Will Congress Get Tough on China's Currency Manipulation?

china currencyFor the most part it seems the Senate likes to blow smoke when there is little fire to take action. Will this time be different?

Today the Senate voted 79 to 19 to allow Bill S. 1619: Currency Exchange Rate Oversight Reform Act of 2011, to proceed for amendments and a floor vote. The bill is a long overdue measure to provide for identification of misaligned currency. The bill provides a mechanism to require corrective action by the offending currency manipulator nation to correct the currency peg misalignment or face anti-dumping type tariffs. Reuters has a plain English summary of what the bill does. Beyond this cloture vote, the question becomes, will the Senate really do something and pass something to take on China and their flagrant undervaluing of their currency?

Uncle Sam should no longer be Uncle Sucker

The Alliance for American Manufacturing said the above in calling for passage of this bill. America should not be China's export dumping ground. We hear pundits, seemingly statistically disabled, proclaiming the bill will start a trade war. These pundit du jours must have been asleep for the last 11 years. We've already had a neutron bomb exploded upon us by China in trade and we've lost, big time. We didn't have a trade war, we had a trade surrender. Giving multinational corporations and correspondingly China whatever they want, is precisely U.S. policy currently, no matter what it costs Americans economically.

The United States has lost millions of jobs to China and their unfair trade practices makes all of America see red. America to date has had trade policy written by and for multinational corporations.

2.4 million jobs were lost to China before the recession. The United States also loses billions to China in intellectual property theft.

It's so bad the trade deficit with China is on track to break last year's record and even Wall Street gets it that China and the trade deficit are huge problems. The Renminbi is said to be 28% to 40% undervalued.

uschina complicitThe bill has blockage in the corporate controlled House of Representatives. The multinational corporation lobby is on high alert, trying to block any action in favor of the U.S. middle class. Seems multinationals are hell bent on offshore outsourcing American jobs, the U.S. manufacturing sector, plus make sure we increase the trade deficit. Like sentinels, lobbyists can be spotted in every corner of those long Congressional marbled halls.

Both the White House and just say no Eric Cantor are being mum on the bill. The code of silence isn't a corporate donor demand, but instead the typical corporate talking points political mouthing spew has been muted by the people's populist rage and anger.

Most Economists who can add praise the bill, including Paul Krugman:

Ask yourself: Why is it so hard to restore full employment? It’s true that the housing bubble has popped, and consumers are saving more than they did a few years ago. But once upon a time America was able to achieve full employment without a housing bubble and with savings rates even higher than we have now. What changed?

The answer is that we used to run much smaller trade deficits. A return to economic health would look much more achievable if we weren’t spending $500 billion more each year on imported goods and services than foreigners spent on our exports.

The bill enables U.S. businesses request tariffs or duties on Chinese imports that directly correlate to China's undervaluation of the Yuan. Bloomberg:

The bill would require the Treasury Department to produce a report twice each year identifying currencies that are significantly undervalued. Governments that are undervaluing their currencies and don’t take corrective action would face penalties including increased dumping duties, a ban on federal procurement in the U.S. and ineligibility to receive financing form the Overseas Private Investment Corporation.

The bill simply makes it easier to slap a tariff on China, but for some goods.

If you want to ask your Congressional representatives to pass this bill, click here. It is expected to pass the Senate.

Meta: 

Comments

Surprise, John Boehner looking to block the China Yuan bill

As usual, GOP "leadership", is out to block the bill on China currency manipulation.

Reuters:

I think it's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency.

In the house the bill has 225 co-sponsors, 61 of them Republicans. Never a bill shall be brought to the floor in Congress unless it's written by the U.S. Chamber of Commerce, that's basically the message here.

You must have Javascript enabled to use this form.

"I think it's pretty dangerous"

Robert Oak's quote from Reuters isn't attributed. Actually, it's Boehner himself who made the amazingly weak statement:

"I think it's pretty dangerous to be moving legislation through the United States Congress forcing someone to deal with the value of their currency." -- John Boehner, quoted in Reuters

Although making that pusillanimous statement, Boehner somehow manages to project a kind of dark confidence and power as he appears to be squelching discussion of trade issues generally. His approach seems to be the classic -- "Stay calm, everything is under control, just keep moving forward in an orderly fashion."

The question is whether Boehner is bluffing ... whether he can ignore the populist demands and survive politically ... that's the question ...

The currency bill and the discharge petition

As recently as yesterday (3 October 2011), the White House appears to be taking a neutral stand on the 'China' currency bill passed in the Senate and now pending in the House. That's according to WSJ.com article by Tom Barkley and Michael R. Crittenden (3 October 2011), 'UPDATE: Obama Administration Hasn't Taken Stance on China Currency Bill'

Whether Boehner will be successful in stifling debate on trade-related issues is being questioned. The WSJ article cites analysts at the Eurasia Group, excerpted as follows:

House Democrats have been successfully building bipartisan support for legislation authored by Rep. Sander Levin (D., Mich.) to try and force action on the issue. The measure currently has 200 cosponsors and Levin has been seeking action on a so-called discharge petition that would force a vote on his legislation.

Analysts at the Eurasia Group say it is unlikely, but not impossible, for the bill to pass the House. Describing House passage as a "worst-case scenario" for the White House, the international research firm believes President Barack Obama will want to avoid making China a major campaign issue next year.

 

The three pending FTAs

Lori Wallach, Director of Public Citizen's Global Trade Watch, seems skeptical that the trade deals will not pass in the House. Following is excerpted from Wallach's article published at HuffPo (4 October 2011) and titled 'Obama Flip-Flops off Trade Cliff', citing Public Citizen memo on polling results for opposition to FTAs --

At this point, that Obama did a total flip-flop on very specific, written, repeated campaign promises ... is not news. But what is noteworthy is the flip-flopping right off a political cliff ... opposition to these sorts of pacts is one of the few things that unites GOP, Dems, and Independents.

Now, the question is whether Congress will follow. Whether or not these job-killing deals go into effect will come down to whether 218 House members vote for them. Few Dems will support the deals. The Korea deal is an albatross of job loss.  ....

A bloc of more senior GOP oppose the Korea deal, as it clobbers certain industries. So, it will come down to the GOP freshmen.

The polling shows that Tea Partiers [voters, not necessarily their elected representatives] are among the most passionate opponents of these deals. But whether the freshmen GOP will stick with the critical position many of them campaigned on and/or heed the Ron Paul call to oppose these deals is at best unclear. Many have already flipped to yes votes, falling in line with the massive Chamber of Commerce campaign that has been aimed at getting them "educated."

If the deals are passed, you can imagine the Democratic congressional campaign committees again making hay with differentiator ads attacking these job-killing votes.

You must have Javascript enabled to use this form.

pretty incredible

Looks like we have some in Congress literally fighting against their own party President to get anywhere on the trade deficit, currency manipulation. Gee wiz, it's only been a decade of zero job growth.

Hope to write up an update on the latest along with some theoretical trade research details today.

Keep up the comments this is really important to try to get something passed.

You must have Javascript enabled to use this form.

Roemer at China Embassy

Speaker Boehner says it's "pretty dangerous," and Robert Oak says it's "pretty incredible" -- but what we all know is that the populist demand for a protectionist trade policy can no longer be denied. 

Republican presidential candidate Buddy Roemer, former governor of Louisiana, is credible enough while he is also amazingly on point. Roemer appears to be without fear of being labeled a 'protectionist'.

Here's Roemer announcing his job plan in front of the Embassy of the People's Republic of China.

Anthony Shoemaker at TradeReform.org (Coalition for a Prosperous America) quotes from article by Steve Bennish in Dayton Daily News (30 September 2011) --

Roemer, who has yet to take part in any of the Republican presidential debates, announced his jobs plan with a speech Sept. 1 at the Chinese Embassy in Washington D.C. denouncing China’s currency manipulation and product dumping and lack of enforcement by federal authorities in both Democrat and Republican administrations. He has taken an aggressive stance championing “Made in America” and decrying American international trade deficits that he says are stifling job growth.

In his speech, he called China a “bear” that eats American jobs with unfair trade policies as its fork.

 

As for why Roemer hasn't been allowed into any of the GOP candidates' debates, check out Robert Oak blog --  'Presidential candidate not there'

 

You must have Javascript enabled to use this form.

Roemer Rocks

Boy is this dead on, so of course he's locked out. Looks like the blogs and sites need to help give him some free press. I noticed he is mentioning policies that I know appeal to both Progressives and Conservatives, kind of the best of the lot.

You must have Javascript enabled to use this form.

Roemer to speak at Dayton summit tomorrow

DAYTON – Republican presidential candidate Buddy Roemer, former governor of Louisiana, will be the luncheon speaker at an Oct. 7 summit here aimed at revitalizing manufacturing.

.........

Announcement per TradeReform.org's Anthony Shoemaker, Steve Bennish, Dayton Daily News (30 September 2011)

The Coalition for a Prosperous America, a Washington, D.C.-based non-profit, and a host of Dayton-area businesses and organizations — including the Dayton Development Coalition, the city of Dayton, and the Dayton-Montgomery County Port Authority — will hold the summit at the Dayton Convention Center to talk about ways to get a handle on international trade and how it affects manufacturing and farming.

Roemer, former governor of Louisiana and 4-term congressman before that, holds MBA from Harvard. He has spent the last couple of decades building an independent bank in Louisiana. Noting that Wall Street has changed and is no longer what it once was, Roemer describes himself as "Main Street, not Wall Street."

You must have Javascript enabled to use this form.

Roemer on Dylan Ratigan show

The fact they won't let him in the GOP debates, while letting in others who have less popularity is despicable. I'm not surprised at all a host of groups that are non-partisan are picking up on him too. So far, what I'm hearing is a lot of positions that seem based on actual statistics, economics, which by that definition would cross political boundaries.

You must have Javascript enabled to use this form.

Embedded links to Roemer

Check out the Buddy Roemer channel on YouTube --

Here's the embed for the Dylan Ratigan interview --

You must have Javascript enabled to use this form.

China currency manipulation

Since when did Boehner start standing up for Chinese over Americans? He owes his jobs to the donors and corporations that do business in China. China does not follow the rules of free trade. Tax goods coming from China (even if it's made in China by American companies) for one year and we will owe them no more debt, and also bring back manufacturing jobs here.

“What trade war? They make it, we buy it, we make it (if we make it) they don't buy it. That's what’s happening now, so I say again, what trade war?”
“hahaha trade war? We import more than 230 billion dollars more than they import from us. Bring on that trade war. The whole western world needs to stand up and say if they are going to play unfairly, then we are not going to play. Plain and simple. They are milking dry the whole free world. Which is counterproductive since we won’t be able to import from them when we are broke.”

You must have Javascript enabled to use this form.

America's massive trade deficit

So we see the damage "free" trade has done to the American economy as evidenced by the massive trade deficit. The Senate is actually attempting to do something to reduce the trade deficit.

But then why in the world is Congress considering passing more "free" trade agreements with South Korea, Panama, and Columbia? Even worse, why is President "I'll renegotiate NAFTA" Obama pushing it against the will of his own party? It's insane and makes absolutely no sense.

You must have Javascript enabled to use this form.

Romney caught in Boehner's trap?

"Why is President 'I'll renegotiate NAFTA' Obama pushing [the three pending FTAs] against the will of his own party? It's insane and makes absolutely no sense." -- Anon. Drive-by

A better question might be why has the China currency bill been put into the mix at this time?

We tend to forget that in politics, we find political animals. They may all be insane, but everything they do makes sense in terms of political survival.

If there is anything clear about President Obama at this time, it's that he aspires to a second term. Everything must be seen in that context if we want to understand the current course of events.

On the one hand, Obama is looking to appear as the man who did the job of getting the three FTAs enacted, thus pleasing corporate contributors. On the other hand, Obama needs the TAA part of it to avoid looking like a fool with his own core constituency, and he has been trapped into yet another game of chicken over connection of the TAA and the three FTAs. And now, on a third hand, there's this new kid on the block, the China currency bill.

How quickly this hot potato, quickly nuked on high in the Senate, was passed to the House! And how quickly it will be tossed to the House Ways and Means Committee ... to a slow death or, at best, bare survival in such a weakened condition that it won't matter if it is ever enacted or not.

Meanwhile, what about the three pending FTAs and the TAA? The House will probably pass those -- even if Boehner has to repeat the voice vote charade (no record of how your representative voted) as was used 7 September 2011 in order to quickly send the GSP/TAA bill to the Senate for rapid action. But will the TAA be funded? And will the FTAs all pass in the Senate? After all, these can be three different bills, none of them much favored by Majority Leader Reid (D-Nev.) ... and they are not unrelated to the issues raised in the China currency bill. True, there's no debate allowed on fast-track FTAs, but there's still the option of voting Nay on all of them or for one or two of the FTAs but against one or two at the same time -- especially if the TAA will never be funded by the House anyway! (Debate will proceed off the Senate floor.)

Possibilities unfold! The proverbial worm has been known to turn unexpectedly.

Scariest of all possibilities, for Boehner, is a revolt among House Republicans, with populist members declaring their independence from the RNC and Boehner. That doesn't seem likely, but a lot depends on public reaction. If there are no House Republicans speaking out against the FTAs or in favor of the China currency bill, then that will be the GOP's karma to carry forward. They will have forfeit the mantle of protectionism, which means they do not value it.

From Boehner's point of view, everything was prepared for the classic squeeze play -- the strategy unchanged since the 1990s. The White House at Home Plate with legislative leaders playing the infield, Boehner at Third ... together they run a squeeze play on populist-protectionist legislators caught between bases.

Now, Boehner is ready to run the squeeze, but where is the play? Which ball is in play? Where is Obama? Obama is still there at Home Plate, but he is now out of the game ... Obama has become the Umpire! Obama has distanced himself from the trade issue, becoming the man with the power, becoming (to borrow a term from George W. Bush) "the decider."

Boehner's lock on power is slipping. So what's his strategy now? This analysis is from article by David Dayen at FireDogLake.com (4 October 2011) --

As for what will happen, House Speaker John Boehner said yesterday [3 October 2011] that he would send the trade deals to the floor for passage along with the separate bill authorizing trade adjustment assistance. The likely outcome is that TAA will be authorized and then never appropriated, and even the fig leaf to get support for the trade bills will not materialize. Meanwhile, the House, scrambling to avoid the label of obstructionism on forcing China to stop manipulating their currency, will try a bait and switch .... while the Chinese currency measure enjoys Republican support in the Senate, it is viewed less favorably in the House, where Representative Dave Camp, the Michigan Republican who is chairman of the Ways and Means Committee, is expected to offer his own less aggressive version later this year.

So the House passes a toothless bill, then there’s either no conference committee on the bill (see FAA authorization) and nothing passes, or the toothless, useless House bill passes. And China keeps eating our lunch.

What we have seen for some time now is that the two-party system has become dysfunctional, failing to represent the people. Sooner or later, schisms were sure to manifest in the body politic.

Both parties are split on trade issues. That's good. Better yet would be if a majority formed from both parties enacts real protectionist legislation.

Meanwhile, the political impact of this China currency bill may be that, in the event that Mitt Romney becomes the GOP candidate, Obama could taunt him by saying that the Democratic Senate enacted his proposals ... only for it all to be lost in the Republican House Ways and Means Committee. Then where will Romney be? Will he defend the toothless, useless House bill, if it even exists? Or will he be campaigning against GOP members of the House?

A specter haunts politics USA -- the specter of protectionism.

What is under-appreciated by the 'pols' and apparatchiks of DC is that the protectionist issue is unlike any of the other issues. It is probably the only issue on which the American people are united. If you play with protectionism, you'd best be understanding that you are playing with fire.

And no time off. No off-year. The specter haunts full-strength 24-7, be it 2011 or 2012.

 

 

You must have Javascript enabled to use this form.

The commie fighting currency peg

Since 1945 we have fought communism by exporting good capitalist manufacturing jobs. Letting Asian nations peg their currency to the US Dollar was the primary means of facilitating this effort. We have taken the fight to the commie's homeland. Soon we will have a complete capitalist victory over communism, and then we can finish taking back everything we had to give up so that your grandparents wouldn't go commie on us along the way. Markets in everything!

You must have Javascript enabled to use this form.

you need a snark else people will believe you're serious

but that's the insane mentality and another one is "helping poverty around the world" by literally giving the world American jobs and the U.S middle class wealth and income. Nice poverty program and obviously worked since many place in the U.S. look 3rd world, the statistics showing 3rd world poverty, despair, right here at home.

You must have Javascript enabled to use this form.