President Joe Biden has been America’s distinguished public servant since January 1973. At the age of 30, he was one of the youngest senators in U.S. history. During 36 years, he held key posts in the U.S. Senate, including the chairmanship of the Foreign Relations Committee.

Biden resigned from the Senate in 2009 to serve as America’s 47^th Vice President in the Obama administration until 2016.

With almost 50 years of top positions in shaping and defending American national interests, Biden is uniquely prepared to lead the country, and the West, in a rapidly changing multipolar world.

China and, to a lesser extent, Russia challenge is no news to him, although things sound that way in his defense of a record-high $6 trillion budget draft, where China is seen as an economic juggernaut, while Russia looms as a serious security threat.

Biden has seen all that, first hand, during his service in the U.S. Senate and, especially, in the course of eight years at the West Wing (of the White House).

It’s no way to compete with Russia and China

On his watch, China made a net income of $2.5 trillion on its U.S. merchandise trade and got a literally unrestricted access to American technology transfers. Issues about economic and trade relations with China were vigorously raised by the Republican administration that followed in 2017, leading to deadlocked U.S.-China relations we have now.

Paradoxically, Obama and Biden seem to have taken with equanimity the fact that China was getting rich and powerful on free and open American markets, while advocating Obama’s famous “pivot to Asia” to contain a booming China, and its unstoppable global power projection.

Russia, for its part, made no secret since 2007 of its drive to modernize its military arsenal in response to what it saw as American-led security threats. Biden only made things worse when he flew to Moscow in March 2011 to oppose President Putin’s run for re-election in 2012. The two men are old acquaintances; they will have a lot to reminisce about when they meet in Geneva on June 16 – unless, as seems likely, the Europeans succeed in scuttling that laboriously prepared summit.

This shows that Biden’s mega-budget talk about alleged threats from China and Russia looks like Nietzsche’s “eternal recurrence,” events repeating themselves in eternal series of cycles.

The saving grace is the fact that none of the U.S. issues with Russia and China have a military solution in a world where the MAD (Mutual Assured Destruction) doctrine still reigns supreme.

So, no one should be fooled. Dire warnings are part of the political money talk. Solutions to America’s problems are entirely in the realm of economics. But solutions won’t be found by throwing trillions of dollars at structural problems (sic) created by decades of neglect and economic mismanagement.

Biden’s talk about infrastructure investments, American workers, science and medical research are all excellent points, but they are long-term commitments incompatible with improvisations of shifting political dynamics.

Here are some numbers to illustrate Biden’s apparently lighthearted remark at a military base in Virginia last Friday that China’s leaders thought they would “own America by ’30 or ’35.”

Raise the U.S. growth potential

Over the last five years, China’s potential and noninflationary economic growth rate averaged about 6%. During the same period, an upward-revised American growth potential came in at 2%, with the rest of the industrialized (aka “first world”) economies slightly behind at 1.8%.

What is the potential and noninflationary economic growth rate?

That is the number showing physical limits to stable and steady (i.e., noninflationary) economic growth delineated by the stock and quality of the country’s human and physical capital. Its key message is that the actual economic growth could exceed those limits for a short period of time, but any significant and prolonged strains of productive potential would inevitably cause accelerating inflation – leading to tighter monetary and fiscal policies, slower economic growth or, most frequently, recessions of ex-ante unknowable amplitude and duration.

So, here it is: Biden wants the U.S. economy to grow faster to stay ahead of China. This year, the consensus U.S. forecast points to a 6% GDP growth – three times above the economy’s noninflationary growth potential.

And all that at a time when the U.S. consumer prices are growing at a rate of 4.2%, produce prices surging 6.2%, and the officially targeted and cherry-picked PCE (personal consumption expenditure index) exceeding the policy target (2%) at 3.2%.

The most worrying thing here is that Biden’s economic officials consider those numbers as temporary and reversible – requiring no corrective (i.e. tightening) action on monetary and fiscal policies.

All that means that we are facing an accelerating U.S. inflation in an economy growing way above its production capacities, with continuing upward price pressures in labor and product markets – and a bulging domestic demand spilling out to the rest of the world.

China is winning: its trade surplus with the U.S. in the first three months of this year is 50% above the same period of 2020.

True to form, Biden does not seem to worry about the fact that he is making China richer and more powerful. And he will do even better in the months ahead as his huge fiscal spending, and a compliant monetary policy, continue to feed billions of dollars to his main strategic competitor.

More ominously, the soaring U.S. inflation will inexorably lead to a growth recession, or worse, while China continues to forge ahead.

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*Dr. Michael Ivanovitch is an independent analyst focusing on world economy, geopolitics and investment strategy. He served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia Business School.