deficit if he, like every other president, is unwilling to touch social security and Medicare.

But even if the administration is able to do that, it will need to return to a more internationalist bent and build up alliances based on common values and interests – even if it doesn’t always put America first in ways obvious to the American public. It means more American influence in the world, but the trade off is more American involvement, including trade concessions to allies and miltary operations.

The ”rollback” here would be in Chinese domination of various industries like shipbuilding – while deterring China from attacking Taiwan and rolling back their presence in the South China Sea by actively helping the Philippines. It would also mean actively combating China’s “belt and road” policies with a more active foreign policy.

A successful Reagan-like policy would maintain the US dollar as the reserve currency, return certain manufacturing industries to the US and promote freedom (without military intervention).

Containment

Containment differs from the Kenan post WWII containment in that it would have to include economic containment. This would mean being extra strict with intellectual property protection and include sanctions, tariffs and other penalties for stealing or even attempting to steal US intellectual property. Intellectual property defense would have to take a military-like importance. It would probably need to include a vast restriction on Chinese citizens studying STEM fields in American universities – especially graduate students. But in order to make sure America kept its intellectual superiority in the sciences and engineering, the American educational systems will need to be upgraded and students taught well enough so that they won’t need to take remedial math courses when they go to Harvard.

Militarily, the US will have to invest as much as it would under the above “rollback” plan and strengthen its Asian alliances to resemble the success of NATO in containing the Soviet Union in Europe throughout the cold war. Japan, Australia, South Korea, Philippines and other countries such as Vietnam, Indonesia and India will need to come together and form a stronger alliance than they have today. The US would, once again need to take the lead in this. It will have to shift its priorities from Europe without abandoning it since the Russian threat will not go away.

Maintaining military and technological superiority while cutting the federal deficit will be a challenge but, as we stated above, economic growth will have to be emphasized over trade deficits. Manufacturing of chips, military hardware and the like will have to be on-shored – which will make containment more expensive than one would think.

Retrenchment

This is the trickiest of the three in that it will be more difficult to maintain American economic dominance if it concentrates its main military missions in the Western Hemisphere. It will be tricky to do this and to keep China from dominating the world’s economy and, if not replacing the US Dollar with the Chinese Yuan, at least removing the US Dollar from its global dominance. Many people will say “so what?” but Americans profit from lower inflation and lower import costs when the world denominates all important commodities in the dollar.

Retrenchment is not abandonment of the world and assuming the United States could still use the oceans to separate itself from the world. Abandonment of the world would be a disaster for freedom, technological advancement and the economic well being of Americans and the world generally.

Diplomatically, retrenchment will mean that the US will have less influence over allies and their actions even if it affects the US economy and US standing. It will lose its veto power over military action by allies and it will have to form separate alliances to protect its interests abroad – depending on foreign militaries and diplomats.

However, retrenchment will allow the US to cut its budget deficit quicker as it will build its military to face most of its threats nearer to home and, as will be able to continue building advanced weaponry that it can sell abroad to its allies. Countries like Israel for example will need to buy advanced bombers and will have to project power to further distances than it can now. The same will be the case for Japan, Australia and the other East Asian American allies as they try to fend off Chinese hegemony without US aircraft carriers and B-52 bombers.

Can this be done? Can the US maintain global economic dominance without a global military, or will the US be either handing over dominance to a country like China or, possibly, create a world where there is no actual reserve currency? I don’t think this has ever been done before but a good historian might prove me wrong.

I think it might be able to be done under the following circumstances. The US must rapidly reduce its budget deficit, first to manageable levels and then, possibly to surplus. The US must bring back manufacturing of key industries such as shipbuilding and other defense related items. It must do this in an economical way so that its allies can depend on American defense products. This means that they need to be technologically superior to rival products and must be affordable to key allies who will now have to maintain order in their part of the world. Most importantly, these allies must know that whatever actions they take, even if it is politically inconvenient to a US president, they will continue to supply these items. This is probably the most important area – America giving up its bully pulpit for whatever moral issue is politically popular in the country that day.

If done properly, it will be in the interest of America’s allies to maintain the dominance of the dollar since it will create a certain international economic order to the advantage of all of America’s allies. Trading products priced in dollars – especially commodities - will allow an orderly market for these products so that pricing can be compared and sales can be measured properly and compared across borders.

As we stated, these allies – now I would count them as Europe, Israel, Saudi Arabia, India, Japan, Australia and South Korea – will have to become regional powers in their own right and be able to defend themselves and their interests on their own. This group will need to be expanded. America will lose its veto power over these allies but will gain economically. Will this work? It is hard to tell and is certainly a gamble.

The administration must decide where it wants America to go in the coming decades. How involved in the world does it want to be? One thing is for sure – if it decides that America is no longer the defender of freedom it will have to loosen its apron strings while strengthening its economy so that free countries can continue to be free and continue to be allies of the United States.