The Coming Republican Campaign For Medicare Buy-In

Step one of health care reform has passed. Republicans vow to campaign on repealing it, which means that from now until the election they will use all of their communication channels to tell the public about all the problems with the health care bill. This is an opportunity. We have to tell the public that the answer to the problems the Republicans describe is not repeal, it is Medicare Buy-In, leading to Medicare-For-All.
Like the Iraq War there are facts and there are Republican lies. Over time facts catch up with lies. In spite of what the Republicans had most of the country believing, over time the public came to understand that Iraq did not attack us on 9/11. Over time the public came to understand that Iraq was not preparing to attack us with nukes.
And just as with Iraq, over time the public will come to understand that Republicans have lied to them about health care. There are no “death panels.” There is no “government takeover.” Etc. Over time the public will become comfortable with the reform that has passed and it will become unthinkable to go back.
The coming Republican campaign to turn the public against items in the legislation should be answered by saying this is why we now need to add Medicare Buy-In before it takes effect. As Republicans proceed with their campaign to knock down the legislation we must make the solution a choice between going back to the bad old ways, and adding Medicare Buy-In.

WTF Does That Even Mean?

OK I turned on the TV and saw about a minute of the health insurance debate. A Republican was saying “A government big enough to give you what you want is a government big enough to take it away.”

WTF? WTF does that even MEAN?
It sounds scary and sinister, but I WANT the government big enough to give people what they want and need. I mean WTF?
And government is rule by the people. So I WANT it BIG. I WANT the people having lots of control over our affairs. I mean, what is the alternative if not big corporations making the decisions for us?

Health Care Bill

So finally, after a year of disengagement, President Obama steps up to the plate and works to get something passed, and we get a health care bill. I wonder if we’ll see him get involved on labor rights, financial reform, infrastructure investment and so many other things the country needs..

Today’s Must-Read

Long, and worth the time: What’s It Going to Take to Make the Bastards in Finance Pay? Excerpt:

There is no arguing that there is no greater method of creating economic growth than capitalism. Even Marx had no qualm with that. But growth is like crack cocaine for bankers and economists, both of which see the world purely in terms if wealth accumulation and production. For we who do the producing (or once did the producing back when workers were still considered a necessary evil)the truth is that American capitalism is like a wine press. It squeezes the masses for the money representing their productivity, in a process otherwise known as the virtual economy. A few people in the virtual economy become multi-millionaires. The rest of us pay the freight financially, socially and ecologically.

China’s Currency Manipulation Manipulates The World

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China’s currency manipulation is a worldwide problem, not just a job-killer here.
U.S. Ambassador Calls China’s Currency Stance ‘a Real Concern’,

In a speech to students at Beijing’s Tsinghua University, the ambassador, Jon Huntsman, said that economic problems in the United States had increased pressure there for a change in the value of the renminbi, which China currently ties to the value of the dollar. That has kept Chinese exports comparatively cheap and, critics say, hampered other nations’ recovery from the global recession.
“My Chinese friends like to pitch this as just an American issue. I like to say that there are many countries that feel the same way,” Mr. Huntsman said. But he focused on the growing political backlash from Americans who feel the currency policy is hurting them. [emphasis added]

The managing director of the IMF – the ‘I’ stands for “International” – agrees. IMF Head Says Yuan Remains Undervalued

International Monetary Fund Managing Director Dominique Strauss-Kahn said Wednesday that China’s currency remains undervalued.

The resulting huge trade imbalance is hurting the entire world. From the NY Times editorial that I linked to yesterday, Will China Listen?,

China’s decision to base its economic growth on exporting deliberately undervalued goods is threatening economies around the world. It is fueling huge trade deficits in the United States and Europe. Even worse, it is crowding out exports from other developing countries, threatening their hopes of recovery.

In the Financial Times, Martin Wolf writes in China and Germany unite to impose global deflation,

[. . .] Surplus countries insist on continuing just as before. But they refuse to accept that their reliance on export surpluses must rebound upon themselves, once their customers go broke. Indeed, that is just what is happening. Meanwhile, countries that ran huge external deficits in the past can cut the massive fiscal deficits that result from post-bubble deleveraging by their private sectors only via a big surge in their net exports. If surplus countries fail to offset that shift, through expansion in aggregate demand, the world is inevitably caught in a “beggar-my-neighbour” battle: everybody seeks desperately to foist excess supplies on to their trading partners. That was a big part of the catastrophe of the 1930s, too.

The United States is not alone here. If the United States takes a stand the world will be behind us. We need to do what is right. On April 15 the President should declare China to be the currency manipulator that it is. Then trade can start to rebalance.

Chinese Currency Manipulation: “Not A Small Issue”

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
The Chinese currency manipulation issue continues to make news.
Economist Paul Krugman lays out the stakes,

China is in effect imposing an anti-stimulus of that magnitude — which plausibly means 1.5 percent of GDP. This is not a small issue.

Senators Schumer, Graham and Brown revive legislation to push China: Schumer, Graham Push Bill to Pressure China on Yuan

Senators Charles Schumer, Lindsey Graham and Sherrod Brown revived U.S. legislation that would increase pressure on China to raise the value of its currency.
. . . “President Obama has outlined a plan to double exports but you simply can’t do that if you don’t address the currency issue,” Brown, an Ohio Democrat, said at a news conference in Washington today. “China’s current policy is out-and-out protectionism.”

130 Members of Congress call on the President to act,

Today a bipartisan group of 130 members of Congress, ranging from Dennis Kucinich on the left to Joe Wilson on the right, wrote to President Obama asking him to stop Chinese currency manipulation.
. . . The crisis has gotten so severe that economists who have long fought for conservative ideology and against tariffs are saying we need them to correct the imbalance.

NY Times editorial shows that establishment opinion is moving against China, Will China Listen?,

China’s decision to base its economic growth on exporting deliberately undervalued goods is threatening economies around the world. It is fueling huge trade deficits in the United States and Europe. Even worse, it is crowding out exports from other developing countries, threatening their hopes of recovery.
[. . . ] The world’s battered economy is certainly in no shape to keep absorbing China’s exports, subsidized through a cheap currency policy. The more countries that say this, the more likely Beijing will consider changing course — and the less likely this disagreement will escalate into a fight that no one can win.

China says this is all just “scapegoating”: Senior Chinese diplomat rejects currency move,

“I don’t think the call by over 100 congressmen from the U.S. is well founded on facts. They should not blame the problems they have by finding a scapegoat in China,” He Yafei, China’s new ambassador to the United Nations in Geneva, told a briefing.

Wall Street takes China’s side: Congress Is Playing ‘Football’ on China Currency, O’Neill Says,

U.S. lawmakers are playing political football by pressing China to boost the value of its currency, which isn’t particularly undervalued, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said.
. . . The concern in Congress “is sort of understandable but it misses the point,” O’Neill said today at a press conference in London. It’s “the equivalent of a football” and is part of “the usual hobby of bashing China,” he said.

CAF’s Bob Borosage discusses the Showdown With “Chermany”,

… The Chinese continue unprecedented measures to manipulate their currency, now starkly undervalued against the dollar. This is a centerpiece of a comprehensive mercantilist policy to grow by dominating export markets.
. . . China’s Premier Wen Jiabao scorned US pressure on the Chinese to revalue its currency, summoning up the wondrous gall to accuse the US and other countries of “protectionism” for seeking to depreciate their currencies.
. . . The Chinese, meanwhile, are openly recruiting US companies with subsidiaries in China to lobby against any US action. The China lobby – think tanks, multinational companies and banks – will unleash a howl about US protectionism, warn of trade wars, discount the importance of Chinese mercantilism, and remind us of the benefits of a cheap yuan. Chinese threats to dump dollars from their $2.4 trillion cache will rattle financial markets (even though a declining dollar will cost the Chinese bigtime).
This could easily get out of hand, but the showdown with Chermany can’t be avoided. We can’t go back to a world in which the US is the consumer of last resort, borrowing $2 billion a day to buy goods from abroad. … Rebalancing is best done cooperatively but it must be done. And it can no longer be delayed.

The Alliance for American Manufacturing issued the following statement:

“The Alliance for American Manufacturing (AAM) strongly supports efforts designed to end China’s ongoing currency manipulation, which is harming American manufacturing and its workers. In the last week, a bipartisan group of Senators have introduced legislation, and more than 130 Members of Congress have signed a letter urging the Obama Administration to take action, strong indications that the mood in Congress is growing more proactive.
“The United States has lost 5.5 million manufacturing jobs in the past decade. Tackling the currency issue is imperative in saving America’s industrial sector. Economists of all backgrounds agree that an undervalued Yuan continues to make Chinese imports cheaper and American exports more expensive.
“The next step is for the U.S. Treasury Department to list China as a currency manipulator in its semi-annual report on currency exchange, due by April 15. Naming China as a currency manipulator, and taking further steps to hold them accountable, would be an important first step toward stopping the systematic dismantling of our industrial base.”

China’s American Enablers

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
China argues that some American companies will suffer if China stops subsidizing manufacturing and adjusts their currency to market levels. They’re right. The fight over Chinese violations of trade rules is also another story about Wall Street and big, monopolistic corporations vs Main Street and American workers.
A China Daily story says China’s huge export surplus is being “misread.” The Chinese government says that US companies — the ones who close US factories, lay off workers, devastate communities and throw the costs onto the government — are also beneficiaries of China’s government subsidies. From the story,

China’s large trade surplus is often used by the United States to argue why China should allow its currency to rise.
Yet most US officials ignore a very important fact: a majority of China’s exports to the US are produced by US-funded companies and huge profits go back into American pockets. . . .
“China’s cheap labor helps foreign companies cut wage costs and increase their profits. Ironically, the rising profits go into foreign bosses’ pockets and China is left to take the blame for the trade imbalance,” said Tan Yaling, an expert at the China Institute for Financial Derivatives at Peking University.

This story is correct. SOME Americans do benefit from closing our factories. Actually, “benefit” might even be the wrong word here. SOME Americans are getting fabulously wealthy from these policies, beyond anything seen before in history, with the rest of us falling further and further behind as a result. Wal-Mart, for example, with their stores full of Chinese goods, has for decades been wiping out regional and local retailers and lowering the local wage and tax base.
So yes, SOME Americans are doing very well, thank you, from these policies. They gain a quick buck today, the rest of us pay the costs later. In Wall Street’s War Against The Real Economy & We, The People, I wrote,

Over and over again we see the consequences of conservative economics and Wall Street domination: Short-term profits for a very few with devastating long-term consequences for the rest of us.

Wall Street firms have been making vast fortunes from this game,

The private equity company-buyout game works like this: buy a company, borrow against the company name and assets and put the proceeds straight into your pocket, sell off assets, outsource jobs, lay people off, cut pay and benefits for the rest, close facilities and factories, externalize costs onto the community, cheapen whatever the company makes or does, run up the debt some more, squeeze money out and pocket it and then sell. Hopefully you make off with the pension fund in the process.

They have been backed by American conservatives who have have long argued in favor of these “free market” and “free trade” scam that, close US factories, instead importing goods subsidized by China’s government. A few get fabulously wealthy at the expense of the rest of us. To persuade people to support this nonsense they say that adjusting China’s currency to market rates would “punish” consumers. Typical of this line is this from the Heritage Foundation a couple of years ago, China’s Undervalued Currency Benefits Americans,

To the extent that the renminbi is undervalued … the benefit goes to U.S. consumers and businesses, which pay lower prices for Chinese goods imported into the United States.
. . . U.S. consumers have the most to lose by congressional efforts to force revaluation of the renminbi. Chinese goods in the U.S. are cheap because the renminbi is cheap. Revaluation will weaken the purchasing power of the American consumers, mostly from the middle and lower economic strata, who depend on Chinese products to maintain their standard of life.

So here we are at a crossroads. April 15 the President has to officially declare that China is manipulating its currency and impose tariffs that will start to bring back factories and jobs to America. There is going to be tremendous pressure from the usual suspects to do the wrong thing, but the wrong thing has been going on long enough.