Hello, I'm Mark Pearson. Whether the sentiment is accurate or not, Americans appear to be feeling optimistic about the U.S. economy. *The Conference Board's index of Consumer Confidence rose this month to its highest level since May of 2002. *Meanwhile, the Commerce Department reports Gross Domestic Product, the broadest measure of U.S. economic activity, grew by a solid 1.6 percent in the fourth quarter of last year. *But the U.S. trade deficit -- particularly with China -- continues to be a stumbling block for the overall economy. Americans consume far more goods from China than any other nation. Last year, the gap topped a record $201 billion and accounted for nearly one third of the overall trade deficit. Some U.S. policymakers believe the Chinese government is manipulating its currency to gain an unfair trading advantage. And this week they took steps to correct the problem.
Claiming that currency imbalances cost American workers their jobs, farm state lawmakers unveiled legislation this week aimed at resolving a contentious currency dispute with China.
For years, U.S. manufacturers and policymakers have accused the Chinese government of artificially depressing the yuan's (you-ON) value by as much as 40 percent in order to make Chinese goods cheaper than those produced in the U.S.
Senate Finance Committee Chairman Charles Grassley of Iowa and Ranking Member Max Baucus of Montana said their bill would shore up weaknesses in the current system.
Sen. Charles Grassley, R - Iowa: "Under current law, if the United States finds that another country is manipulating its currency at the expense of the U.S. economy, we don't have a lot of options. Current law essentially says, 'Now what?" Our bill says, 'Do this.'" 10:10:40
The measure would require the Treasury Department to work with the International Monetary Fund and other countries to resolve currency imbalances. If foreign nations fail to comply they could lose U.S. government loan guarantees and face other economic sanctions. The proposal also expands the authority of the U.S. Trade Representative to handle specific trade enforcement issues.
While Grassley and Baucus claim other nations have manipulated their currencies in the past, it was clear that China is the focus of their reforms.
Sen. Max Baucus, D - Montana: "China is not doing what it should be on currency, on piracy, on imports of U.S. Beef... It's no surprise that Americans don't trust China on trade. But Americans wouldn't need to be so nervous if their government was doing what it should do." 10:12:40
Even if China brings its currency into balance with the dollar, the trade gap likely will remain high, due largely, to lower labor costs. A study commissioned by the U.S. Bureau of Labor in 2004 revealed that China's factory employees were paid about 3 percent of a U.S. worker's wages.