The US financial year 2022/23 ended last month with a deficit of $1.695 trillion – up $320bn or 23% year-on-year. It provided a difficult background to the problems in agreeing a new Speaker of the House and in the administration getting more spending for Israel and Ukraine agreed.
President Joe Biden’s address to the nation at the end of last week marked a new phase in his presidency. In his first period he was keen to get out of Afghanistan quickly, even before telling his allies or making good arrangements for the final withdrawal. In his early dealings with Russia, he suggested there could be some minor incursion by Russia in Ukraine that did not warrant a big response. He showed every wish to concentrate on a domestic agenda and to reduce US commitments abroad.
Russia’s invasion of Ukraine required him to condemn President Vladimir Putin and to start offering some military aid. His showed caution by refusing to commit US troops and by being selective about which weaponry to supply, with clear restrictions on use to within Ukrainian territory. He was still understandably concerned about being dragged into a wider war. Since then, the US has sent more types of weaponry and relaxed some of the original limitations and conditions.
Mr Biden’s speech last week to the American nation showed a more muscular outward going approach to world problem.
The immediate takeover of Afghanistan by the Taliban did not lead to any big changes in US Middle Eastern policy. The president cooled relations with Saudi Arabia and the UAE a little and tried diplomatic approaches to Iran. Work continued to secure a rapprochement between Israel and Saudi at the same time. Saudi Arabia decided to put more distance between it and the US, joining the BRICS grouping of countries and working more closely with Russia through Opec+. Saudi turned a deaf ear to US entreaties to ease the oil market with more supply.
Mr Biden’s speech last week to the American nation showed a more muscular outward going approach to world problems. The president states that: “American leadership is what holds the world together”. He sees the US as the arsenal of democracy, and finds connections between what Hamas did in Israel, Putin is doing in Ukraine and what could happen in the Asia Pacific region if democracies are not defended. He said: “We cannot let terrorists like Hamas and tyrants like Putin win.”
Problems with budgets and the House Speaker
Defending democracy comes at a price. The president naturally hopes the cost in lives will be limited and reiterated that he thinks Israelis and Palestinians should live in safety, dignity and peace. His immediate problem is the money. He is seeking from Congress an extra $105bn. That includes $60bn for Ukraine, $14bn for Israel, $10bn for the humanitarian relief, $14bn to strengthen the Mexican border and $7bn for the Pacific region. He is presumably hoping that some Republicans will approve the money for Israel and the border even though the Ukraine money is now more contentious amongst them. By linking it all in a package he will hope the House can find the votes to pass it.
The Republicans cannot yet support a Speaker – and this remains a problem. Efforts last week to fill the role so business can proceed in Congress were unsuccessful. Jim Jordan got to within 20 votes or so of securing enough Republicans to win, given that the Democrats vote against any Republican who stands to be Speaker. With 212 Democrats in a House of 435 members very few Republicans can block anyone of their caucus from the Speakership by voting with the Democrats to stop that candidate.
The arguments run from the early days of the Tea Party movement and relate to a fundamental disagreement over the size of government, the extent of the federal budget and the best way to offer an alternative to the Democrats. Some Republicans think the best course is to do deals with the Democrat Senate and President to allow government to act even though this means large budget deficits and higher taxes. Others think the budgets and actions of the administration are unacceptable and therefore the Republicans should refuse to compromise over spending more and borrowing more. There will be a further attempt to elect a Republican Speaker this week, with nine new candidates expressing interest demonstrating how unsure the caucus is about its direction and personalities.
President Biden is right that the world looks to America in many ways. Enemies will be deterred if the US takes a problem seriously and puts resource into it. Friends look to the US to offer the biggest share of financial and military support in any conflict. Ukraine, Israel and the wider world awaits the resolution of the Speaker problem, as without the House no extra budget can be voted. We expect some compromise to be struck in due course, resulting in more military spending. The House will also need to approve the tabled budgets for domestic spending soon as there is only a temporary agreement on the general budget. There will be turbulence whilst a solution is found.
Influencing the Israeli response to Hamas
Meanwhile, the US is stressing to Israel not only its support against terrorism, but also the need for a proportionate and effective response. The US and other Western countries want safe routes for large quantities of practical aid into Gaza and are seeking reassurances that protecting the lives of civilians is a high priority. Some progress has now been made on the aid issue.
China, Russia, Iran – as well as the US and Nato – are seeking to influence the behaviours of both Hamas and Israel in a tense situation. Israel has delayed an invasion and must be worried about the plight of the hostages in Gaza. The US and China have sent naval forces to the region. China will have noted the modest allocation of money to the Pacific as a symbol of the intent to support democracies such as Taiwan. We continue to hope and think that a wider war can be avoided, whilst being most concerned about the death and damage the current war is creating.
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