In my recent post Trade: Who Advocates For American Interests? I wrote that, “other countries advocate for the interests of their economy, businesses and working people, and our own elites also advocate for the interests of other countries’ economies, businesses and working people instead of our own. “
One place where America’s leaders could advocate for America’s economy, businesses and working people is by confronting currency manipulation.
5.8 Million Jobs From Just This One Thing
I think one of the better examples of this problem is in our failure to confront currency manipulation. This sounds like some kind of complicated, technical subject but it’s actually quite simple and it is costing us 5.8 million U.S. jobs. Other countries manipulate their currencies as a way of subsidizing things done and made there to make them less expensive in world markets than things done and made here. That costs our economy, businesses and working people. The resulting trade deficit drains our wealth, cuts growth and increases our budget problems.
From last month’s post, Want 5.8 Million New U.S. Jobs? Do This:
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.
Read this report to see how many jobs could be gained in each state if we fixed this one problem.
The Alliance for American Manufacturing’s (AAM) Scott Paul explains the problem at Politico magazine, in What ‘House of Cards’ Gets Right About China,
China and other mercantilist governments manipulate their currencies by deliberately devaluing them, effectively taxing U.S. exports while generously subsidizing their own. The hallmarks of this practice are a combination of high foreign cash reserves and large trade surpluses, both of which China has in abundance.
… The reticence of U.S. lawmakers to take this issue seriously notwithstanding, the fact remains: In combination with an exploitable workforce, a notoriously lax regulatory regime and a massive program of subsidies, China still intervenes in currency markets to boost to its export-dominated economy. The yuan has actually depreciated steadily this year, and just in the past week, the People’s Bank of China engineered its largest controlled drop in 18 months.
But Fixing This Is Obstructed
So, after a big fight, the Senate finally passed a bill to confront countries that manipulate their currency. In the House the bill even has 60-or-so Republican co-sponsors. But the Republican leadership refuses to allow the bill to come to a vote because Wall Street doesn’t want to change the status quo. By the way, not allowing a bill to come to the floor for a vote because it will pass is called “obstruction.”
So here is one place where some pressure on Republicans in the House could actually do some good. If you have a Republican member of Congress representing you, give them a call and let them know you are paying attention and want them to tell the leadership to let them vote on the currency-manipulation legislation. It will pass if it just gets a vote.