Prospects Appear Dim for Currency Bill

Posted October 3, 2011 at 6:13pm

The Senate moved one step closer Monday to clearing a bill designed to punish China for allegedly manipulating its currency for economic gains — but it’s unclear whether the legislation will make it to the GOP-controlled House floor and even less clear whether the Obama administration would support it even if it did.

The bill, a more comprehensive framework than the one the House approved in 2010, would enable the government to impose tariffs on products from countries that undervalue their currencies. And it has caused divisions within almost every political group in Washington, D.C., with some Senate Republicans touting the bill, some House Republicans saying it could damage the economy and the White House keeping mum on what has emerged as a clear Senate Democratic priority.

Even as lawmakers prepared to push the bill forward, a top White House official on Monday expressed only lukewarm support for the general idea of fair trade and declined to say whether President Barack Obama would sign the legislation into law on the unlikely chance that it makes it to his desk.

“We’re still in the process of reviewing it. We share the goal that it represents, which is to achieve further appreciation of China’s currency. We’ve seen some appreciation since last summer, which has been useful and good, but not enough,” White House Press Secretary Jay Carney said.

Democratic sources on the Hill say the administration’s official position of “reviewing” the legislation is code for a desire not to support it — a gentle way of letting the Senate exercise its will without stifling the effort entirely.

A lack of coordination or agreement between Democrats on the Hill and in the White House might not matter, though, as House Republicans appear unlikely to consider the legislation in its current form, if at all.

House Majority Leader Eric Cantor (R-Va.), who runs the schedule for that chamber, expressed reservations Monday about moving forward with the legislation, which would impose stricter rules on the Departments of Treasury and Commerce on how they consider currency manipulators.

The Virginia Republican said he believed the bill could have “unintended consequences” and was concerned about “the impact that an escalation may have on consumer prices and the rest” — hinting that he believes increased tensions between China and the United States could damage the struggling American economy. Moreover, he appeared to question whether it was the place of Congress to aggressively step in on such a delicate foreign policy and economic issue.

“I’m not saying that there isn’t something necessary right now because manufacturers in this country are hurting,” Cantor told reporters. “If there are unfair practices going on, we should look to our trade rep and the administration to address those.”

Instead, House Republicans may choose to take up the issue of unfair trade practices by holding a series of hearings and, perhaps in the long term, making their own legislative offering. There are merits to discussing the benefits of fairer trade to American workers, some Republicans have suggested, but there is also serious concern in the GOP caucus that the Senate version of the bill would do more harm than good.

The united reticence from Republicans in the House stands in stark contrast to the positions taken by their GOP counterparts in the Senate, who were divided Monday on whether the bill should pass or why the Democratic-controlled body was considering the measure at all.

Budget ranking member Jeff Sessions (R-Ala.) sent a “Dear Colleague” letter urging Senate Republicans to support the bill, using it as an opportunity to criticize the White House for shirking its responsibility to act against countries that may be underrating the value of their currencies.

“China’s consistent, deliberate, and strategic devaluing of its currency,
specifically designed to create huge trade imbalances with the United States, skews the system,” Sessions wrote. “But despite negotiations and promises, the Obama Administration and its predecessors have failed to persuade the Chinese to play by the rules. It now falls on the Senate to lead where the White House has abdicated.”

Not all Republicans, however, shared Sessions’ passion. Sen. John McCain (R-Ariz.) had a contentious back-and-forth with Senate Majority Leader Harry Reid (D-Nev.) on the floor Monday afternoon before the chamber’s vote to proceed to the trade measure.

“With over 9 percent unemployment, with a debt and a deficit continuing to run out of control, with the 12 or 13 appropriations bills not acted on, with the Defense authorization bill perhaps for the first time in 41 years not being taken up … now in its wisdom, under the leadership of the Majority Leader, we will be taking up the China currency bill,” McCain said with frustration on the floor.

Reid then came to the floor to engage McCain and defend the Democrats’ plan to move forward with a bill that has bipartisan support.

Aides close to Senate leadership in both parties say the bill’s ultimate fate in the chamber — despite prospects looking as good as any for passage — will be determined by how many amendments Republicans get to offer on the package, whether they will be germane and whether it will be enough for some Members who want to open debate on the bill to get their proposals heard.