After Arizona Tragedy, Obama Turns to Economy, China
12:00 AM, Jan 15, 2011 • By IRWIN M. STELZER
The tragic shooting by a deranged man in Tucson absorbed the president’s time and attention last week, and culminated in a masterful speech in which he refused to blame the tragedy on heated political discourse, but nevertheless called for a more civil discourse to help the nation face up to its problems.
That done, the president returned to Washington to face two immediate challenges, both to be dealt with on two levels: the apparent, and the sub rosa. First in line is China, with China’s president, Hu Jintao, arriving later this week. Treasury secretary Timothy Geithner is trying to focus public attention on trade issues, to appease an electorate that blames sluggish job creation on China’s unfair trade practices, and to divert attention from the much more difficult question of how the United States should react to China’s increasing political and military power, and an increased belligerence that has its regional neighbors wondering whether they can any longer count on America, which seems to be less willing to bear the burdens of preserving regional stability.
Geithner is practicing the art of linkage. If China will allow its currency to appreciate more rapidly, “We are willing to make progress” on increasing China’s access to U.S. technology and other issues. The Taiwanese are hoping their security is not one of the items to be traded for a higher yuan.
More important than the administration’s new much trumpeted willingness to get tough on trade is its unwillingness to confront openly its sudden realization that it is dealing with an expansionist nation that has massively increased its military spending, its technological competence, and its ability to project power.
And its economic reach. By offering to buy some of the shoddy paper that busted eurozone countries are peddling, China has induced the EU to press for removal of restrictions on arms exports, with Britain almost alone fighting to keep the current ban in place. At the same time, it is shoring up the falling euro to prevent Chinese goods from becoming uncompetitively expensive in the 17-nation eurozone.
President Obama has been told by Secretary of Defense Robert Gates, returning from a trip to China, that U.S. intelligence failed to pick up the progress China has made in producing stealth fighters, and missiles that can take out American aircraft carriers, the latter making their current deployment and bases difficult to defend.
The president will have to weigh his options, with two complicating factors in mind. First, there is the China lobby -- American companies that lust after that country’s market, including the emerging Chinese middle class increasingly visible on the tourist trails of Europe and America, to the point where they hand over their technology to gain access to China. These companies curry favor with the regime’s leaders by instructing their lobbyists to emphasize the job-creating effect of increased exports so as to persuade Congress and the administration not to antagonize the Chinese leaders. Not for nothing did Lenin say the capitalists would sell him the rope with which to hang them.
Second, there is the untamed budget deficit, fed by Obama’s Stimulus 2, passed by the outgoing lame-duck Congress in which Republicans gained $100 billion of tax relief for upper-income families by handing the president another trillion dollars of spending money. With the deficit due to climb by about $1.5 trillion this year, some incoming Republicans, in the past counted on to protest cuts in the military budget, have become budget hawks, calling for a reduction in defense spending, a perennial goal of Democratic liberals. Which is undoubtedly music to the ears of the People’s Liberation Army.
Then there is the economy. Again there is what you see, and what you don’t. What you see is intended to convey the impression of a presidential move to the center, in imitation of President Clinton’s reaction to the Democrats’ defeat in the 1994 midterm elections. The White House is leaking tales of Obama’s desire for a rapprochement with the business community. Instead of businesses “that dodge their responsibilities” and “fat cat bankers” we have, “We can’t succeed unless American businesses succeed. And I’m going to do everything I can to promote their ability to grow and prosper.” Instead of attacks on the U.S. Chamber of Commerce, which spent millions supporting anti-Obama congressional candidates, a trip across the street from the White House to the Chamber headquarters to whisper sweet somethings in their ears. Not only an olive branch, but the entire tree.
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