Obama Quickly Caves To China

Well, it didn’t take long for a re-elected President Obama to choose China and multi-national businesses over the blue-collar electoral base that enabled his victories throughout the Midwest earlier this month. The Obama Administration announced that it would not label China a currency manipulator. When the Chinese currency—the yuan—is undervalued against the dollar, it makes Chinese goods cheaper when they enter the United States, thereby undercutting American-based competition.

China's manipulation of the yuan gives it a competitive edge over U.S. manufacturing and the White House refuses to deal with it.

It was U.S. manufacturers who sought to have China branded a manipulator and it’s their employees who have been suffering the brunt of the economic losses that come when domestic manufacturing loses market share to China. Furthermore, it cannot be argued that the Chinese are producing a better product—not when it requires currency manipulation—on top of lower wage and environmental compliance costs—to beat out their U.S. competitors.

The people Obama’s decision does work for is international businesses that can continue to set up shop in China, knowing they can ship the goods back into the United States duty-free.

Obama—as previous presidents, including Republican ones before him—argues that branding China will trigger a trade war, which will hurt U.S. exporters. But who has the bigger consumer market as leverage? Is access to the American market more important for Chinese exporters or vice-versa? The United States, at least for the time being, has its wealthy consumer market to use as leverage to protect its manufacturing jobs.

Given the current state of the economy, this may not always be the case, so the time to act is now. As Frank Pentangeli advised Michael Corleone in Godfather II, “lets hit ‘em now, while we’ve got the muscle.”

In fairness to Obama, one of the dilemmas he does face is that China owns a huge chunk of the national debt, and as such, any sort of hardball becomes dicey. Of course on the flip side of this, Obama has happily chosen to be a part of the problem in Washington when it comes to running up the national debt, rather than part of the solution. Come to think of it, if there’s anyone in Washington who’s a part of the solution—at least anyone with real power—I’d love to hear their name.

The proper first step would be for Obama, in a joint conference with Speaker John Boehner, to announce that budget negotiations are off, and we’re going to let the mix of spending cuts and tax increases take effect on January 1.

In an ideal world, I’d have preferred a different deal, as I’m sure would most people of either party. But when it comes to budget policy, a re-elected Democratic President and a strengthened Republican Congress each have to try acting like adults, and acknowledging the need for this politically unpopular deficit reduction would be a good start.

With the government’s fiscal house then on the road to being in order, Obama would have a strengthened hand to deal with China. The voters who stand to benefit the most from this in the long run are the ones who gave the president his margin of victory and are ones the Republicans could reasonably win over.

If doing the right thing for its own sake isn’t enough—and let’s face it, in Washington it never is—then taking care of voters you need can suffice as each party’s form of imperfect contrition.

Dan Flaherty is the author of Fulcrum, an Irish Catholic novel set in postwar Boston with a traditional Democratic mayoral campaign at its heart, and he is the editor-in-chief of TheSportsNotebook.com

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5 thoughts on “Obama Quickly Caves To China

  1. abadilla says:

    Dan,

    “Well, it didn’t take long for a re-elected President Obama to choose China and multi-national businesses over the blue-collar electoral base that enabled his victories throughout the Midwest earlier this month.”
    Am I supposed to cry over the blue-collar electoral base that enable his victory? They will get exactly what they deserve but the problem is, so will the rest of us who did not vote for him.

  2. Joe M says:

    When I heard this news, the first thing that came to mind was the moment in the presidential debate when Obama argued that we could trust him over Romney to stand up to China… That standing up didn’t last very long. Did it?

    Dan. I don’t agree that we should let the “fiscal cliff” happen. In your previous article, you seem to suggest that the resulting tax hikes would only be on top brackets. In fact, the hikes would affect a lot more people than that.

  3. Rob says:

    Why do we keep pretending this is a Catholic website when stories end with a tagline about how Republicans can win more voters?

    Second, as to your logic:

    “Furthermore, it cannot be argued that the Chinese are producing a better
    product—not when it requires currency manipulation—on top of lower wage
    and environmental compliance costs—to beat out their U.S. competitors.”

    Uhh, China has signed onto the Kyoto Protocol. The US? Not so much. Second, your argument that lower wages in China are somehow producing an unfair advantage when writers at CatholicVote have argued that getting rid of a minimum wage in the US would reduce unemployment. Fair for us, not fair for them? http://www.catholicvote.org/discuss/index.php?p=34851

    You argue that workers of manufacturing are hurt by all this. Yes, but the exporting of jobs overseas has virtually no net loss in jobs. Exporting manufacturing work inevitably creates new work in the US to bring the products back. Why do you not factor this in?

    Finally, the economic edge of countries like China, India, Brazil in the late 90s and Mexico today is partly attributed to the training of their workers in US universities. The US has shown little willingness to welcome these people as citizens; the green card process is way too onerous. So they take their skills and they go back to where they came from and create the jobs of tomorrow, not for us, but for others. Look at CatholicVote’s endorsements over the past two cycles: Sharron Angle, Richard Mourdock, Rick Santorum. If you want to support people who are virulently anti-immigrant, then you can’t sit here and complain about this new economic edge other countries have.

    Your arguments are pretty much all contradictory when you look at what has been written on this site over the last couple years.

  4. Randall says:

    China isn’t a currency manipulator anymore than the USA.

    1. Randall says:

      Impostor alert!!! That is not me and whoever posted the above should have their IP address banned. In any case, 0zero can’t wait to head to China so he can start bowing and scraping to his new overlords. He obviously cares more about the Chinese than he does Americans – of course because they are Communists (and as a bonus they oppress Catholics)!! Look for Ofailure to start sending Government Motors over to China any day now.

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