Biden's cancelled Australia-PNG trip was a missed opportunity – but a US debt crisis would hurt a lot more

The Quad leaders’ meeting was meant to take place in Sydney today, with the Sydney Opera House as the picturesque setting. Instead, US President Joe Biden has rushed back to Washington from the G7 summit in Japan to deal with the looming debt ceiling crisis in Congress.

Biden’s sudden cancellation of his travels to Australia and Papua New Guinea has unsurprisingly ruffled feathers. But for America’s regional partners, the costs of a bad resolution to the debt crisis in the US far outweigh those of a cancelled trip.

Whichever way you look at it, this is a clear reminder of the importance of US domestic politics in setting the terms for US strategy and credibility in the Indo-Pacific region.

The best of bad options

Those complaining about Biden’s absence have good reason. Turning up to regional meetings matters a lot in Asia, and for America’s partners in the Pacific especially.

Indeed, Biden was due to meet with leaders from the Pacific Islands Forum, the region’s premier multilateral forum, in PNG this week. The symbolism of cancelling further engagements with leaders of a region that has become a new focal point of strategic competition with China is hard to ignore.

Still, the president could be forgiven due to the difficulty of the choice he faced. On the one hand, there’s the potential short-term hit to US regional credibility from a cancelled trip. On the other hand, there’s the risk the debt crisis at home could boil over into a full-blown default, with ruinous, long-term consequences for US strategy in the region.

This is also not the first time a US president has missed key meetings in the Indo-Pacific due to domestic politics.

Faced with a government shutdown in 2013, President Barack Obama skipped a host of major Asian summits. In response, Singapore’s Prime Minister Lee Hsien Loong noted the region’s preference for

a US president who is able to travel to fulfil his international duties to one who is preoccupied with domestic issues.

More recently, regional powers grew accustomed to President Donald Trump’s absence from meetings, though he tended to forego travel for reasons less pressing than a looming default. Polling of regional elites and and the general public showed Trump’s approach had considerable consequences for people’s trust in the United States.

The Biden administration, by comparison, has been a reliable diplomatic partner. Research from the United States Studies Centre has shown that Biden and his senior appointees have an almost unblemished attendance record at key regional summits and consistently show up for bilateral meetings with allies.

As for the Quad, the Biden administration is hardly throwing in the towel. A condensed version of the Quad meeting was held during the G7 summit. With the leaders’ announcement of a suite of new initiatives, a last-minute venue change had little bearing on the Quad’s progress.

Why the debt crisis matters to the Indo-Pacific

By contrast, the outcome of debt ceiling negotiations between the White House and Congress will have far greater repercussions for US Indo-Pacific strategy.

With cuts to Medicare and Social Security – a third of the US budget - reportedly off the table, the US defence and state departments face likely cutbacks. In short, the Republicans’ existing proposal to cut top-line discretionary government spending to 2022 levels would mean a 9% reduction to defence and non-defence programs.

Many in Congress are loath to reduce defence spending, but the narrow majorities of the Republicans in the House and Democrats in the Senate – as well as the House speaker’s calls for “efficiencies” and an end to “blank cheques” – leaves the Pentagon budget open to scrutiny.

In a worst-case scenario, unsuccessful negotiations could lead to another significant clampdown on government spending on foreign policy priorities.

In 2011, similarly stalled negotiations over the debt ceiling nearly resulted in default, forcing Obama to sign the Budget Control Act. This effectively placed nearly US$1 trillion in restrictions on discretionary government spending for a period of ten years.

Even this failed to resolve the crisis, with automatic spending cuts triggered in 2012 after Congress failed to agree on additional deficit reduction measures.

Though lawmakers found ways to mitigate some impacts of the Budget Control Act in subsequent budgets, the consequences for US defence spending were nonetheless profound. In the words of former US Secretary of Defence James Mattis:

no enemy in the field has done as much to harm the readiness of the US military than the combined impact of the Budget Control Act’s defence spending caps.

United States Studies Centre research from 2019 showed the Budget Control Act had a significant impact on America’s ability to fund its Asia-Pacific strategy, particularly its defence component. It has still not entirely recovered from this position, meaning further cuts could set ambitious US defence plans in the region back even further.

Read more: A brief history of debt ceiling crises and the political chaos they've unleashed

Compared with the Pentagon, the State Department appears to have comparatively little political support in Congress, meaning it could be especially vulnerable to cuts.

The department is still reeling from cuts to the tune of 30% under the Trump administration. Further reductions would hamstring the Biden administration’s efforts to put forward a robust and consistent diplomatic presence in the Indo-Pacific region.

At a time where Australia is reinvigorating its own diplomatic statecraft in the region, a capable US partner is more valuable than ever.

Shoring up US credibility

Even short of cuts, the risk of default is already damaging US credibility in Asia.

Comments to that effect from the chairman of the Joint Chiefs of Staff, the defence secretary and the chairman of the Senate Armed Services Committee have framed these risks primarily in terms of Chinese views of American resolve. The subtext is the same goes for America’s allies and partners in the region.

Ultimately, it is more critical the US ensure its regional strategy is reliably resourced than for Biden to attend a handful of important meetings. Both of his options were bad, but he may have picked the least damaging option in the long run.

Read more: Could Joe Biden be the most consequential American president of our times?