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Gordon Hanson's Research Referenced in The New Republic

How Congress’s Showdown With China Puts Obama in a Serious Bind

10/06/2011
William Galston, The New Republic

While all of Washington fastened its gaze on Chris Christie, the most important issue of the week—maybe of the year—was playing out on the floor of the Senate. By a margin of 79 to 19, senators agreed to consider a measure that would allow the United States to impose tariffs on another country if the Treasury found its currency to be “misaligned.” As the Wall Street Journal points out, this is a less demanding standard than current law, which “requires a finding of intentional manipulation.” If this newfound bipartisan comity in Congress over the issue of confronting China culminates in a bill that passes both houses, it will put Obama in a serious bind: either adopt a similarly hawkish stance and risk a trade war, or issue a veto that would expose him to attack from the Republican nominee and provoke a populist backlash from workers and communities throughout America’s hard-pressed manufacturing sector.

The huge bipartisan majority on the procedural question this week virtually guarantees that the bill will make it through the Senate, and it illuminates the changing contours of the China trade issue. Nearly every Democrat voted to proceed; Washington’s Maria Cantwell and Patty Murray and (intriguingly) Claire McCaskill of Missouri were the only dissidents. And fully 31 of the 47 Senate Republicans supported the motion as well, including Minority Leader Mitch McConnell, Conference Chairman Lamar Alexander, Policy Committee Chairman John Thune, and John Cornyn, who heads the committee responsible for electing more Republicans to the Senate in 2012. Among the party’s leadership, John Kyl stood alone in opposition.

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Gordon Hanson is director of the Center on Emerging and Pacific Economies and professor of economics at UC San Diego, where he holds faculty positions in the School of International Relations and Pacific Studies and the Department of Economics.  He is a research associate at the National Bureau of Economic Research, a member of the Council on Foreign Relations, and a co-editor of the Review of Economics and Statistics. Prior to joining UCSD in 2001, he was on the economics faculty at the University of Michigan (1998-2001) and at the University of Texas (1992-1998).

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