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Can Biden And McCarthy Avert A Calamitous Debt Default? 3 Evidence-Backed Leadership Strategies That Might Help



Whether or not the U.S. defaults on its debt may depend on the leadership of Joe Biden and Kevin McCarthy. AP Photo/Mariam Zuhaib

The U.S. is teetering toward an unprecedented debt default that could come as soon as June 1, 2023.

In order for the U.S. to borrow more money, Congress needs to raise the debt ceiling – currently US$31.4 trillion. President Joe Biden has refused to negotiate with House Republicans over spending, demanding instead that Congress pass a stand-alone bill to increase the debt limit. House Speaker Kevin McCarthy won a small victory on April 26 by narrowly passing a more complex bill with GOP support that would raise the debt ceiling but also slash spending and roll back Biden’s policy agenda.

Biden recently invited congressional leaders, including GOP leader McCarthy, to the White House on May 9 to discuss the situation but insisted he isn’t willing to negotiate.

Rather than leading the nation, Biden and McCarthy seem to be waging a partisan political war. Biden likely doesn’t want to be seen as giving in to Repubicans’ demands and diminishing legislative wins for his liberal constituency. McCarthy, with his slim majority in the House, needs to appease even the most hard-line members of his party.

Having studied leadership for over 25 years, I would suggest that their leadership styles are polarized, oppositional, short-term and highly ineffective. Such combative leadership risks a debt default that could send the U.S. into recession and potentially lead to a global economic and financial crisis.

While it may seem almost impossible in the current political climate, Biden and McCarthy have an opportunity to turn around this crisis and leave a positive and lasting legacy of courageous leadership. To do so, they need to put aside partisanship and adopt a different approach. Here are a few evidence-backed strategies to get them started.

1. Moving from a zero-sum game to a more holistic approach

Political leaders often risk being hijacked by members of their own party. McCarthy faces a direct threat by hard-line conservative members of his coalition.

For example, back in January, McCarthy agreed to let a single lawmaker force a vote for his ouster to win enough votes from ultraconservative lawmakers to become speaker. That and other concessions give the most extreme members of his party a lot of control over his agenda and limit McCarthy’s ability to make a compromise deal with the president.

Biden, who just announced he’s running for reelection in 2024, is betting his first-term accomplishments – such as unprecedented climate investments and student loan forgiveness – will help him keep the White House. Negotiating any of that away could cost him the support of key parts of his base.

My research partner Marianne W. Lewis and I label this kind of short-term, one-sided leadership as “either/or” thinking. That is, this approach assumes that leadership decisions are a zero-sum game – every inch you give is a loss to your side. We argue that this kind of leadership is limited at best and detrimental at worst.

a Black man and a white man stand next to each other holding Nobel Peace prize folders and medals
Nelson Mandela, left, and F.W. de Klerk won the Nobel Peace Prize for helping end apartheid in South Africa.
Jon Eeg/Pool photo via AP

Instead, we find that great leadership involves what we call “both/and” thinking, which involves seeking integration and unity across opposing perspectives. History offers examples of how this more holistic leadership style has achieved substantial achievements.

President Lyndon B. Johnson and fellow Democrats were struggling to get a Senate vote on the Civil Rights Act of 1964 and needed Republican support. Despite his initial opposition, Republican Sen. Everett McKinley Dirksen – then the minority leader and a staunch conservative – led colleagues in crossing party lines and joining Democrats to pass the historic legislation.

Another example came in 1990, when South Africa’s then-President Frederik Willem de Klerk freed opponent Nelson Mandela from prison. The two erstwhile political enemies agreed to a deal that ended apartheid and paved the way for a democratic government – which won them both the Nobel Peace Prize. Mandela became president four years later.

This integrative leadership approach starts with a shift of mindset that moves away from seeing opposing sides as conflicting and instead values them as generative of new possibilities. So in the case of the debt ceiling situation, holistic leadership means, at the least, Biden would not simply put up his hands and refuse to negotiate over spending. He could acknowledge that Republicans have a point about the nation’s soaring debt load. McCarthy and his party might recognize they cannot just slash spending. Together they could achieve greater success by developing an integrative plan that cuts costs, increases taxes and raises the debt ceiling.

2. Champion a long-term vision over short-term goals

What we call “short-termism” plagues America’s politics. Leaders face pressure to demonstrate immediate results to voters. Biden and McCarthy both have strong incentives to focus on a short-term victory for their side with the presidential and congressional elections coming soon. Instead, long-term thinking can help leaders with competing agendas.

In a 2015 study, Natalie Slawinski and Pratima Bansal studied executives at five Canadian oil companies who were dealing with tensions between keeping costs low in the short term while making investments that could mitigate their industry’s environmental impact over the long run. The two scholars found that those who focused on the short term struggled to reconcile the two competing forces, while long-term thinkers managed to find more creative solutions that kept costs down but also allowed them to do more to fight climate change.

Likewise, if Biden and McCarthy want to avert a financial crisis and leave a lasting legacy, they would benefit from focusing on the long term. Finding points of connection in this shared long-term goal, rather than stressing their significant differences about how to get there, can help shift away from their standoff and toward a solution.

3. Be adaptive, not assured

Voters often praise political leaders who act swiftly and with confidence and self-assurance, particularly at a moment of economic uncertainty.

Yet finding a creative solution to America’s greatest challenges often requires leaders to put aside the swagger and adapt, meaning they take small steps to listen to one another, experiment with solutions, evaluate these outcomes and adjust their approach as needed.

In a study of business decisions at a Fortune 500 technology company, I spent a year following the senior management teams in charge of six units – each of which had revenues of over $1 billion. I found that the team leaders who were most innovative tended to be good at adaptation. They constantly explored whether they had made the right investment and made changes if needed.

Small steps are also necessary to build unlikely relationships with political foes. In his 2017 book, “Collaborating With the Enemy,” organizational consultant Adam Kahane describes how he facilitated workshops to help former enemies take small steps toward reconciliation, such as in South Africa at the end of apartheid and in Colombia amid the drug wars. Such efforts helped South Africa become a successful multiracial democracy and Colombia end decades of war with a guerrilla insurgency.

two white men are seen shaking hands and smiling with other people who's backs are turned
Former Democratic Gov. Phil Bredesen, second from left, and former Republican Gov. Bill Haslam, right, have built a good relationship since leaving office despite their political differences.
AP Photo/Mark Humphrey

This kind of leadership requires small steps toward connection rather than large political leaps. It also requires that both sides let go of their positions and consider where they are willing to compromise.

Biden and McCarthy could learn from two former Tennessee governors, Democrat Phil Bredesen and Republican Bill Haslam. Though they oppose each other on almost every political issue, including gun control, the two former leaders have built a constructive relationship over the years. Rather than tackle the big divisive issues, they started with identifying the small points where they agreed with each other. Doing so led them to build greater trust and continue to look for connections.

So when a gunman killed six people at a school in Nashville recently, the two former governors were able to move beyond political finger-pointing and focus on how their respective parties could work together on meaningful gun reform.

Of course, it’s easier to do this once you’re out of office and the pressure from voters and parties goes away. And although current Tennessee Gov. Bill Lee agreed on the need for gun reform, his fellow Republicans in the state Legislature balked.

A long shot, but …

And that’s why I know this is a long shot. The two main political parties are as polarized as ever. The odds of a breakthrough that leads to anything more than a last-second deal that kicks the debt ceiling can down the road remain pretty low – and even that seems in doubt.

But this is about more than the debt ceiling. The U.S. faces a long list of problems big and small, from high inflation and a banking crisis to the war in Ukraine and climate change.

Americans need and deserve leaders who will tackle these issues by working together toward a more creative outcomes.

The Conversation

Wendy K. Smith does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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'Mistaken, Misread, Misquoted, Mislabeled, And Mis-Spoken' — What Woody Guthrie Wrote About The National Debt Debate In Congress During The Depression




Guthrie questioned whether politicians really cared about the public interest — such as the welfare of these veterans demonstrating in front of Congress in 1932. Senate Historical Office

The debt ceiling debate between the House GOP and President Joe Biden could, if not solved, lead to economic chaos and destruction – so it might seem strangely lighthearted to wonder what a Great Depression-era singer and activist would think about this particular political moment.

Certainly, in all the research I did in putting together my book “Prophet Singer: The Voice and Vision of Woody Guthrie,” I never came across any comment Woody Guthrie made about the debt ceiling.

But he lived through the Great Depression and its aftermath. He also stood witness to legislators struggling to correct the direction that the nation was headed in during the 1930s and early ‘40s.

He had a lot to say about Congress in general and how it handled the national debt in particular.

He once made a folksy joke that suggests his feelings about this supposedly august body.

“The Housewives of the country are always afraid at nite, afraid they’s a Robber in the House. Nope, Milady most of em is in the Senate,” he wrote in his regular column for The People’s Daily, called “Woody Sez.”

Guthrie constantly railed against politicians, both Republican and Democrat, who he thought represented their own selfish interests rather than those of deserving working men and women.

What if he could survey today’s America? Would his comments on the state of the nation in the past suggest that he would have something to say in 2023?

In fact, some of his observations sound as if they were written about this political moment – rather than his own.

A man with a hat playing a guitar with a sticker attached that says, 'This Machine Kills Fascists.'
Guthrie, who was known as ‘the Dust Bowl troubador’ for his songs about the Dust Bowl and the Depression.
Library of Congress, World Telegram photo by Al Aumuller

‘Hearin’ the hens a cacklin’

When Guthrie visited Washington, D.C., in 1940, he managed to hear some Senate debates and provided his thoughts on their effectiveness.

“I gawthered the Reactionary Republicans was in love with the Reactionary Republicans; also that the Liberal Democrats was in love with th’ Liberal Demacrats. Each presented a brief case of statistics proving that the other brief cases of statistics, was mistaken, misread, misquoted, mislabeled, and mis-spoken,” he wrote in his column.

And just what were politicians arguing over then? The national debt.

Bipartisan legislative efforts raised the debt ceiling three times under President Donald Trump. Now, House Republicans are balking unless certain conditions are met, while the Democrats are demanding a clean bill with no restrictions.

Guthrie witnessed much the same situation in his era. During his visit to Washington, D.C., he listened to “senators a making speeches – on every conceivable subject under the sun, an’ though the manner in which they brought forth their arguments, their polished wit, and subtle maneuvers, were all very entertaining, I come out of it as empty handed as I went in,” he wrote in “Woody Sez.”

He then compared their debates to “hearin’ the hens a cacklin’ – and a runnin’ out to th barn.” Despite the scene’s being “loud, noisy, and plenty entertaining,” the result was “no eggs.”

There’s a lot of noise coming from Congress today also – but no results.

What could happen if the two sides cannot agree? A telling example occurred in 2011, when the bipartisan deal to raise the debt ceiling came so late that Standard & Poor’s downgraded the country’s credit rating – which hiked the interest that needed to be paid on the U.S. debt.

But if an agreement does not happen, Treasury Secretary Janet Yellen has warned that such a crisis would bring on “economic and financial catastrophe” on a national and global scale.

Guthrie would find this kind of brinkmanship troubling. Not because he was a political operative, with merely an intellectual understanding of the risks. Instead, he was driven by a personal knowledge of the day-to-day hardships, the human toll of such momentous political decisions. His family had fallen from middle-class safety into abject poverty even before the onset of the Great Depression.

A family on the road, standing next to a rickety truck with their belongings. Two boys in overalls are wearing no shirts.
Guthrie knew and sang about the needs of America’s poor, such as this Depression-era impoverished family of nine on a New Mexico highway.
Dorothea Lange, photographer; Library of Congress

Because of falling agricultural prices in the aftermath of World War I and his father’s real estate speculation in some small farms surrounding their hometown of Okemah, Oklahoma, the Guthries could not keep up with their mortgages. They were forced into foreclosure.

Guthrie joked that his father “was the only man in the world that lost a farm a day for thirty days.”

Foreclosures would likely be just one of the ruinous effects of default now, along with interest rates hikes, slashing of social programs, unemployment spikes and decimation of pension plans. All are negative results, but they are certain to hit the poor and working class the hardest.

Those are the people whom Woody Guthrie advocated for throughout his career. Those are the people whose hardships he lamented in such songs as “I Ain’t Got No Home” and “Dust Bowl Refugee.”

But he also expressed optimism about the power of those same people to make a positive change, such as in “Union Maid” and “Better World A-Comin’.” Individual and collective action was necessary, according to Guthrie, and he celebrated both. The union maid would “always get her way when she asked for better pay,” and in “Better World” he sings, “we’ll all be union and we’ll all be free.”

Perhaps his best-known comments about the nation appear in “This Land Is Your Land,” with the popular version praising the American landscape. But in his early version of that song, he ended it with his narrator surveying a line of hungry people lined up “by the relief office” and then asked, “Was this land made for you and me?”

That question could rise again in 2023: If congressional leaders debating over the debt ceiling fail to find common ground for the nation’s greater good, perhaps someone will challenge them and ask if the politicians are in office for the American people, or for themselves – just as Woody Guthrie would have.

The Conversation

Mark Allan Jackson does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Symbols Of The Confederacy Are Slowly Coming Down From US Military Bases: 3 Essential Reads




People pose next to a newly unveiled Fort Moore sign on May 11, 2023. Cheney Orr/AFP via Getty Images

Without much fanfare, a federal panel is removing the names of Confederate generals from U.S. military bases and replacing them with names that exemplify modern-day values and patriotism.

Most recently, on May 11, 2023, the U.S. Army base in Georgia originally named after Confederate Brig. Gen. Henry Benning was renamed Fort Moore after both Lt. Gen. Harold “Hal” Moore, who served in Vietnam, and his wife, Julia Moore, who had been an advocate for military families and reformed the military’s death notice procedures.

In stark contrast to the Moores, Benning was a leader in the South’s secession movement and strongly defended slavery.

Over the years, The Conversation US has published numerous stories exploring the legacy of Confederate nostalgia, everything from national monuments to U.S. military bases. Here are selections from those articles.

1. Reconsidering Confederate iconography

For decades, nine U.S. Army bases have carried the names of men who fought against the United States and its Union army – in a war waged to defend and perpetuate the slavery of people of African descent.

These military installations, all in Southern states, were named to honor such figures as Gen. Robert E. Lee, who commanded the Confederate Army, and John Bell Hood, an associate of Lee’s known for being both brave and impetuous.

Until recently, the military installations honoring Confederate leaders received little scrutiny from the media. As a newspaper reporter four decades ago, Jeff South gave the names a free pass. In 1981, South wrote, he covered the Boy Scouts Jamboree at Fort A.P. Hill in Virginia without mentioning that the base was named for a man who had turned against the United States and fought to defend slavery.

“In recent years, more Americans, including those living in the South, have reconsidered the use of Confederate iconography,” South wrote.

Read more:
US moves to rename Army bases honoring Confederate generals who fought to defend slavery

2. Memorializing modern-day values

As a professor of pop culture history who studies Black statues within mainstream society, Frederick Gooding Jr. wrote about America’s reckoning with its oppressive past.

“The nation (faces) the question of not just which statues and other images should be taken down,” Gooding explained, “but what else – if anything – should be put up in their place.”

Gooding pointed out that the lack of Black statues, for example, is an overlooked barometer of racial progress and “sends a clear message of exclusion.”

Read more:
Old statues of Confederate generals are slowly disappearing – will monuments honoring people of color replace them?

3. Memorials have expiration dates too?

Alan Marcus and Walter Woodward have been studying the role of Confederate monuments and other nostalgia in American memory.

“Historical monuments are intended to be timeless, but almost all have an expiration date,” they wrote. “As society’s values shift, the legitimacy of monuments can and often does erode.”

This is because monuments, including the names of U.S. military bases, reveal the values of the time in which they were created and advance the agendas of their creators.

Read more:
Monuments ‘expire’ – but offensive monuments can become powerful history lessons

Editor’s note: This story is a roundup of articles from The Conversation’s archives.

The Conversation

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How China Uses 'geostrategic Corruption' To Exert Its Influence In Latin America




The successful courting of Honduras is the latest example of China’s influence in Latin America. Lintao Zhang/Pool/Getty Images

Corruption has long been a scourge in parts of Latin America.

Traditionally, it has funneled down domestic routes, with local politicians, business interests and drug lords benefiting from graft and dodgy dealings. Indeed, a 2022 report from Transparency International found that 27 out of 30 countries in Latin America and the Caribbean have shown stagnant corruption levels with no improvement in recent years.

But over the last two decades, a new form of corruption has taken hold in countries in the region, a phenomenon we call “geostrategic corruption.”

It is characterized by external countries using corrupt methods – no-bid contracts, insider financial deals, special relations with those in power – to become stakeholders in multiple facets of the politics, economy and society of a country. China is a master of the art; the United States, less so.

As scholars of Latin American politics, we have seen how China has used geostrategic corruption to gain a foothold in the region as U.S. influence has waned.

What is geostrategic corruption?

Geostrategic corruption builds on traditional pervasive patterns of clientelism and patronage. In Latin America in particular, the growth of the drug gangs since the 1980s introduced “narco-corruption” in which police and local officials collude with organized gangs, which are able to “buy protection” from prosecution.

As a result, police, local governments and elected representatives are considered by watchdogs as among the most corrupt political entities in Latin America, with the region consistently scoring low in annual global corruption perception rating.

This pattern of corruption has coincided with a period in which the U.S. has turned its attention away from Latin America and toward first the Middle East and then Asia.

The vacuum has largely been filled by China. Trade between the region and China skyrocketed from US$10 billion worth of goods in 2000 to $450 billion in 2021. China is now the top trading partner of South America, making up to 34% of total trade in Chile, Brazil and Peru.

China’s expansion in the region is largely driven by the country’s search for resources such as cobalt, lithium, rare earths, hydrocarbons and access to foodstuffs, which are abundant in Latin America. In the past 20 years, China has also poured massive investments into infrastructure, energy and financial sectors of Latin America.

And China isn’t alone in upping its interest in Latin America. The last two decades have also seen an increase in investment and influence in the region from Russia and Iran.

These countries have found Latin America a fertile ground due in no small part to the region’s culture of corruption and weak institutions, we argue. Local criminal networks and the disregard of democratic norms on the ground have made it easier for countries that themselves are perceived to be dogged by corruption to gain a foothold in Latin America.

US-China global competition

China’s presence in the region forms part of the country’s long-term strategic objective to challenge U.S. influence across the globe through economic, military, financial and political means.

That process has been aided by global trends. Countries such as Brazil and Argentina have increasingly sought to diversify bilateral relationship and become less dependent on U.S. trade.

Meanwhile, Russian aggression in Ukraine has seemingly given China more weight on the international scene, with Beijing positioning itself as an alternative diplomatic force to Washington, especially to countries that feel nonaligned to the West. A recent example was seen in March, when Honduras announced it would establish diplomatic relations with Beijing and break off ties with Taiwan – a development that Taiwanese officials say followed the “bribing” of Honduran officials.

What gives China an added competitive edge as it extends its influence is that it is able to eschew constraints that bind many would-be investors in the West – such as environmental concerns or hesitation over a country’s labor rights and level of corruption. Chinese companies are judged by international watchdogs to be among the least transparent in the world, and bribery watchdogs have long noted Beijing’s reluctance to prosecute Chinese companies or individuals accused of bribery in regard to foreign contracts. A 2021 study found that 35% of China’s “Belt and Road” projects worldwide have been marked by environmental, labor and corruption problems.

The U.S. administration, in contrast, is more restricted by commitments to encourage democratic development as well as public pressure and international image. Washington does not have the same privilege of diplomatic pragmatism as China.

U.S. companies are, of course, not spotless when it comes to engaging in corrupt practices overseas. But unlike China, the U.S. government is bound to an international treaty prohibiting the use of bribes to win contracts. Moreover, the U.S. Foreign Corrupt Practices Act strictly prohibits American companies from bribing foreign officials; China has no such equivalent.

Chinese corruption in the region

Chinese investment has been easier where populist regimes govern and where the rule of law has long been undermined, such as Argentina, Bolivia and Venezuela.

For example, in Bolivia during the 14-year tenure of President Evo Morales, Chinese companies achieved a major foothold in key sectors of the economy that has translated into a monopoly over the lithium industry there, despite a strong anti-mining movement in the country.

Geostrategic corruption in Argentina is firmly rooted at the local level, in provinces and regions across the country, feudal-like governors have enabled a sophisticated corruption network that China has seemingly used to invest in everything from nuclear plants and building lithium battery plants to constructing a satellite-tracking deep-space ground station, railroads, hydroelectric plants, research facilities and maybe even fighter jets.

In Ecuador, such projects include a dam built in exchange for oil contracts; the Coca Codo Sinclair hydroelectric plant, which developed massive cracks soon after construction; and the Quijos hydroelectric project, which failed to generate promised volumes of power. Similarly, the Chinese-financed Interoceanic Grand Canal in Nicaragua was estimated by opponents of the project to irreversibly impact the ecosystem and displace about 120,000 people, while local activists faced harassment, violence and unlawful detention.

In Venezuela, China initiated but never completed construction of a multibillion dollar bullet train line, and an iron mining deal not only allowed the Asian country to buy Venezuela’s iron ore at a price 75% below market, but also turned out to be an instance of Chinese predatory financing, leaving Venezuela in a catastrophic $1 billion debt. Likewise, in Panama, port concessions and a high-speed train line were frozen or canceled, while the investor is under investigation in China.

Throughout the region, Chinese firms have been cited in numerous cases involving bribery and kickback schemes that have enriched local officials in return for contracts and access.

What does it mean for the US?

This use of geostrategic corruption works to the direct detriment of U.S. interests.

In Argentina and Bolivia, Chinese expansion means that sectors that are crucial for the success of the U.S.’s green energy goals are increasingly under Beijing’s hold. It also undermines U.S. efforts to counter corruption and human rights abuses in the region.

And U.S. companies are unable to compete. The Biden administration has set high standards for U.S. investment in the very sectors where the Chinese have a strong foothold. These include transparency and accountability, as well as commitments to environmental, labor and human rights standards.

President Joe Biden has stated that adherence to these standards is what distinguishes U.S. foreign investments from its competitors. But it does hamstring American companies when it comes to competing with China.

In the meantime, while the U.S. is looking for answers and trying to figure out how to reestablish influence in Latin America, China is quietly and pragmatically increasing its presence in the region.

The Conversation

As an academic and as director of a university research center, I’ve received funding from foundations, US government agencies, and multilateral institutions.

Valeriia Popova does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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