House to Consider Sestak Co-Sponsored Legislation to Protect American Workers, Prevent Chinese Currency Manipulation

Toomey’s Defends China at the Expense of American Workers

MEDIA, Pa. — The House of Representatives today is expected to consider legislation co-sponsored by U.S. Senate candidate Joe Sestak to prevent China from manipulating its currency. This action is necessary because for too long, China has been intervening in currency markets to keep its currency weak, providing an unfair advantage to its exporters, and ultimately costing American workers’ jobs.

This legislation, H.R. 2378, would strengthen the Commerce Department’s ability to crack down on foreign currency manipulation that allows countries to flood the U.S. market with cheap goods at the expense of American manufacturers. 

“We have allowed China to take advantage of these currency tricks for far too long and American workers have paid the price,” said Joe. “It’s time that we put Pennsylvania’s working families ahead of Wall Street and China. It’s time to say ‘Made in America’ again.” 

Congressman Toomey defends China’s position — arguing that no one could know the true value of China’s currency or claim American manufacturing jobs had been lost to China. This position is consistent with his stance on trade. 

He argues in his book, The Road to Prosperity, trade deficits are good for economic growth. Since China entered the WTO in 2001, the U.S. trade deficit with the country has increased by an average of $26.6 billion per year. [Robert E. Scott, “Unfair China Trade Costs Local Jobs,” Economic Policy Institute, 3/23/10]

As the New York Times noted: “In the United States, smaller manufacturers, labor unions and agricultural producers have been pressing the government to take a tough stance, saying that the currency policy has contributed to soaring trade deficits and the continued erosion of domestic industry. But large multinational corporations, especially those with production plants in China, and Wall Street banks, are comfortable with a weak renminbi because they export goods from China or are trying to promote investment there.” [New York Times, 9/29/2010]

While the resulting trade deficit may have benefited Chinese manufacturers and corporations that shipped jobs offshore, it also cost 2.4 million U.S. jobs between 2001 and 2008, including 95,700 here in Pennsylvania. [Robert E. Scott, “Unfair China Trade Costs Local Jobs,” Economic Policy Institute, 3/23/10]

“Congressman has a long record of fighting on behalf Wall Street and China at the expense of Pennsylvania’s workers. It is time that he levels with voters and admits whose side he is on,” said Sestak campaign spokesman Jonathon Dworkin. “Joe Sestak is the only candidate in this race with a plan to put ordinary Pennsylvanians first.”

Toomey’s Take on Currency Manipulation

Toomey said no one could know if China was undervaluing Its currency and China could not be blamed for any American manufacturing job losses. In 2007, Toomey mocked a GOP presidential candidate, arguing that no one could know the true value of China’s currency or claim American manufacturing jobs had been lost to China. In his commentary on a presidential debate, Toomey wrote, “Winner of Award for Economic Illiteracy: Duncan Hunter for his comments on trade. Hunter claimed China has devalued its currency by 40 percent and that Americans have lost 1.8 million jobs to China. Both these comments are patently absurd. Duncan Hunter – or any other human being for that matter – cannot tell you the precise value of the Chinese currency, and the loss of manufacturing jobs in America cannot be blamed on China but an economy that is increasingly more reliant on technology and automation.” [National Review, 5/16/07]

Officials agree:China manipulates its currency. Officials from both sides of the aisle agree: China manipulates the value of its currency. Richard Shelby, top Republican on the Senate Banking Committee: “There is no question that China manipulates its currency in order to subsidize Chinese exports.” U.S. Treasury Secretary Timothy Geithner called the Chinese yuan “significantly undervalued.” Ben Benanke, head of the Federal Reserve: “I have spoken about the yuan, about the Chinese currency. And I think that it’s undervalued. And I think that the Chinese ought to allow it to be more market determined and that they should move in that direction.” [New York Times, 9/16/10; House Financial Services Committee hearing, 2/15/07]

Toomey: Free trade is good and support of China revaluing its currency must mean opposition to free trade. In 2007, Toomey took a negative tone reacting to Sen. Fred Thompson’s comments that China should revalue its currency, implying such a stance is against free-trade with China, which Toomey supports. Toomey praised Sen. John McCain for his pro-free trade comments in the same commentary. Offering his insights into a 2007 GOP presidential primary debate, Toomey wrote: “Kudos to John McCain for taking an unequivocal stance in favor of free trade and reminding American voters that protectionism à la Smoot-Hawley would be a disaster for the American economy. Mayor Giuliani also embraced free trade without qualifications, a welcome pronouncement given his opposition to NAFTA while mayor of New York City in 1993. Senator Thompson’s call for pushing China to revalue its currency, begs the question of whether Thompson supports legislation currently pending in Congress that would impose duties or tariffs on China retaliation.” [National Review, 10/10/07]

China’s currency manipulation has led to global capital imbalance. The Washington Post reported in 2009 that Geithner “bluntly” stated China was “manipulating” its currency. The report added that economists argue “Beijing has kept its currency artificially low to keep the prices of its goods cheap and generate trade surpluses. That has led to a global capital imbalance, as American consumers borrowed and spent and China became the United States’ largest foreign creditor.” [Washington Post, 1/23/09]