The United States could create up to 5.8 million new jobs, reduce our trade deficits by up to $500 billion per year by 2015 and increase U.S. gross domestic product by up to $720 billion per year if we act to end global currency manipulation. Simple as that.
Currency manipulation makes the U.S. dollar more expensive than it would be in a free currency market. This means that products made and services performed in the U.S. cost more than products made and services performed in other countries. Business migrates to companies located in the manipulators' countries, which costs U.S. jobs and increases the trade deficit.
A report released today by the Economic Policy Institute (EPI), titled "Stop Currency Manipulation and Create Millions of Jobs," shows how currency manipulation by China and others are costing the United States between 2.3 million to 5.8 million jobs.
According to the report, realigning exchange rates could:
- Reduce U.S. trade deficits by up to $500 billion per year by 2015;
- Increase U.S. GDP by up to $720 billion per year (a 4.9 percent increase);
- Support creation of up to 5.8 million jobs (a 4.1 percent increase); and,
- Increase manufacturing jobs by up to 2,337,300 jobs (a 15.9 percent increase).
Also, increased tax revenues and reduced safety net expenditures would reduce the 2015 federal budget deficit by up to $266 billion, up to an 86.1 percent decline in the projected federal deficit.
From the report:
Reducing trade deficits by eliminating currency manipulation would cost the federal government nothing; in fact, increased tax revenues and reduced safety net expenditures would reduce federal budget deficits by between $107 billion and $266 billion in 2015 (34.4 percent to 86.1 percent), and net state and local resources would increase by between $40 billion and $101 billion.
Rep. Sander Levin (D-Mich.) said on a press call about the report, "This report so clearly outlines that currency manipulation has such an impact on jobs and workers, it is a key part of the trade imbalance." Levin also said that the "TPP [Trans-Pacific Partnership] has to address this currency issue."
The Obama administration doesn't label countries like China as currency manipulators with the "intent" of being more competitive (a requirement of the current law), likely because the administration wants China's cooperation in dealing with countries like North Korea. (Coincidentally, it seems that when pressure to confront China over currency increases, tensions with North Korea increase, and pressure over currency is dropped.)
A bill that would force action on currency manipulation has passed the Senate, but as is so often the case, the Republican House leadership is obstructing a vote.
Currency manipulation is a very big deal. It isn't complicated; it's one more way we allow other countries to take our jobs, factories and money. There are people making vast fortunes from this, and those fortunes make them very powerful enough politically to purchase congressional obstruction.
Call your senators and your representative and let them know you are paying attention to this.