Eliminating Currency Manipulation Will Help Fix U.S. Trade Deficit
It’s no secret the U.S. trade deficit is high. After all, our trade deficit is responsible for the transfer of approximately $1.2 million a minute to foreign countries. Our trade deficit warrants attention because it is a devastating problem hurting not only the average American worker, but also small and mid-sized companies and communities. Without solutions, the economy will continue to suffer.
It might seem at times that our leaders in Washington are looking the other way when faced with issues like trade deficits and national debt, but one elected official has been particularly vocal when discussing the trade deficit and the dangers it poses to U.S. industries and jobs. Ohio Senator Sherrod Brown has stated that “our nation’s record trade deficit is more than just a statistic, it affects real jobs in important industries. When industry and the government get tough on cheaters and enforce our trade laws, America wins. That’s why we need to act now on the recommendations published in the Economic Policy Institute’s new report—and stand up for Ohio’s workers and businesses.”
Senator Brown went on to say that “multinationals like the system the way it works because the companies get less expensive labor, less environmental and worker safety regulation, and the currency advantage. It works for these multinationals, and House Speaker John Boehner is listening to them. There is this economic benefit to them, at the expense of smaller companies, companies in the supply chain, American workers and their communities.”
Just what is driving our trade deficit? It is currency manipulation. Currency manipulation by itself costs the U.S. between 2.2 million and 4.7 million jobs and between 1.0 and 2.1 points of the unemployment rate.
According to the EPI’s new report, it is possible to reduce the U.S. goods trade deficit by an estimated $190 billion to $400 billion in the span of three years if we could successfully stop global currency manipulation.
If currency manipulation ceased, the benefits for the economy would be tremendous! The EPI report estimates that abolishing currency manipulation would result in the creation of 2.2 million and 4.7 million U.S. jobs and a reduction in the national unemployment rate of between 1.0 to 2.1 percentage points. An estimated 620,000 to 1.3 million manufacturing jobs would be created, and there would be an increase in U.S. GDP of between $225.0 billion to $473.7 billion. What’s more, the federal budget deficit would effectively shrink between $78.8 billion to $165.8 billion. All of these economic benefits would be a direct result of the elimination of currency manipulation.
It is safe to say that currency manipulation is the single biggest factor in our huge trade deficit. Immediate action is needed to remedy the course we’re on. Our leaders in Washington need to step up and devise a strategy to strengthen our economy and assure we do not continue to fall victim to currency manipulation of foreign entities. Contact your congressperson and ask what they’re doing to fix our trade deficit!