After all this time China is still manipulating its currency, the Obama administration is still not able to get them to change, their exports are still rising relative to the rest of the world, global imbalances are still bubbling out of control, jobs are still being lost, and the Senate is getting ready to force the situation to change.
Paul Krugman writing at his blog today,
Back in April we were told to lay off on the currency manipulation charges; the grownups would work something out with China. How’s that going, exactly?
. . . Nicely, nicely isn’t working. Time to get tough.
As referenced in today\’s Progressive Breakfast, Treasury Secretary Geithner told the Senate Finance Committee yesterday,
\”To be honest, I don\’t know whether we are at the point where we are going to see meaningful progress in the short term,\”
The result? It just gets worse:
The U.S. trade deficit with China widened 14 percent in April, to $19.3 billion, compared with $16.9 billion in March, driven by a surge in imports and a fall in sales to China by American companies.
Senate To Act
The Treasury Secretary was supposed to formally declare whether China was manipulating its currency on April 15. He didn\’t. So here we are in June, things getting worse and the Senate is getting ready to step in and act on its own,
U.S. Senator Lindsey Graham said legislation aimed at getting China to raise the value of its currency has “huge” support in Congress, and President Barack Obama “runs the risk” of being overridden if he vetoes it.
This has huge support, is going to pass, and China should not count on the President vetoing the measure because the House and Senate will override the veto. The legislation would impose a series of steps, designed to pressure a country that manipulates its currency but also to allow the country to negotiate solutions. Tariffs and even our own currency manipulation against that country are some of these steps.
Threats to pass this bill are a move designed to pressure China to negotiate fairly, but if they don\’t it will pass and will lead to harsh solutions.
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