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Stop Right There or I Will Shoot Myself!

Via the Washington Post:

It has become a Capitol Hill ritual: A few senators, always including the New York Democrat Charles E. Schumer, introduce a bill to punish China if its leaders do not raise the value of the nation's currency. Photos are taken, news releases are issued, but nothing really happens.

This year, the atmosphere on the Hill is markedly different. Powerful senators from both sides of the aisle, Schumer among them, are pushing two bills that threaten retaliatory action if China does not budge. For the first time, the idea is gaining broad support. The bills are moving swiftly through the Senate, and many analysts expect one will pass.

If the bill's authors are successful, the effect at a minimum will be to raise consumer prices in the United States and lower them for Chinese citizens.  So we are going to "punish" China by making our own citizens pay higher prices.  How does this make any sense?  Also, in the process, let's make sure we reduce the capacity of China to buy US government debt, which to this point has been reducing the cost of the Federal budget deficit.

Tyler Cowen argues this is the best we can expect -- the worst is a substantial debalization in the Chinese economy... and ours.  I wrote much more on continuing to allow the Chinese government to subsidize American consumers here.

Posted on August 1, 2007 at 10:52 PM | Permalink


It's hard to determine who the absolute worst senator is, because there are so many candidates. Most of the time, though, I think it's Schumer.

Posted by: Craig | Aug 2, 2007 8:12:02 AM

It's not terribly hard to understand. A good economy hurts their chances at keeping their congressional majority and taking the White House. Bad economic news is good for the Democrats. If there isn't enough bad news - make some.

Posted by: Stephen Macklin | Aug 2, 2007 5:49:06 PM

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Posted by: Beata | Sep 13, 2007 4:02:17 AM

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