If Republicans want China to win, they should ensure Biden doesn’t come to Australia

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The debate over increasing the US government-held debt is a familiar but troubling feature of American political dysfunction casting a shadow over Washington and its political allies.

President Joe Biden on Wednesday sought to pressure Republican members of Congress to raise the country’s $US31 trillion ($47 trillion) debt ceiling or risk pushing it into a recession.

President Joe Biden may cancel a trip to Australia if the issue is not resolved in coming days.Credit: Bloomberg

“We’ve got to fight. We’re going to win this fight,” Biden said at an event at Westchester Community College in Valhalla, New York.

The US Treasury Department says the government will be unable to pay its bills as early as June 1, which could trigger cascading economic, financial and political crises.

Biden said on Tuesday that protracted negotiations over the debt ceiling could prevent him from attending the Quad meeting in Sydney on May 24, an event to co-ordinate the strategic response to China’s growing influence in the region.

Wrangling with Republicans: President Joe Biden and his congressional opposition made little tangible progress towards averting a first-ever US default. Credit: Bloomberg

The negotiations have emerged as a periodic game of chicken between Democrats and Republicans, who see it as an opportunity to restrain spending and Democrats’ legislative ambitions.

If this predicament seems familiar, it should: Republicans and Democrats have clashed over the debt limit 10 times in the past 13 years.

In 2011, for example, the battle over a debt increase spooked global markets. The uncertainty sent sharemarkets plunging, and prompted Standard & Poor’s credit rating agency, in a first, to downgrade the country’s borrower rating from A+.

Any onlooker, especially from Australia, could see how this is an own goal for the US.

The government periodically needs to raise the debt levels it carries by changing legislated limits. Under the US system, raising the current debt ceiling of $US31 trillion requires a political compromise between the White House and Congress.

In times of polarisation, an orderly compromise is difficult.

For some time, certainly, since the mid-1990s, US parties haven’t seen themselves bound by a larger geopolitical consideration than simply winning.

That was certainly the case in 2011, when the Tea Party wing of the Republican Party, oblivious to the global implications of default, pushed hard against a GOP deal with the Obama White House.

This year, the stakes are much higher. Not because of events inside the US but outside: China wants to remake everything from trade to communications, to currency in a way that advantages itself.

If the Republicans or Democrats want to hand a victory to China today, they should ensure Biden doesn’t get to make his trip to Asia and Australia, where he will discuss liberal democracies’ strategy for competition in this new geopolitical environment.

It doesn’t have to be this way. Increasingly, as China changes the world, there has been a shift towards agreement between Republicans and Democrats on the competitive threat posed by China.

In February, Congress voted 419-0 to condemn the incursion of a Chinese spy balloon over US territory.

In July, Republicans crossed the aisle to vote for a bill to boost US microchip production to compete with China.

This is natural response to the realisation that China seeks to erode, supplant or just plain upend the existing global financial order, and replace it with a Beijing-dominated global system.

But the urge to burn everything down among Republicans remains strong.

On Wednesday, ex-president Donald Trump called on Republicans to let the country default on its debt if Democrats don’t accept Republican spending-cut requests.

A certain way to avoid default and crisis is for US leaders to remember that there is nothing inevitable about US leadership and China’s aspirations are ambitious.

The 2023 version of the US debt-limit debate could look different if cooler heads prevail in Washington.

That is if Americans (Republicans and Democrats alike) remember that the seemingly endless and ideological debate about US budget spending priorities takes place in a world increasingly transformed by China.

One need only look at China’s potential diplomatic role in bringing an end to Russia’s invasion of Ukraine to see the US is no longer the only “indispensable” player.

China stands ready to swoop in and take advantage of retreat from American leadership in markets, in the global economy, in information flows and in global security.

So as the wrangling between Biden, Republican House Speaker Kevin McCarthy, and Senate Minority Leader Mitch McConnell intensifies, China watches, looking for signs of American power slipping.

If Biden is prevented from leaving Washington to discuss the security of the Indo-Pacific, China certainly stands to win.

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