As United Steelworker President Leo Gerard said recently,
While Washington is paralyzed over budget deficits, it’s ignoring the unacceptably high trade deficits that have forced too many workers over the cliff as their jobs have been outsourced and lost to outdated and failed trade policies. The trade policy cliff should be the real worry in Washington.Gerard pointed out that our trade deficit with China reached an all-time high of $315 billion last year.
The reason: currency manipulation, according to a recent study by our friends at the Economic Policy Institute. Writes the Economic Populist:
The figures are astounding. EPI estimates 20 countries, developed and underdeveloped, made off with $700 billion more in trade by manipulating their currency in 2011. This cost the United States $400 billion in additional trade deficit for the same year. That's a hefty amount of cash.EPI suggests the U.S. should just stop selling U.S. Treasury bonds to currency manipulators like China, Japan and Singapore. That would cause those currencies to rise. U.S. exports would cost less and be more competitive. Domestic manufacturers would have to hire more workers to keep up with demand. EPI estimates as many as 4.7 million workers.
Here's how NOT to fix the trade deficit: enter into another job-killing trade deal.
Inside U.S. Trade reports on what happened to the deficit after the last big job-killing trade deal -- the one with South Korea that was supposed to boost U.S. exports:
...data released by the Commerce Department last week show rising U.S. trade deficits with several key trading partners, including South Korea and China. According to that data, the U.S. trade deficit with South Korea grew 25 percent in 2012 from the previous year's level, and 32 percent during the April through December period. The U.S.-Korea FTA went into effect on March 15 of last year.And Public Citizen reports the other two -- with Panama and Colombia -- didn't help, either:
Under the Korea, Colombia and Panama FTAs, which took effect in 2012, combined U.S. exports to the three countries fell four percent relative to the same months of 2011.Economic Populist doesn't think Congress will pay much attention:
Will policy makers listen to the statistics and actually do something? We doubt it, but we suggest writing them anyway. Demand Congress start addressing the biggest cause of American job suck, currency manipulation. One will need to bang the drum loudly, for Congress is clearly obsessed with the wrong deficit.