In late 2017, the Carnegie Endowment for International Peace convened a task force to explore how U.S. foreign policy could work better for a struggling middle class and those aspiring to reach it. To gain a diverse set of perspectives, Carnegie sought task force members who served in a variety of senior policymaking roles as political appointees and career professionals in or under Democratic and Republican administrations. Those selected hail from the Departments of Commerce, Defense, State, and Treasury; the Office of the U.S. Trade Representative (USTR); the National Intelligence Council; and the National Economic Council (NEC) and the National Security Council at the White House (see About the Authors).
Although the task force members brought disparate views on U.S. domestic and foreign policy to the table, they all concurred that, while in government, long-standing assumptions about how foreign policies affect the broad middle class were not adequately challenged or tested (see box 1 for how the task force defines “foreign policy” and “middle class” in this report). They also agreed that those outside Washington, DC—many of whom are on the frontlines of addressing the economic challenges confronting middle-class households and their communities—have not had enough opportunities to weigh in on U.S. foreign policy. The task force’s research team therefore partnered with university researchers to conduct interviews and focus groups with hundreds of state and local officials and community leaders, local economic development teams, small business owners, local labor representatives, and middle-income workers in three case study states: Colorado, Nebraska, and Ohio.
[The task force] all concurred that, while in government, long-standing assumptions about how foreign policies affect the broad middle class were not adequately challenged or tested.
The task force chose to focus on states in the middle of the country because foreign policy professionals in Washington tend to be more influenced by the views of those in large coastal cities. These three states were chosen in particular because they collectively represent an industrial and political mix that serves as a good proxy for many of the national-level debates now playing out at the intersection of U.S. foreign policy and middle-class well-being.
- Colorado provides a “new economy” perspective on trade and sits at the epicenter of national debates on defense spending, energy, and climate change. Very liberal and very conservative communities coexist in Colorado, once a perennial swing state that has trended blue in recent years.
- Nebraska is a quintessential “ag state,” with industries caught in the crosshairs of the trade war with China and rural areas that rely on immigration to address workforce shortages. It votes solidly Republican in presidential and congressional elections, though it has become politically and economically more diverse as people move to the urban centers of Lincoln and Omaha.
- Ohio exemplifies how international trade and investment policies have intersected with manufacturing over the last half century. It is also the ultimate political bellwether state. Every presidential candidate since 1964 who won Ohio went on to win the White House, including former president Barack Obama and President Donald Trump.
While these three states do not encapsulate all the interests and conditions of middle-class households, the interviewees represent the political spectrum, a range of industries, and regional divides to capture some of the variation that exists within the middle class. The findings from each state, and the research methodology employed, were published in detailed separate reports on Ohio in December 2018, Colorado in November 2019, and Nebraska in May 2020. The key findings from across the states—and the ways in which they tally with national-level economic and polling data—significantly influenced task force members’ thinking and recommendations outlined in this final report.
Box 1: Defining Foreign Policy and the Middle Class
“Foreign policy” in this study serves as shorthand for foreign, defense, development, international economic, trade, and other internationally oriented policies perceived by those interviewed for the project as impactful to their economic well-being. Interviewees across the states also associated foreign policy with some issues that typically fall under the purview of domestic policy, such as foreign direct investment, immigration, and energy and climate change.
Further information on the definition of terms, the rationale for the project, and relevant historical context can be found in the introductory chapter of the first report on Ohio.
This project focused on households falling within the middle-income bracket, defined by the independent, nonpartisan Pew Research Center as two-thirds to double the median income, adjusted for household size and local cost of living. The median household income for a family of three in the United States in 2018 was $74,600 per year. That translates to a middle-income range for a family of three of $48,505–145,516. Adjusting for local cost of living, the three-person household ranges for case study states in 2018 were $42,879–128,637 (Ohio), $49,427–148,281 (Colorado), and $43,412–130,237 (Nebraska). Owing to data limitations, the report occasionally relies on data for either the “median” or “middle quintile” to discuss middle-class income, expenditure, and wealth trends.
“Middle class” connotes more than income alone, however. Many people also associate this term with the dignity of work, position in society, and/or the maintenance of a certain lifestyle. Those interviewed for the project often described a “middle-class standard of living” as the ability to secure a job with adequate pay and benefits to meet their monthly expenses, tend to their families’ medical needs, buy a car, own a home, help their kids pursue decent postsecondary school education, take an annual vacation, save for retirement, and not be saddled with crippling debt.
Viewing the American middle class through an income lens also obscures important differences relating to geography, demography, race, religion, ethnicity, and political beliefs. For example, two-thirds of Americans say that the United States should take allies’ interests into account when it makes foreign policy, even if it requires compromise. But only a narrow majority of Republicans support this statement, while 83 percent of Democrats do. In another example, young people voice much stronger support for preventing genocide and defending human rights in other countries than do older Americans. When it comes to the seriousness with which certain threats are viewed, partisan affiliation can be a critical factor: 27 percent of Republicans and 84 percent of Democrats view climate change as a major risk and 35 percent of Republicans and 65 percent of Democrats view Russia’s power and influence as a major risk. In other words, these divergent views that play out across the American body politic naturally play out within the middle class as well.
Sources: Rakesh Kochhar, Pew Research Center, “Middle Class Data Update: State Ranged,” presented to the Carnegie Task Force, March 13, 2020, and August 6, 2020.
Pew Research Center, “In a Politically Polarized Era, Sharp Divides in Both Partisan Coalitions,” December 17, 2019, https://www.pewresearch.org/politics/2019/12/17/6-views-of-foreign-policy/.
Pew Research Center, “Climate Change and Russia Are Partisan Flashpoints in Public’s Views of Global Threats,” July 30, 2019, https://www.pewresearch.org/politics/2019/07/30/climate-change-and-russia-are-partisan-flashpoints-in-publics-views-of-global-threats/.
Although the coronavirus pandemic hit after the case studies were completed, its early impacts also influenced the task force’s thinking. The pandemic’s economic and social consequences continue to unfold, but they have already intensified many of the middle-class vulnerabilities observed during the research. The virus’s spread across the globe has resulted in the worst public health crisis since the Spanish flu (H1N1) outbreak in 1918 and delivered the sharpest blow to U.S. labor markets since the Great Depression. Many Americans are at grave risk of losing their homes and financial safety nets. The task force offers a preliminary assessment of how the pandemic is exacerbating already immense middle-class challenges and illustrates how a properly conceived foreign policy could mitigate the domestic fallouts. Even once the U.S. economy has recovered and returned to more normal levels of activity, the consequences of this shock will linger for years and should inform future foreign policy making.
The pandemic’s economic and social consequences continue to unfold, but they have already intensified many of the middle-class vulnerabilities observed during the research.
The case study findings—and the many trials now testing the United States’ resolve—clearly illustrate why so many Americans across the political spectrum have been questioning whether the United States should, or even can, continue being a global leader in the same way it has for decades. The question of what comes next is an important one, but it has become painfully obvious that the America First approach is not the answer. A zero-sum, unilateralist foreign policy has not yielded net job gains, fostered inbound investment, or raised household incomes in the United States. And it has certainly not made the United States less vulnerable to global shocks or more competitive in the global marketplace. The United States cannot solve its economic problems through trade wars and saber-rattling, while largely neglecting the domestic and fiscal policies that will have the most impact.
Yet the appeal of the America First approach is understandable. It is rooted in frustration over the uneven distributional outcomes of recent decades of growth and inadequate policy responses—both in the domestic and foreign policy realms—to a wide range of disruptive economic forces. Put differently, the self-evident failures of the America First approach do not necessarily amount to a full-throated defense of all that came previously.
To understand the shortcomings, it is necessary to reflect on the priorities of the foreign policy establishment during that time. From the end of the Cold War until 2016, the Departments of Defense and State were largely focused on protecting the United States from a wide range of security threats, sustaining U.S. primacy on the global stage, and promoting democratic values. The thinking was that by keeping the nation and its citizens secure, the middle class would have the space and opportunity to thrive—and that others, such as international economic experts, trade negotiators, and domestic policy counterparts, would help the middle class and those working hard to join it to take advantage of that freedom.
Meanwhile, the Departments of Commerce and Treasury, the NEC, and the USTR were focused on promoting the economic well-being of Americans, including the middle class. Policies were designed to advance global economic growth and create more trade and investment opportunities for U.S. businesses, believing that a rising tide would create more well-paying middle-class jobs here in the United States and increase public revenues for domestic investments. Many believed that growth in trade and investment flows would bring aggregate benefits to middle-class households—from lower prices and more choices for consumers, more foreign investment and job creation in the United States, and more demand for U.S. goods and services abroad.
But the task force’s case studies and other research have shown that, to varying extents, many in the foreign policy establishment did not fully appreciate the distributional impacts of an increasingly interconnected global economy. Both the security-minded and economic-focused wings of government trailed behind a changing world, and they continued to operate in silos.
Those at the security helm needed to more directly question whether strategic U.S. military interventions were, in fact, aligning with the interests of the American middle class. Had missions been more narrowly constructed around counterterrorism, counterproliferation, and conflict containment, for example, rather than around regime change and an ambition to remake the Middle East backed by the force of arms, they might have reduced the risks of protracted conflict, regional spillover, and fiscal backlash at home. This fundamental question about the scope of U.S. vital interests should have featured far more prominently in White House Situation Room deliberations on national security matters.
Those working to steer the global economy and trade needed to take a closer look at whether the American middle class was indeed benefiting as much as the nation’s top earners. The reality was that the economic gains generated from trade agreements were not being shared broadly with working middle-class families. And this is partly because not enough attention was paid to the trade-offs at a more micro level. Larger companies, together with the affluent and well-educated, adapted more readily than small businesses and workers without a college degree during a period of rapid globalization and technological change.
The prime directive of everyone in the foreign policy community—not just those responsible for international economics and trade—should include developing and advancing a wide range of policies abroad that contribute to economic and societal renewal at home.
In essence, the foreign policy establishment did not connect all the lines between the United States’ role abroad and the economic challenges unfolding at home. The task force and research team’s past two years of study—including hundreds of conversations with those striving to sustain and expand the middle class—have helped to highlight many of these disconnects. And, more importantly, they have shed light on what should come next.
- First, the prime directive of everyone in the foreign policy community—not just those responsible for international economics and trade—should include developing and advancing a wide range of policies abroad that contribute to economic and societal renewal at home.
- Second, foreign and domestic policymakers need to collectively redress the country’s growing distributional challenges. The broad middle class and those struggling to join it do not benefit enough from the fruits of global economic growth and market access. And they also bear too much of the burden of global shocks and dislocations and of the trade-offs that come with foreign policy–related decisions made in Washington.
- Third, the policy community needs to adopt a more collaborative, integrated approach to domestic and foreign policy making and to embrace more policy innovation.
These three themes recur throughout this report and shaped the task force’s proposed agenda for making U.S. foreign policy more responsive to the needs of America’s middle class.
The stagnation of the American middle class should deeply concern national leaders of every political stripe. A strong and prosperous middle class bolsters economic mobility and strengthens social cohesion.1 It provides a ready and healthy workforce to power the national economy and funds a large tax base to pay for national security and social insurance programs. It is a deep and underappreciated source of national power. This is not to say that the American middle class is as widely accessible as it should be. Deeply discriminatory policies have held back the progress of too many American households, and the country needs to rectify them. But the breadth of the American middle class is still remarkable, encompassing millions and millions of households of all ages, races, ethnicities, and religious and political beliefs. It is what poor families aspire to and what has driven millions of immigrants to come to this country.
1 Organization for Economic Cooperation and Development, “Under Pressure: The Squeezed Middle Class,” May 2019, https://www.oecd.org/els/soc/OECD-middle-class-2019-main-findings.pdf.