Homeland Insecurity

The New York Times

Homeland Insecurity
By THOMAS L. FRIEDMAN

Bush officials have always been eager to pose as the tough guys willing to make the tough decisions. On Iraq and Afghanistan, they did. But when it comes to China, the Bush administration is engaged in one of the greatest acts of unilateral disarmament ever seen in U.S. foreign policy.

National security is about so much more than just military deployments. It is also about our tax, energy and competitiveness policies. And if you look at all these areas, the Bush team has not only been steadily eroding America's leverage and room for maneuver vis-à-vis its biggest long-term competitor - China - but it has actually been making us more dependent than ever on Beijing. Indeed, if the Bush policies were wrapped into a single legislative bill it could be called "The U.S.-China Dependency Act."

The excessive tax cuts for the rich, combined with a total lack of discipline on spending by the Bush team and its Republican-run Congress, have helped China become the second-largest holder of U.S. debt, with a little under $200 billion worth. No, I don't think China will start dumping its T-bills on a whim. But don't tell me that as China buys up more and more of our debt - and that is the only way we can finance the tax holiday the Bush team wants to make permanent - it won't limit our room to maneuver with Beijing, should it take aggressive steps toward Taiwan.

What China might do with all its U.S. T-bills in the event of a clash over Taiwan is a total wild card that we have put in Beijing's hands.

On energy, the Bush team's obsession with drilling in the Alaskan wilderness to increase supply is mind-boggling. "I am sure China will be thrilled with the Bush decision to drill in Alaska," said the noted energy economist Philip Verleger Jr. "Oil in Alaska cannot easily or efficiently be shipped to our Gulf Coast refineries. The logical markets are on the West Coast of the United States and in Asia. Consumers in China and Japan, not the U.S., will be the real beneficiaries of any big Alaska find.

"With a big find, China and Japan will be able to increase imports from a dependable supplier - the U.S. - while consumers in the U.S. will still be at the mercy of unreliable suppliers, such as Venezuela and Saudi Arabia. It is simple geography. [Also], a big find will lead to lower prices in the short term, promoting more emissions and more warming."

Moreover, focusing exclusively on squeezing out a little more supply will only discourage conservation, Mr. Verleger added, setting the stage for higher prices again in three or four years - "when exhausting oil reserves and burgeoning demand from China and India will drive the price of oil to well above $100 a barrel." That will put even more money in the pockets of some of the world's worst governments.

That's why America urgently needs what I call a "geo-green" strategy, which combines geopolitics with environmentalism. Geo-greenism starts with a $1-per-gallon gasoline tax, which would help close our budget gap and force the U.S. auto industry to convert more of its fleet to hybrid and ethanol technology, thereby reducing the amount of money going to Sudan, Saudi Arabia and Iran for oil. It would also reduce our dependence on China to finance our debt and the chances that we will end up in a global struggle with China for energy.

Finally, on competition policy, the Bush team and Congress cut the budget of the National Science Foundation for this fiscal year by $105 million. I could not put it better than Congressman Vern Ehlers, one of the few dissenting Republicans, who said: "This decision shows dangerous disregard for our nation's future ... at a time when other nations continue to surpass our students in math and science and consistently increase their funding of basic research. We cannot hope to fight jobs lost to international competition without a well-trained and educated work force."

In addition, at a time when China is encouraging its new companies to offer employees stock options to get Chinese innovators to stay at home and start new firms, the Bush team has been mutely going along with a change in accounting standards that will force U.S. companies to expense stock options by June 2005. This is likely to dampen the growth of our own high-tech companies and encourage U.S.-educated Indian and Chinese techies to go back home.

I am not a China basher. We need to engage China, and help accommodate its rising power with the world system, but the only way to do that is from a position of strength. But everything the Bush team is doing is ensuring that it will be from a position of weakness.

originally published March 17, 2005