Monday's final campaign debate focuses on foreign policy. Will it focus on our policy of running huge trade deficits with China? Every dollar of trade deficits makes our country a dollar poorer. That trade deficit is the deficit that our Washington elites should be worried about.
The China Trade Deficit
For some reason, when we close a factory here,lay off the workers and ship the equipment to China, and then ship the same goods back here to sell in the same stores, that is called "trade." And when we buy vastly more stuff from China than they buy from us, that is also called "trade."
We have a huge "trade" deficit with China. We sent China $28.7 billion dollars in August alone - $295 billion last year. So in one year we transferred $295 billion of our wealth to China.
The trade deficit not only drains the economy and our jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.
President Obama is working to double American exports, but imports also continue to rise. The problem here is that even if we double exports we continue to drain our economy if the export increase doesn't catch up to the level of imports.
You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff… Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.
Trade Deficit Costs Jobs
A new report, The China Toll, takes a look at the effect of our trade deficit with China since that country joined the World Trade Organization (WTO) ten years ago, and comes up with some very specific numbers. In summary:
"Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state"
The Economic Policy Institute (EPI) released the report, The China toll, Thursday.
According to the report,
Between 2001 and 2011, the trade deficit with China eliminated or displaced more than half of all U.S. manufacturing jobs lost over that period. The growing trade deficit with China has cost jobs in every congressional district in all 50 states as well as in the District of Columbia and Puerto Rico.
The total losses include 662,100 jobs from 2008 to 2011 alone—even though imports from China and the rest of the world plunged in 2009 before recovering and surpassing the previous peak reached in 2008. The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries. In fact, rapidly growing imports of computer and electronic parts, including computers, semiconductors and audio-video equipment, accounted for nearly 55 percent of the $217.5 billion increase in the U.S. trade deficit with China between 2001 and 2011.
Again: Half of our manufacturing job loss is lost to the trade deficit with China. … The trade deficit in the computer and electronic parts industry grew the most, displacing more than 1 million jobs in high-tech industries.
Trade Deficit Makes Workers Afraid
The trade deficit and resulting job loss makes workers afraid, so they work longer hours, skip vacations and accept cuts in wages and benefits, which also hurts the economy. From Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class,
The middle class is disappearing. Our economy is "hollowing out" because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government - and us.
The President has filed several trade complaints against China, including actions involving tires, steel pipes and solar panels. This has made a difference. Just yesterday the WTO found in favor of the United States in a dispute challenging China’s imposition of duties on U.S exports of grain oriented flat-rolled electrical steel (GOES). This ruling ensures that American workers and businesses that make certain types of steel won’t face Chinese retaliatory tariffs.
But these trade actions are just one piece of the big puzzle. Another piece is confronting China's currency manipulation.
The Currency Problem
China manipulates their currency. Because their currency is "weak" goods made there cost as much as 30% less than goods made here, even before you take into account the effect of various Chinese government subsidies and other trade cheating.
There is a bill in Congress to crack down on China's currency manipulation. This is a bipartisan bill that has passed the Senate. In past years this bill has overwhemingly passed in the House, and the current bill has more than 60 Republican co-sponsors.
But that bill cannot get a vote in the House, even with more than 60 Republican co-sponsors. Wall Street's front group The Club For Growth has made the currency bill a litmus test. Politico: Club for Growth warns GOP on China currency bill,
The influential Club for Growth is pressuring Republican presidential candidates and lawmakers to oppose bipartisan legislation cracking down on China’s currency policies.
… The Club for Growth has urged lawmakers to vote no on the bill, warning that the vote will be included in the group’s 2011 Congressional Scorecard, used to measure how fiscally conservative they are.
So Speaker Boehner refuses to bring the bill to the floor for a vote -- because it will pass. And the 60+ Republican co-sponsors in the House refuse to sign a discharge petition that forces the bill to come to the floor for a vote because they fear retaliation from Wall Street.
Romney Says he Will Crack Down On China, Refuses To Actually Crack Down On China
On the campaign trail Mitt Roney says he will crack down on China. He says he will do something about China's currency manipulation on the first day he is in office.
But there is something he will not do: he will not actually crack down on China right now, by pressuring Boehner to bring the currency bill to the floor, or by asking the 60+ Repubican co-sponsors of the bill to sign a discharge petition.
If Romney wants to crack down on China he should crack down on Boehner and House Republicans right now. This needs to be part of Monday's final campaign debate.
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