The International Monetary Fund (IMF) deemed the United States’ economy as the world’s largest in 2021, producing an estimated $22.94 trillion or 24.4% of global Gross Domestic Product (GDP). The number is especially impressive when considering the population of the United States is just over 333 million and it has a per capita GDP of roughly $68,700.
Many public policy concerns
While many public policy issues are greatly concerning – from COVID-19 to the crisis at our southern border to education gaps relative to our ability to compete economically – in our opinion, the following three are paramount for the U.S. Congress and Biden Administration.
1. The shrinking influence of the United States and North America
In 1960, North American total global GDP was $597.42 billion or 43.7%, with the U.S. contributing $543 billion or just under 40 percent of the total global GDP of $1.367 trillion (China’s 1960 global GDP by comparison was $59.72 billion or $4.39%).
China’s 2021 global GDP grew to about $16.86 trillion or 17.86% of total global GDP. Comparatively, 2021 North American GDP declined to 27.9% of total global GDP, while Asia – led by China, Japan, India, and South Korea– produced 33.7% of global GDP and extended its faster growth pace lead to more than two decades.
2. An objective and realistic view of China is needed more than ever in Washington D.C.
On December 29, 2021 the Chinese Communist Party ordered Hong Kong police to raid the headquarters of Stand News, a pro-democracy Hong Kong-based news service critical of government policy coming out of Beijing. Seven Stand employees were arrested, and all remaining employees were dismissed. China’s action is another violation of the Sino-British agreement signed in 1997 giving Hong Kong economic and political freedom until 2047. The West, and especially the United States, must not continue to turn a blind eye toward China’s treatment of Hong Kong.
We also must reverse the current trend which has allowed China to gain superior numbers of military assets to ours in the South China Sea and off the coasts of our numerous Asian allies. As tensions grow with China over Taiwan, we must acknowledge Chinese Foreign Minister Wang Yi's comment: “the U.S. will pay an unbearable price” if we continue to support Taiwan. Our response must speak with conviction and specificity of the consequences China will suffer economically and potentially militarily if it moves against Taiwan, an important U. S. economic partner and champion of freedom and free enterprise.
With shortages of face masks to battle COVID-19 and computer chip delays that have challenged American automobile manufacturers, it should be apparent to both U.S. producers and consumers that U.S. businesses must rethink their previous supply chain strategy and be encouraged to produce more necessities at home.
Further, we must rally the world and hold China responsible for the COVID-19 outbreak and its consequences. It’s the right thing to do and the only way to prevent a future outbreak.
We applaud Congress for passing a bill targeting China over Uyghur-forced labor practices. The measure prohibits imports from the Xinjiang region of China unless companies can prove the products were made without forced labor. We hope President Biden signs it immediately and more is done by the U.S. government and U. S. corporations to protect the rights and freedoms of Muslim Uyghurs living in China.
Broadening our view of China further, The Hill recently posited: Should a weakening and unstable Chinese economic model be as great a concern as a rising China? The answer is yes. China’s concern over energy shortages, slowing economic growth and productivity, and debt now at 290% of GDP, demonstrates that confidence in the Chinese economic and political structure is teetering from within. In addition, recent crackdowns on the property and technology sectors will result in less flexibility and greater economic authoritarianism control over two sectors that account for 29 percent of Chinese GDP.
Our concerns regarding Chinese economic stability and their ability to execute their 5-year planning model hopefully will be a cause for concern within the greater Communist Party of China. Exposing the growing fragility and incompetence of the Chinese economic model could provide a boost for pro-market reform party members as they vote at the 2022 Communist Party Congress this fall. Open, honest and regular communication of China’s current economic structural weaknesses could help market-friendly party members use data to thwart Xi Jinping’s ambition to be only the third leader in the party’s 100-year history elected to a third term. Perhaps a modern Chinese version of ‘Radio-free Europe’ would be useful in the months ahead?
3. U.S. Energy Policy continues to make no sense to us.
Oil prices continue to fluctuate, declining to the mid-$60’s range weeks ago only to rebound to more than $77 a barrel currently. Many energy experts believe oil could trade at more than $100 a barrel in 2022 if the Biden Administration continues its illogical energy policy. Remember that U.S. oil and natural gas are among the cleanest carbon-based fuels by category available in the world today. In fact, U.S. production of clean fossil fuels has dramatically reduced the U.S. carbon footprint, making it the global leader in carbon reduction in the industrialized world over the last 30 years. However, if cleaner U.S. oil and natural gas continue to be removed from the U.S. and world markets due to the Biden Administration’s policies, five nonsensical results will occur: 1) The policy will enhance the political and public policy initiatives of countries unfriendly to democracy like Russia and Iran; 2) European allies will become more dependent on unfriendly nations for their oil and natural gas needs, thereby weakening the security and economic prowess of Europe and the United States; 3) More “dirtier” Russian and Iranian oil and natural gas on global markets coupled with less from the U.S. means a sustained increase of lower quality and higher polluting fossil fuel products on global energy markets (in effect, the Biden Administration’s policy will increase the global carbon footprint rather than reduce it, making the policy anti-green rather than the pro-green policy it’s currently being promoted to represent); 4) The policy will employ thousands of Russians and Iranians in high-paying oil industry-related jobs when those good jobs could be here in the United States with workers paying taxes to the United States; and, 5) Billions of dollars of local, state and federal tax revenue from U.S. oil companies will be lost to the U.S. government at all levels in the months and years ahead.
Conclusion
The U.S. National Debt currently stands at $29.62 trillion (over $89,000 per U.S. man, woman, and child and just under $237,000 per U.S. taxpayer). Much of the current state of our national debt is due to excessive government spending on programs that are not needed while taking capital from private sector investments and U.S. national defense. It is crucial that U.S. fiscal, monetary and foreign policy focus on strategies that will grow U.S. capital investment, private sector job and economic growth, while defending the United States and our key allies. This is the only way to ensure that the United States will remain the world’s only economic and military superpower.
Lisa McClain is a member of the U.S. Congress representing the 10th District of Michigan and Timothy G. Nash is director of the McNair Center at Northwood University.