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Bridging the Divide: Domestic Constraints on Future US Foreign Policy

Image credit: PAS China (Creative Commons: Wikimedia)

Washington’s future role in the global order is the most pressing question in geopolitics today. China is taking centre stage, combining its flagship Belt and Road initiative with an extensive military modernisation program. Concurrently, an opportunistic Russia seeks to grow its influence in Eastern Europe and the Middle East. Meanwhile, the Trump Administration is unravelling decades of investment in the liberal rules-based order, replacing grand strategy with a seemingly more transactional approach.

The May/June 2019 issue of Foreign Affairs focused heavily on the decline of US global leadership. While the analyses are critical of the Trump Administration’s approach, there is also a recognition that the decline is multi-factorial and started well before Trump’s presidency. A Pew Research Center report from May 2016 supports this claim, citing a 57% majority of Americans who agreed that the US should ‘deal with its own problems’, highlighting the significant level of public disengagement from foreign policy.

Much as the contributors to Foreign Affairs are broadly united on their proposed solutions – primarily the strengthening of alliances, increased State Department resourcing, and prioritising diplomacy over military force as a tool of statecraft – none of these can be effectively implemented without stronger public support. Absent this, and regardless of who occupies the White House, the US will find it more difficult to undertake the required strategic shift.

Why has the public become so disengaged? Two further Pew Research Center reports provide some insight. Examining voters’ priorities for 2019 shows, as one might expect, that domestic issues like healthcare, education and Medicare are considered ‘top priorities’ by 67-69% of respondents. The key trend is that healthcare has become significantly more important to voters since 2011, so much so that it may soon overtake the economy as their highest priority. Even terrorism is now at one of the lowest reported levels of importance to the public since September 11, 2001. In sum, US voters are becoming significantly more internally focused.

The second report showed that while 74% of Americans agreed ‘trade is good’, only 36% believe that ‘trade creates jobs’. Only 31% believe that ‘trade increases wages’. These attitudes are closely linked to education and income levels – less educated citizens with incomes below the median are less likely to believe that ‘trade creates jobs’.

Despite these reservations on wages and incomes, a cursory glance at the macro-economic data indicates why 74% still agreed ‘trade is good’. The US still ranks 1st among OECD countries for ‘household net adjusted disposable income’ and ‘household financial wealth’. Stock market indices are near all-time highs, and long term growth in GDP per capita has been sustained through the early 2000’s to the present, reflecting the substantial growth in wealth of the US economy.

A more nuanced analysis shows that the problem lies in income inequality. The wealthiest 1% of American families now own as much as the bottom 95%. This translates to a share of around 40% of total wealth, up from around 22% in the late 1970s, placing the US 35th out of 39 OECD countries for inequality. Further, US poverty rates are the 4th worst in the OECD and wages have barely grown since 2005, suggesting the gap is likely to widen.

The data helps explain Americans’ scepticism towards globalisation; trade may well be good for the US economy, but the limited distribution of its benefits helps explain why Trump’s campaign rhetoric on trade – such as tariffs on imports and bringing back US manufacturing jobs – resonated so strongly with voters.

Moving forward, to gain public support for a shift in foreign policy goals, US leaders will need to first address the suite of voters’ domestic priorities. They will need to explain how an ongoing expansion of global trade and investment in multilateralism and international institutions will benefit all Americans. Concurrently, they will need to implement structural reforms to reverse the trend towards economic inequality.

Several Democratic contenders for the 2020 Presidential election have outlined proposals in this space. Senator Elizabeth Warren has been prominent in advocating for a wealth tax – an incremental 2% tax applied on the portion of wealth exceeding $50 million, with a further 1% taken when wealth exceeds $1 billion. This tax would only impact around 75,000 households, but generate an estimated $2.75 trillion over a 10-year period which would be reinvested in domestic priorities like healthcare.

However, maintaining redistributive policies funded by wealth taxes requires sustaining economic growth. The historical trend shows that US engagement in the global economy delivers this growth, but the current Administration’s trade policies and escalating trade war with China are signs of growing isolationism. This could impact both US and global economic growth in the coming years and will be highly relevant to any policy designed to address domestic inequality.

There is a clear path forward here, but one that US leaders must tread carefully. Withdrawal from the global arena will likely increase system instability and erode much of what the US has built since 1945. However, failure to convince a disillusioned public that global engagement genuinely advances US interests will severely constrain any realignment of foreign policy over the longer-term.

Dr Mark Bowden is a business executive in the animal health sector and Master of International Relations graduate based in Sydney.

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