Who Let the Dogs Out - Will The Senate Man Up on China's Currency Manipulation?

dogschaseChina is like a bunch of yelping dogs. So says Senator Sherrod Brown. When it comes to doing anything about our massive trade deficit with China, out come the pundits, corporate plants, threats and misinformation, all in an effort to stop our government from taking any action. Will the Senate actually listen to the statistics and the cries of the U.S. worker, ignore the snapping dogs, barring their teeth, nipping at their heels, and vote to do something?

Update: Yes the Senate did man up and voted for cloture, allowing the the vote for passage to occur. Here are the votes and it was 62 to 38. The bill still has to pass and Boehner is blocking the bill in the House.

Finally the Senate is considering doing something about China's currency manipulation and guess who is trying to block that effort? Why GOP minority leader Mitch McConnell. He is trying to block cloture, which requires 60 votes to stop debate on a bill. Politico is reporting no vote tomorrow, which means McConnell got his 40 so called representatives of you in the Senate to vote no. That would mean, once again, the U.S. worker gets no action from our government to create jobs and support U.S. manufacturing. Yet The Hill is reporting there will be a cloture vote today, Thursday morning.

Below is a video clip where Sherrod Brown, Senator from Ohio, a state absolutely decimated by bad trade pacts, describing what the the currency bill, S.1619, actually does.

 

 

Senator Bernie Sanders on the consequences of currency manipulation:

Over the last decade, more than 50,000 factories in America have been shut down. 5.5 million manufacturing jobs have been lost. We had more factory jobs in March of 1941, eight months before the attack on Pearl Harbor, than we do today.

So, why would Mitch McConnell block the vote on a very obvious trade problem that is costing so many American jobs? Why, corporate lobbyists of course.

Grover Norquist and the Club for Growth are threatening retaliation against any Republican who dare fight to bring the China currency bill up for a vote in the House.

The well-funded conservative group has said it will score as a "key vote" any signatures to a discharge petition to force a House vote on legislation meant to punish China for manipulating its currency to lower the price of its exports to the U.S.

So much for representation. The Club for Growth loves to buy elections, and of course have large corporate donors.

America has lost 2.4 million jobs to China from 2001-2008. In 2010 alone, U.S. lost half a million jobs to China.

Even the Peterson Institute acknowledges the cost of China's currency manipulation to the U.S. economy:

Fred Bergsten, director of the Washington-based Peterson Institute for International Economics, estimates that a 20 percent rise in the yuan would reduce the U.S. trade deficit by $50 billion to $100 billion. At a gain of about 6,000 jobs for every $1 billion improvement in the trade balance, $100 billion would work out to 600,000 jobs.

You can contact your Senators here, by phone, since the vote is this morning, requesting they pass this bill.

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Comments

China's currency has appreciated by 30%

In 2005, the exchange rate was 8.27 Chinese Yuans for one U.S. Dollar. (Source: http://en.wikipedia.org/wiki/Renminbi )

In 2011, the exchange rate is 6.36 Chinese Yuans for one U.S. Dollar. (Source: http://www.x-rates.com/d/USD/table.html )

The Chinese currency has appreciated 30% against the U.S. Dollar in the last 6 years. What are the U.S. Senators complaining about?

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Math:

In 2005, one Yuan was worth 12.09 cents. [1 dollar / 8.27 yuans = 12.09 cents per Yuan]
In 2011, one Yuan is worth 15.72 cents. [1 dollar / 6.36 yuans = 15.72 cents per Yuan]

Yuan appreciation = (15.72 cents – 12.09 cents) / 12.09 cents * 100 = 30.02% appreciation vs. U.S. dollar

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not so

picking a couple of select data points is misleading. Try looking at 1990. It's still undervalued by at least 30%. The below history shows the peg, not even back to 1995 rates where currency manipulation became in earnest from China.

 

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final vote next week, "Senate games"

Seems GOP is POed because they want to "offer amendments". This is a small piece of a host of policies that need to change. Why these people just cannot pass simple, short bills which over 80% of America wants, the statistics back up the bill, and keep it simple, get something done is beyond me.

CNN has the latest infighting, and the Senate is now calling itself, "dysfunctional", no kidding there Congress.

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Reid gets real

"Seems GOP is POed because they want to "offer amendments". This is a small piece of a host of policies that need to change." -- Robert Oak

 

We know what we were following today in the Senate -- the vote on S. 1619 (Currency Exchange Rate Oversight Reform Act of 2011), which has been postponed until next week.

In the big picture, we also know that what's happening in the Senate recently is a fight over whether to take protectionist steps to counter China's trade abuses, or not.

That's definitely not what was 'supposed' to be happening, according to 'Conventional Wisdom'. What was supposed to happen is that the three pending FTAs would, by now, have been approved by the Senate and the House. That would have been business-as-usual, and that's what was supposed to be happening this week in Congress. Then, with the FTAs concluded, the political game could return to a little brouhaha over the TAA crumbs to be tossed to workers displaced by the FTAs, and corporate news media could return to covering the GOP nomination process (excluding Buddy Roemer) as predictive of November 2012.

But behind the scenes what's been happening recently is a desperate effort by Boehner in the House and McConnell in the Senate to get back to business as usual -- which requires shutting out the China-trade issue. That is, there has been a desperate effort by 'free' traders in the Congress to slow down the growing momentum behind the Currency Exchange Rate Oversight Reform Act of 2011.

Two weeks ago, the currency bill was no more than talk from the likes of Sen. Sherrod Brown (D-Ohio). Then, popular support began to grow, and so did support from Republicans as well as Democrats both in the Senate and in the House. And then, Senate Majority Leader Harry Reid (D-Nev.) decided to lead the charge of the protectionist forces.

If the protectionist forces were limited to the more progressive Democrats in the Senate, we would by now be back to business as usual (passing the three pending FTAs with a minor disagreement over TAA). However, the currency bill has substantial Republican support and enormous popular backing. And that's all the difference.

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What Reid did on Thursday

Behind the scenes, what has been happening is beyond incredible, it's flat-out amazing.

Harry Reid (grabbed from reid.senate.gov video)(Photo grabbed from video at official reid.senate.gov webpage)

About Harry Reid (from Wikipedia) --

"Reid's boyhood home had no indoor toilet, hot water or telephone. Searchlight had no high school, so Reid boarded with relatives 40 miles away in Henderson, Nevada to attend Basic High School where he played football, and was an amateur boxer.  ....  Reid attended Southern Utah University and graduated from Utah State University. He then went to George Washington University Law School earning a J.D. while working for the United States Capitol Police.  .... "

From the Las Vegas Sun (available online), story by Karoun Demirjian (6 October 2011), 'Harry Reid changes arcane U.S. Senate rules to make a point' --

The arcane rules of procedure exercised on the floors of Congress don't get written about very often. But an incident on the Senate floor tonight carried a larger lesson: Push Sen. Harry Reid too far, and he will change the rules of the Senate into perpetuity to put you in your place.

From this night on, senators will no longer be able to move to suspend the rules that require all bill amendments to be on-topic, a move the minority party sometimes avails itself of to force votes on topics the majority would rather block.  ....

It started over a disagreement between Reid and Republican Leader Mitch McConnell over what amendments Republicans would be permitted to present to [the Currency Exchange Rate Oversight Reform Act of 2011, S. 1619].

McConnell had been rattling Reid, telling the majority leader that he'd never clear the filibuster-busting threshold necessary to advance the legislation. Mid-day, Reid did with room to spare, pulling enough Republicans on board for a 62-to-38 vote. ....

That meant it was time for an argument about amendments.  ....  Thursday afternoon, Reid decided [that] he'd take seven of the nine amendments McConnell was pushing hard to include. It didn't take long for Reid and McConnell to come to blows.

McConnell picked seven, but Reid didn't like one: an amendment by Mike Johans, R-Neb., objecting to an Environmental Protection Agency rule that would have declared certain farm dusts toxic.  ....  Reid couldn't get an agreement from his caucus on that, he protested -- much to McConnell's anger.

As McConnell ranted about the right of Republicans to pick their own amendments, Reid quietly pulled out a procedural move few others saw coming (even though Reid was planning it since Thursday morning): raising a point of order against using motions to suspend the rules, then objecting to it on McConnell's behalf, and finally, instructing his caucus -- all but one of whom did as instructed -- to vote against the objection.

The vote was 48 to 51. Boom. Motions to suspend [the rules on] amendments are dead.

“There has to be some end to the dilatory tactics to stop things,” Reid said of the need for the move. "This has to come to an end. This is not a way to legislate."

"This is a bad mistake ... we are fundamentally turning the Senate into the House," McConnell said, his anger apparent as he complained about Reid's efforts to limit the application of the filibuster and expedite the Senate process by a simple majority, as he did Thursday night.  ....  "Today's minority may be tomorrow's majority." ....

"Let me tell everyone within the sound of my voice: if I were in the minority, I wouldn't do this," he said, referring to use of motions to suspend [the rules on amendments].

"I think it's dilatory and wrong. I think we have to do a better job of legislating here under the rules," Reid continued. "Am I 100 percent sure that I'm right? No, but I feel pretty comfortable with what we've done."

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What's next?

" ... we are fundamentally turning the Senate into the House," McConnell said, his anger apparent ... "  -- from Las Vegas Sun (available online), story by Karoun Demirjian (6 October 2011), 'Harry Reid changes arcane U.S. Senate rules to make a point'

Oh yeah, Senator, that'll play real good back home in Kentucky wink laugh no

 

I love the way things are going for a change. When the 'free' traders obviously are shown to be clueless, they remind me of that old Bob Dylan lyric, "Something is happening and you don't know what it is, do you Mr. Jones?"

From Dow Jones Newswire online.wsj.com (story by Siobhan Hughes, 6 October 2011), 'On Currency Bill, Rank-And-File Republicans Buck GOP Leaders' --

Lawmakers such as Rep. Allen West (R., Fla.), a Tea Party backed freshman, aren't shy about taking sides. "If someone's out there cheating, you've got to call them out," he told a reporter on Wednesday night. "We're already in a trade war, whatever you want to call it, the trade imbalance with China," and "if you don't take some type of action, you're going to get even worse behavior, and we've got to call the Chinese out on this."

(That answers the question 'Is there a real Tea Party left in Congress?' Apparently there is!)

I know, I know. It's hard to like Democrat senators like Harry Reid, who supported the DREAM Act with its loopholes. But what's important isn't who you like or what your grudges are -- it's understanding what's going on. Like Buddy Roemer says in one of his videos, "I'm a issues wonk. I like it."

I am focusing on the trade issues here, and on everything involved in a successful resolution of the trade issues, including the politics and the personalities. It's going to take a lot of focus on this bill to keep an eye on what happens, if we hope to see a real improvement in trade legislation.

What can we expect to see developing next week?  IMO, 'free' traders -- if unable to halt the momentum behind this Currency Exchange Rate Oversight Reform Act -- will be desperately trying to figure out a way to put a poison pill into the legislation. That is, they will want to pass a law that will be toothless and doomed to failure. (Key to such treachery is getting a bill to the Senate-House conference or reconciliation stage, where it can be gutted outside public scrutiny -- like another SuperCongress.)

Unless we get Mitt Romney or (dare we hope?) Buddy Roemer nominated in 2012, we can look forward to the entire mess of the U.S. economy being charged by 'economists' to the Currency Exchange Rate Oversight Reform Act of 2011. "Exactly the mistake that was made in the Great Depression with the Smoot-Hawley Tariff Act of 1930" -- yes, that's what we'll be hearing from the TV pundits this time next year. "The economy's still in a mess, and it's all the fault of the Currency Exchange Rate Oversight Reform Act of 2011 (as amended)."

Let's do everything we can to make sure that real trade reform legislation is what the great WTO propaganda machine blames it all on.

Did you call your senators Thursday? I did. And I'm going to call them everyday for a while. Also my other congress crittur. Why not?

If there was ever a time that called for citizen activism, this is it!

It's like OWS, but you can do it from the comfort of your home! (And you don't have to go into The City either.) Give 'em hell. It's fun.

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TradeReform on tying currency bill to FTAs

EP-linked TradeReform.org (Coalition for a Prosperous America) is following the pending trade legislation carefully. It appears now that Senate Majority Leader Harry Reid will hold a vote on the currency bill Tuesday evening, with the vote on the FTAs Wednesday.

Michael Stumo (in a brief post at TradeReform.org, 7 October 2011) wonders about the wisdom of Reid's timing.

Stumo would like Reid to link the two matters (the currency bill and the FTAs), holding up the vote on the FTAs until the House has voted on the currency bill. Such a strategy would perhaps force the hand of John Boehner, who is believed to be preparing to quickly pass the FTAs while ignoring the currency bill by shunting it off to committee to die or diminish into a gutless wonder before getting to the floor of the House for a vote.

Stumo at TradeReform.org --

Reid supports the currency bill and opposes the FTAs.  Speaker Boehner and Majority Leader Cantor oppose the currency bill but support the FTAs.

Maybe I’m playing checkers and Reid is playing chess, but if he wants currency (and Pelosi does too), why give up the FTAs until the House passes currency?

The key to understanding this is (1) Speaker of the House John Boehner (R-Ohio), the RNC, the U.S. Chamber of Commerce and all of GOP leadership in the Congress are committed to passing the FTAs and to defeating (or gutting) the currency bill (S. 1619/HR 639), and, (2) while all of the preceding (Boehner, etc.) are committed to the FTAs and opposed to the currency bill, the currency bill (HR 639) appears to be almost a slam-dunk if it goes to a vote in the House, at this time in its current form.

Trade Reform is asking, "Why not hold the FTAs hostage to the currency bill?" That might, possibly, force Boehner to let HR 639 go to a vote in the House, where it can win unless too many GOP supporters of the bill are scared or bought off by Boehner and company.

The thing is, of course, that Boehner probably has the power to shunt HR 639 off to committee, and that's what is likely to happen. That would bring all the GOP members back together into their group-think mentality that is so comfortable and profitable for them. It would also take pressure off for 2012, allowing everyone to say that they voted for a currency reform bill (which will be gutless and toothless).

This all relates, of course, to November 2012, considering that all members of the House will be up for re-election at that time, unless they choose to take the money and run -- retire comfortably without running for re-election, as has happened before when congress critturs vote for unpopular trade legislation.

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Huge sh*t sandwich?

In response at Stumo's post at TradeReform.org, 'Julian Martin' provides an analysis that "Senator Reid is handing Speaker Boehner a huge shit sandwich, which he’ll eventually have to eat." I wish that were true, but it seems doubtful to me.

Boehner and his gang are planning a weakened gutless wonder of a currency bill, to emerge from committee later this year. That is supposed to set things up for the big election year (2012) so that Boehner's GOP congress critturs will be able to say that they voted for a currency bill, so as to deflect criticism that they also voted for the three FTAs.

As for Senator Reid, we have to remember that he doesn't run the Senate the way Boehner has been able to run the House. Most likely, Reid figures he can only do what he can do, and he feels that this is the time to get S. 1619 through the Senate. After that, he needs to put the FTAs to a vote, so he might as well dump it all onto the House in one big delivery -- maximizing the potential for a real discussion of trade issues in the media and among the people.

After all, S. 1619 appears to be very well-drafted legislation, something to be proud of. Not that real, informed discussion is likely to happen ... but let's give it a chance!

I'm calling my senators, but as soon as anything leaves the Senate headed for the House -- it's time for maximum pressure on your congress crittur in the House. We have to convince them that we know what's going on, we're mad as hell, we won't accept any watered-down substitutes, and, we will remember in November 2012.

We fair traders and economic/trade/financial/monetary reformers are weak politically, although we are growing stronger every day. Therefor, we take the advice of Sun Tzu. "When weak, appear strong." Give 'em hell. It's fun.

OWS from the comfort of your home!

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Don't tie Currency w/ FTAs

Frankly don't do it. It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them.

We'll see, it's absurd to me in one minute trying to pass a China currency manipulation bill and the next passing FTAs which they know will lose more jobs and increase the overall trade deficit.

That said, China is the largest trade deficit and if they actually enacted even a slight tariff on China, it could really help bring back jobs here. (but they should do this to all currency manipulators who are doing so for an unfair trade advantage).

Anyway, I don't want them to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich, which you point out.

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Whatever we can get for USA

"It's hard enough to get the currency bill passed and I suspect Reid isn't tying the two together because there are probably a whole lot of Senators, Reps. who will not vote for those FTAs, at least one of them." -- Robert Oak

I'll celebrate whatever we can get, meaning if one or more of the FTAs is or are rejected, and/or if S. 1619 is enacted. Anything along those lines is good news compared to what we have had for years now.

Hopefully, we won't see all three FTAs enacted and, later, a watered-down gutless wonder of a currency bill.

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Transparent application of rule of law

Congress "should do this to all currency manipulators who are doing so for an unfair trade advantage." -- Robert Oak

My understanding of the currency bill is that it would establish an objective measure for currency manipulation in the context of what I call neo-mercantilism (the WTO system).

I agree we should avoid legislation that would 'punish' China or any other country by act of Congress. (The proposal is called the "China currency bill" but there is, I believe, no mention of China in the bill.) We should set the rules in place, put China and all others on notice, and then apply the law equitably. To have a system of preferences as the foundation of an equitable system of global international trade is an anomaly.

The approach that is needed is transparent application of the rule of law. The idea that we will ever fix the broken system by hoping that the USTR will work everything out in secret negotiations is a guarantee of continuing neo-mercantilist policy by 'trade czars' -- a guarantee of continued legitimizing of an essentially corrupt system. Such policy is set in secret, insulated from popular discussion and from public view ... but at its core, entirely a matter of bought-and-paid-for political pressure.

The point is that business decisions, if only for the sake of efficiency in a free enterprise system, should not be subject to continual political interference. The neo-mercantilist system may work for an autocratic country like China or like Singapore, but it's a bad idea for democracy and for the USA. By establishing a system of protectionism under law, we can influence the WTO system in a direction that is good for the USA and for the world.

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Legislative strategy, legislative principle

"I don't want [Congress] to link up anything, that's the problem, they link up amendments and so on so we get a shit sandwich." -- Robert Oak

Tying the FTAs and the currency bill together, or not, is a matter of legislative strategy. I would not attempt to second-guess someone like Senator Reid, even though I am suspicious of (not to say cynical about) anything that happens in Congress.

I agree on the principle that bills should be clean, without unrelated amendments, and issues voted on separately.

That was the problem with the 2010 medical insurance bill ("Obamacare") -- and with all such 'omnibus' legislation. I think that 'omnibus' legislation is necessary for budget and revenue bills or for what are necessarily systemic reforms such as the Judiciary Reorganization Act of 1980. The medical insurance issues would have been better dealt with piecemeal, taking a modular approach.

Issues should have been voted on separately, beginning with repeal of the anti-trust exemption, public (Federal) funding of abortion, expansion of MediCare to age 60, repeal of the Medicare Payroll tax, allowing direct bargaining to MediCare as is already allowed for the VA and DoD, and other matters such as were actually proposed in amendments early in 2009, that were all ignored in the big push to do something even if it's wrong, unconstitutional and unworkable. It was inane, for example, to have the omnibus monstrosity held up at the last minute by the abortion issue -- that should be dealt with separately with votes of all members of Congress clearly recorded.

The worst of it is when the final version of a law is written by a reconciliation committee (sometimes with no more than 3 members and often doing their dirty work in secret). The SuperCongress idea is also an abomination. Either we have a Constitution or we don't. I think we do, and we should endeavor to work within that framework at all times.

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Passes with 65% -- can Boehner stop the momentum?

Official record of roll call not yet available at senate.gov or at thomas.loc.gov (Library of Congress), but the results have been posted at democrats.senate.gov webpage (11 October 2011, 7:02 PM), Senate Passes Bipartisan Bill to End Currency Manipulation, Save American Jobs --

The bipartisan bill to end China’s unfair trade practice of currency manipulation passed in the Senate tonight by a vote of 63 to 35, with 15 Republicans joining Democrats to support it.

The legislation, called the Currency Exchange Rate Oversight Act, provides tools to impose consequences on countries that manipulate their currency and consequently, cost us jobs.

We hope this common-sense, bipartisan bill will pass in the House. It’s time to put an end to this unfair trade practice, and put Americans back to work.

That's very nearly 65% of senators who voted. Can Boehner stop this? Maybe,  but if so, it will likely cost him his job.

Senator Harry Reid's statement --

Washington, D.C. — Nevada Senator Harry Reid issued the following statement after the Senate approved a bipartisan bill that will pressure China to stop manipulating its currency:

“For too long China has been using underhanded tactics to manipulate its currency at the expense of American workers and businesses. They deserve a level playing field. This bipartisan bill levels that playing field, and could support up to 1.6 million American jobs.

“I commend my Republican colleagues who joined with Democrats to pass this important bill. I join my colleague, Senator Graham, in calling on the House to take up this bill and pass it quickly.”

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Write your House Representatives

Demand they pass it. I cannot believe ZeroHedge seemingly let some U.S. Chamber of Commerce troll post yesterday trying to claim their "fear" talking points. There is no way China is going to start a "trade war" and beyond that, we already lost it, they have been waging "trade war" against the United States for over 11 years. It's just ridiculous and you'll see almost every economist who looks at the numbers, stats, saying the U.S. needs to do this.

Clearly shows Boehner is the U.S. Chamber of Commerce puppet. I think the House version has a majority of representatives as co-sponsor of the bill.

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