Round-up: Saudi Arabia First? Biden's poisonous legacy. The GOP's mega-bill.

Analysis of the week's events

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Saudi Arabia First?

Trump’s trip to the Middle East this week has been dominated by big, controversial events like his apparent decision to accept a 747 jet from Qatar and his meeting with the leader of Syria, Ahmed al-Sharaa. But bubbling beneath the service is another major, and surprising, theme.

Trump has built a lot of his political brand around the idea that he is going to boost the American economy by reshoring industry from abroad. He’s famously opposed to U.S. companies manufacturing thing overseas and wants them to do it at home instead. He is particularly focused (he claims) on strategic industries which are important parts of America’s national power.

Why, then, has he just agreed - indeed, helped facilitate - the offshoring of AI data centers, a major U.S. strategic industry?

States like Saudi Arabia and Qatar have been pushing for years for major investments by American AI and cloud computing companies. AI uses a lot - a terrifying amount - of power, and these countries have it in abundance. They also have the space and the loose permitting laws which allows data centers to be built quickly.

For their part, American tech companies also see this as a good bargain. They want to build data centers extremely rapidly in order to train and operate new AI systems. As I wrote in ‘The AI guys meet national security’, they view this as a necessity for the United States to maintain a lead in the global AI race.

At the same time, they’re fed up with how long it takes new energy projects to get online in the United States and the bureaucratic hurdles to new developments that exist in democratic countries. Partnering with an autocracy which doesn’t care about climate change must seem like the perfect solution.

But for the Trump administration, the ‘America First’ logic of allowing this process to play out is not clear at all.

What Trump has agreed to this week is effectively to allow the export of the chips necessary to run these data centers to Gulf states. The export of these chips is limited because they’re seen as a key national secret. Most people in the U.S. government don’t want to see China get its hands on them, because they it will be able to compete more effectively in the AI arms races. They would also prefer to have the data center industry operate in the United States itself, where it will create American jobs and be easier to regulate and control.

The idea that AI represents a key national strategic asset is of course questionable. Whether it is true or not depends a lot on whether the promises that the industry is making about its future capabilities are true or not. But if we assume that they are, it makes little sense to build out those capabilities half way around the world in states that also have close relationships with U.S. adversaries.

It’s also a big contradiction in light of Trump’s general commitment to protectionism. Why is he so keen to facilitate the development of the Saudi Arabian economy when he’s supposed to be all about “America First”? Sure, some American companies will also benefit from this arrangement - but plenty of American companies benefited from traditional offshoring too. So why is it okay now when it wasn’t okay then?

I don’t have a clear answer to why the administration is taking this contradictory position, although I do know that plenty of people in the U.S. government are concerned by it. Trump’s personal and family business interests in the region are certainly one possible explanation. Another is that he’s just not a consistent thinker and has little understanding of policy and economic details anyway. Yet another is the influence of J.D. Vance and people close to Silicon Valley on the administration.

The problem with having such a corrupt, incompetent administration is that you can never really be sure about the real reason why something is happening.

Biden’s poisonous legacy

A slew of recent books have new details about how Joe Biden’s inner circle hid his decline. I wrote about that before, and the books themselves don’t tell us much new.

But they do highlight a dangerous issue for Democrats: how are they going to deal with this issue in the 2028 election?

The problem is that many of the Democrats who want to run in 2028 were in close proximity to Biden last year but didn’t speak out. It’s hard to stand up before voters and say you should be trusted to run the country when you made such a major mistake in such recent memory.

You can argue that by 2028, those memories won’t be quite so recent. Trump’s parade of horribles will have created many other issues to talk about. The very occurrence of a free and fair election may be contested. In short, there are a lot of other things to worry about.

But it never hurts to be good at politics. And it is increasingly clear that whoever wants to be the Democratic Party’s standard-bearer in 2028 needs to be able to credibly put distance between themselves and Joe Biden. They might even have to throw some shade at Kamala Harris, who after all was right there in the White House too.

There’s always a delicate line to be drawn between appearing honest and independent and criticizing your own side so much that you just remind people of its faults. If Democrats were still walking around carrying signs saying “Sorry about the whole Monika Lewinsky thing!” then that would be odd. But the Biden event is still fresh enough in people’s minds, and implicates enough of party’s current leaders, that it just can’t be sidestepped.

There’s no time to start like the present. So, dive in Democrats, and tell us what you really think about how badly Biden screwed up - you might even enjoy it.

The GOP mega-bill

In the past week, House Republicans unveiled a draft of the massive tax and spending bill that they hope will enshrine many of Trump’s campaign promises into law. As I’m writing this newsletter, it’s unclear if it will get enough votes to advance out of committee to the full House today. It’s also unclear if it could ever pass the Senate or get signed by Trump. In other words, it might change a lot in the weeks to come, and there’s a chance it will never be signed in anything like its current form. But it’s still a revealing document.