The China currency bill is the most significant jobs bill Congress could pass. It enjoys the bipartisan support of nearly 80 Republican and Democratic senators, yet President Barack Obama and House Speaker John Boehner oppose it, illustrating that both are out of touch with the problems besetting the American economy.
The nearly $600 billion trade deficit is destroying more American jobs than the mortgage crisis, too much business regulation and high health care costs combined.
Americans haven't forgotten how to make things or compete. Unlike what President Obama would have us believe, Americans are not undereducated dolts, unenlightened in the ways of global competition. Rather, through a failure to act on issues the president has identified (Chinese mercantilism) and on issues where his ideology prevents action (the development of abundant U.S. energy), Americans are being denied their fair opportunity to compete.
Simply, the U.S. economy suffers from too little demand for what Americans make. Americans are spending again, but since the first quarter of 2009, the trade deficit is up 55 percent. In the second quarter, it was nearly $600 billion, or 4 percent of gross domestic product — thanks almost entirely to surging subsidized imports from China, barriers to U.S. exports into the Middle Kingdom and higher oil prices.
Every dollar that goes abroad to purchase Chinese goods or oil that does not return to purchase exports is lost purchasing power that could be creating American jobs. Halving the nearly $600 billion annual trade deficit would create at least 5 million jobs.
To keep Chinese products artificially inexpensive on U.S. store shelves, Beijing undervalues the yuan by 40 percent; simply, it prints yuan and purchases about 450 billion dollars annually in currency markets to keep its currency and exports cheap. In the bargain, it uses some of those dollars to subsidize oil imports and drive up gasoline prices in the United States.
In addition, China provides domestic industries with more than 200 export subsidies and blocks competitive imports of U.S. cars, alternative energy products and just about anything else it chooses to promote. Currency manipulation, subsidies and insidious barriers to the sales of foreign products ranging from cars to solar panels violate the letter and spirit of China's World Trade Organization obligations to promote freer trade and provide open access to foreign goods in its markets.
All Mr. Obama does is complain; Mr. Boehner prefers to do even less; and both, with feet planted firmly in the past, cling to ideological prescriptions that do little to address these problems.
Mr. Obama remains faithful to "food co-op capitalism" — more government spending, income redistribution, overregulation, industrial policies and free trade agreements that don't reduce the trade deficit and destroy jobs. Meanwhile, Mr. Boehner adheres to "knickers era capitalism": indiscriminate cuts in taxes, spending and regulation. Both have failed America — the former since 2008, when the Democrats took control of the House and bloated the bureaucracy and deficit, and the latter during the first six years of the Bush presidency.
The China currency bill would permit U.S. firms and workers harmed by China's 40 percent undervalued currency to obtain relief through offsetting duties until China stops intervening in currency markets. That should jog China into finally compromising on the issue. If not, it would move some jobs back to the United States that should not have left in the first place.
American companies like GE and Caterpillar, which have outsourced American jobs and corporate functions to China and are now clients of Beijing's protectionism, have convinced President Obama that the China currency bill is protectionist and would start a trade war. But what China does is protectionist, and America is already in a trade war, in which China is throwing rocks and Mr. Obama is throwing words.
China is bullying America. Mr. Obama refuses to stand up to the bully, and Mr. Boehner is just fine with that.
Growing up in a tough, blue-collar neighborhood as the smallest boy at school, I learned that whining about bullies doesn't work. Sometimes, you just need to get a big stick and strike back. After a few hard blows, even big bullies can be brought to reason.
The world is a messy place and full of nasty people. Americans must address it as they find it, not as Mr. Obama's friends in neatly pressed Brooks Brothers suits tell us it should be.
Peter Morici, a professor at the University of Maryland's Smith School of Business, is former chief economist at the U.S. International Trade Commission. His email is email@example.com.