Just after 5:30 p.m. today, the Senate will invoke cloture on the China currency bill, S.1619. Passage by late Wednesday is assured. The bill imposes tougher reporting requirements on the Treasury Department and allows countervailing duty suits to be brought for currency manipulation. House passage is very unlikely despite majority support in both parties because Speaker John Boehner (R-OH) won’t take it up, even though the House passed a similar bill last year. What’s going on here?
This is an exercise in blame avoidance, but given Congress’ record low popularity, it doesn’t seem to be working. Unemployed workers across the country have seen their jobs move to China in part because of China’s currency manipulation that keeps the Renminbi undervalued by approximately 30%, although estimates vary widely as explained in this Congressional Research Service report. Congressional leaders understand that retaliating against China, which holds $1.2 trillion of our debt (See this Treasury table.), could have severe repercussions. So the drill today is to pass the bill so senators can say they voted for it without revealing that it has no chance of enactment. I don’t believe voters will be so easily fooled.
Close observers of Washington infighting may notice that Senator Reid scheduled the China currency bill ahead of President Obama’s American Jobs Act, S.1549, to send a message of his displeasure about not being consulted in their formulation of the Jobs Act to Mr. Obama and his aides. This is one more example how contentious and difficult governing has become in Washington. As Washington paddles in all directions at once, our economy goes nowhere.