As President Obama meets with Chinese Premier Wen, the House Ways and Means Committee announces it will vote tomorrow on a bill to take action if China does not bring its currency to market rates. This sends a loud and clear signal to China that action is coming, one way or another, and they are going to have to make adjustments. This has every appearance of a smart, coordinated strategy between the administration and the leadership of the Congress.
House leaders are moving forward with legislation to combat China's currency policies, adding to pressure from the Obama administration and giving lawmakers an election-year chance to vote on a sensitive trade matter.
The House Ways and Means Committee plans to vote Friday on a bill that would expand the Commerce Department's power to impose duties on Chinese imports in response to that country's currency being undervalued on world markets.
But there is opposition from inside our own country.
Some business groups oppose the bill, arguing that it could backfire if it raises trade tensions with China and prompts the Chinese government to use the many tools at its disposal to interfere with American companies. China is a major destination for U.S. exports - about $70 billion a year - although the United States runs a trade deficit of about $200 billion a year with that country. Duties on Chinese imports might also raise prices for U.S. consumers.
There are competing interests at work. Robert Reich wrote about this a week ago in The Two Categories of American Corporation -- And Their Politics and Harold Meyerson picks up the theme today in The real un-Americans.
Reich points out that some giant companies sell to Americans, and therefore want us strong and prosperous, and want policies that stimulate our economy, provide jobs with good pay and generally boost the middle class. Others, not so much.
The first group includes national telecoms like Verizon and AT&T that need a prosperous America because most of their sales are here. Same with finance companies like Bank of America and Travelers Insurance whose business strategy has been built around U.S. consumers. Ditto certain giant chains like Home Depot. Naturally, all these companies were especially hard hit by the Great Depression and its devastating impact on American consumers.
The second group includes companies like Coca Cola, Exxon-Mobil, Hewlett-Packard, Intel, and McDonalds, that get substantial revenues from their overseas operations. Increasingly this means China, India, and Brazil. Ford and GM are still largely dependent on US sales but becoming less so. ...
What does this mean for Main Street? Reich says,
Large American corporations are going global as fast as they can. That's good for their shareholders. But in a Washington ever more susceptible to their money and influence, that's not necessarily good for most Americans.
Meyerson picks up on this today,
Consider the debate in Congress about whether to impose tariffs on Chinese imports if China continues to depress the value of its currency. ... Unions and some domestic manufacturers support the bill. But a large number of American businesses, in a campaign coordinated by the U.S.-China Business Council, oppose it.
... The question here is whether the 220 corporations that belong to the council ... are already so deeply invested in China as manufacturers, marketers or retailers that buy goods there to sell them here that their interests are more closely aligned with China's than with America's. [emphasis added]
It is important to understand that some of the country's most powerful entrenched, wealthy interests no longer depend on the success of America's economy and the prosperity of our people. They have a lot of power and money, and use it to influence our country's politics to increase their own wealth and power. But their interests are not our interests. They want low taxes and don't care whether we have good jobs, good schools, modern infrastructure and an economy that works for We, the People. They just don't care about that. And they are willing to say and spend what it takes to set us against each other, poison our politics, and anything else they need to do to get us to act in their interests not ours. "Globalization" and "free trade' policies work for them, because they enable them to evade the protections that our democracy gives us. But allowing them to just move factories and jobs out of the country and then bring the goods back here with no penalty does not work for the rest of us.
Keep this in mind when you hear the different arguments over taxes, infrastructure, education and government in general.