If this doesn’t take the cake for buck-passing and copping out, we at GLOBALIZATION FOLLIES don’t know what does.  Of course, we’re talking about outsourcing enthusiasts in Congress who are now complaining about the weak dollar.

Iowa Republican Senator Chuck Grassley, for instance, is obviously right to warn that “Brazil, Russia and China have been working among themselves to bring a global discussion of whether the dollar ought to be the reserve currency.”  And it’s great to see that his South Carolina Republican colleague Jim DeMint is “very alarmed” by the global concern “about our ability to pay our debt and...the long-term value of our currency.”  

But these two and so many others might have a credibility rating above zero on the issue had they ever voted against even one of the major outsourcing-focused trade deals put before them during their Capitol Hill careers.

Grassley, DeMint, and many other legislators in both parties readily blame the sagging dollar on this latest, manic phase of Washington’s post-9-11 deficit spending binge.  But as Fed Chairman Ben Bernanke usefully noted in October 19 remarks, the huge trade and broader financial surpluses amassed by America’s Asian trade partners in particular earlier this decade “overwhelmed” – and bubble-ized – the U.S. financial system when recycled back into the United States by governments in China and the rest of Asia.

These governments, of course, “earned” the dollars by heavily subsidizing export-led growth, mainly to the United States.  And only the willfully ignorant deny that America was so tightly tied to so many developing countries that were unwilling or unable to consume and import adequately because of the trade agreements Washington signed with them with starting with NAFTA – and ratified by Congress.

Among the loudest cheerleaders for this approach, from NAFTA through the “normalization” of trade with China to deals with Vietnam, Africa, the Caribbean Basin, and Central America were none other than Grassley and DeMint.   Indeed, the former just gave President Obama an “F” on trade policy for failing to press ahead with even more such outsourcing-focused deals.

Bernanke emphasized that, to end this crisis and avoid repeats, “We must avoid ever-increasing and unsustainable imbalances in trade and capital flows” – especially “[a]s the global economy recovers and trade volumes rebound....”  In other words, Grassley, DeMint, and Congress’s other outsourcers must finally become as determined to cut trade deficits as to cut budget deficits.    

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