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Vote “NO” on the motion to invoke cloture on S. 1619, the “Currency Exchange Rate Oversight Reform Act of 2011.”
October 3, 2011
NTU urges all Senators to vote “NO” on the motion to invoke cloture on S. 1619, the “Currency Exchange Rate Oversight Reform Act of 2011.” This bill, which seeks to identify and raise tariffs on currency manipulators in the name of job creation, is doomed to backfire, thereby threatening higher prices for consumers and a costly trade war with China.
A careful analysis of the history of China’s currency valuation does not demonstrate a conclusively dramatic effect on the U.S. trade deficit. This signals that American consumption of Chinese goods is relatively inelastic, meaning that attempts to force currency appreciation could lead to higher prices for U.S. consumers at a time when they can least afford them.
S. 1619 also does not pay sufficient heed to the positive domestic impact of trade. Lower-priced imports allow American taxpayers to stretch their paychecks further than they otherwise could. Moreover, any relative savings can be put back into the U.S. economy through the purchase of American-made goods or expanding the capital structure through investment. Finally, because a significant percentage of the value of exports comes from components and raw materials produced in the U.S., raising tariffs would end up penalizing American workers.
Rather than pursue statist and protectionist measures, Washington should focus on reducing the regulatory burden, paving the way toward domestic energy production, and pursuing fundamental tax reform as a way to increase the competitiveness of American products on the world stage. Roll call votes on the motion to invoke cloture on S. 1619 will be significantly weighted in our annual Rating of Congress, and a “NO” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Federal Government Affairs Manager Brandon Greife at (703) 683-5700