How do you get a left-liberal to argue that the federal government is out of money? Propose spending it on rescuing a sovereign nation from domination by a anti-Western despot. Peter Beinart, best known for being a vociferous critic of mainstream Zionism and of the state of Israel, takes up Rand Paul’s line in The Atlantic: America can’t afford to do anything about Ukraine. He writes:
If America and Europe have failed to adequately defend Ukraine, it’s not for lack of guns. It’s for lack of money. Over the last year, the real contest between Russia and the West hasn’t been a military one (after all, even McCain knows that risking war over Ukraine is insane). It’s been economic. In part because of two wars that have drained America’s coffers, and in part because of a financial crisis that has weakened the West economically, the United States and Europe have been dramatically outbid. . . .
The West’s response has been underwhelming. After Russia seized Crimea last month, the EU belatedly raised its offer to $11 billion in a bid to stabilize Ukraine’s weak, post-Yanukovych government. But the package will release only $1.6 billion in the first year, and even that money depends on an IMF deal that would likely require Kiev’s new leaders to take wildly unpopular steps like raising home-heating bills. For its part, Washington has pledged loan guarantees worth $1 billion. But that assistance is now stalled in the Senate, where Democrats are linking it to IMF reforms and Republicans, if you believe Harry Reid, are using it to stop new IRS rules that would limit the political activities of nonprofits like those funded by the Koch brothers. The West may no longer be in a bidding war with Putin, who is more interested in destabilizing Ukraine’s new government than wooing it. But countering Putin’s efforts requires helping Ukraine secure itself economically. And so far, the West’s attempts don’t nearly accomplish that.
If any of this sounds vaguely familiar, it should. The U.S. and its European allies have been getting outbid a lot lately. Last fall, for instance, as the Obama administration considered withholding America’s annual $1.5-billion aid package to Egypt to protest its recent military coup, several oil-rich Persian Gulf states—thrilled to see an Islamist regime ousted from power—offered Egypt’s generals a cool $12 billion.
Nowhere in his piece does Beinart resolve his sleight of hand: The U.S.’s and the EU’s low bids have nothing to do with economic or fiscal capacity (you know, what “lack of money” usually means), but merely political will. “We’re long past the era when America and its allies can spend vast sums to promote Western ideals and interests around the world,” he writes. Not really — at worst, we seem to be past the era when America and its allies eagerly reach political agreements on spending vast sums to promote Western ideals and interests around the world. It’s not clear why Beinart insists on claiming there are economic constraints when all his evidence points toward there being political ones.
As he happily admits, the U.S. just enthusiastically (for a while) spent trillions of dollars on wars in Iraq and Afghanistan. Those conflicts certainly have rendered a lot of Americans war-weary, and they happened before the financial crisis increased the U.S. federal debt substantially. To argue that they mean we can’t spend make a $10 billion loan to Ukraine, though, or that an adequate explanation from the president and Congress couldn’t easily find approval from the American people for such a measure, is silly.
Beinart doesn’t explain the economic arguments as to why we can’t afford to help Ukraine, instead pretending that political gridlock is the same thing as fiscal insolvency, because they’re so bad I doubt The Atlantic would print them: The U.S. currently sells five-year bonds at a yield of about 1.5 percent, and we need to replace the five-year funding deal Ukraine reached with Russia, which involved buying bonds at a 5 percent yield. Given that we can’t send them discounted gas like Russia can, cut that coupon even more, and this is still far from a costly endeavor for the U.S. taxpayer.
Senator Rand Paul and a number of conservative commentators have complained that this would mean sending money to Russia, since Russia did buy $3 billion worth of Ukrainian bonds as part of the now-abrogated deal between the two countries. Yes, buying Ukrainian bonds now would send some money to make payments to Russia on those bonds (over the next year or two, not immediately). The alternative is default – which would mean shafting not just Russian bondholders but all of the American and European holders of Ukrainian bonds, too. If that happens without some support from the West, it would substantially weaken the Ukrainian government and could even precipitate its collapse or a Russian invasion of eastern Ukraine.
A lot of people in Congress and the White House don’t seem to care too much about that. But they shouldn’t have to care very much to be willing to reach a deal that the U.S. can very obviously afford. If Americans understand that the costs here are simply not that substantial, a deal to support Ukraine shouldn’t be a hard sell. American politicians (if not European ones sometimes) have the burden of democratic checks and balances where Putin doesn’t — but that’s not at all impossible if we dispense with the kind of economic delusions Senator Paul is peddling and Beinart is pretending to buy. (Congressional Republicans’ insistence on getting a domestic political victory out of this has to go, too.)