Hello, I'm Mark Pearson.
The talk in Washington this week was of big numbers ... and political spin.
The nonpartisan Congressional Budget Office forecast a record budget deficit of $422 billion for the current fiscal year. That's a $55 billion improvement over the CBO's March forecast, which led Republicans to hail the $422 billion deficit as good news. Democrats were quick to point out the estimate still is $50 billion more than last year's record.
The other economic news of the week was slightly less politically charged. *Wholesale prices dropped slightly in August, thanks to a reduction in food costs. *The number of people filing new claims for jobless benefits dropped to the lowest level in two months. *And the monthly U.S. trade deficit shrank in July for the first time in 2004.
Even so, the U.S. still is on pace to set a record annual trade deficit of some $581 billion ... and the politically sensitive trade imbalance with China mostly is to blame. The U.S. deficit with China hit $124 billion last year, the largest shortfall ever suffered with a single country. And this year's deficit is running 28 percent above 2003.
Those figures have led many American companies to tell the Bush administration, enough is enough.
It is NOT a new issue. But the onset of the American presidential campaign has further politicized the complaints over Chinese trade practices.
This week, a group of industry, farm and labor organizations, seeking to put pressure on the Bush administration before the fall elections, petitioned the government to file an unfair trade practices case against China. The group, which calls itself the China Currency Coalition, alleges the Chinese are manipulating their currency to gain trade advantages against U.S. companies.
The administration will have 45 days to decide whether to pursue the case, a timeframe that requires a decision right before the November 2nd election.
The White House last April rejected a similar case accusing China of unfair labor practices, and said at the time it would NOT pursue either labor- or currency-related charges before the World Trade Organization. The administration said U.S. trade interests would be better served through diplomatic engagement.
But the Coalition says it hopes the government will reconsider that stand given the growing U.S. trade deficit with China, as well as the lack of movement by the Chinese to address the charges.
The Chinese currency is the yuan. Critics claim that by pegging its currency tightly to the U.S. dollar, China is keeping the value of the yuan at least 40 percent below where it would be if it was set by market forces. That would give the Chinese a competitive advantage by making their exportable goods cheaper on the world market.
For its part, the Bush administration says opponents of its trade strategy, including Democratic presidential nominee John Kerry, are pursuing a policy of economic isolationism that will leave the country less able to compete in a global economy.