[Congressional Record Volume 149, Number 156 (Friday, October 31, 2003)]
[Extensions of Remarks]
[Page E2188]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  ENCOURAGING PEOPLE'S REPUBLIC OF CHINA TO FULFILL COMMITMENTS UNDER 
  INTERNATIONAL TRADE AGREEMENTS, SUPPORT UNITED STATES MANUFACTURING 
      SECTOR, AND ESTABLISH MONETARY AND FINANCIAL MARKET REFORMS

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                               speech of

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                      Wednesday, October 29, 2003

  Mr. PAUL. Mr. Speaker, like all Americans, I am concerned about the 
loss of jobs in America's manufacturing sector and the role currency 
manipulation plays in that loss. For many years, I have warned my 
colleagues that America's monetary policy is endangering America's 
economy. The economic difficulties currently facing this country are a 
classic example of the harm resulting from a boom-and-bust cycle caused 
by an inflationary monetary policy. An open debate on monetary issues 
is therefore long overdue.
  However, instead of debating America's monetary policy, we are 
debating China's monetary policy. Specifically, the goal of this 
resolution is to pressure China to change the valuation of its 
currency. Whatever short-term benefit our manufacturers may gain from 
this action, the policies urged today are not in the long-term interest 
of the American people.
  In arguing for fluctuating rates, the backers of H. Res. 414 are 
demanding that the Chinese Government adopt an irrational policy. A 
sound economy requires a sound and dependable unit of economic 
measurement. Yet, by definition, under fluctuating rates the currency, 
which serves as the basic unit of economic measurement, will not be 
sound and dependable. Instead, that value will change depending on the 
whims of politicians and the perceived economic needs of politically 
powerful special interests.
  China, in fact, has done very well with a fixed measurement of value. 
China's economic growth rate is high; China is also exporting many 
products into our market while our domestic producers are suffering. 
Therefore, China makes a good scapegoat for our economic problems. 
Demanding that the Chinese government adjust its currency is a 
convenient distraction from addressing the real economic problems 
facing our country.
  Instead of having fluctuating currency exchange rates and the 
inevitable instability that accompanies them, we should be working to 
establish a gold-backed currency whose value is determined by the 
market. This would provide an objective measurement of the value of 
economic goods and services and thus strengthen the economy by freeing 
it from the negative effects of our unstable monetary policy.
  I would also urge my colleagues to consider the benefits we receive 
from our relationship with China. Of course, consumers benefit from 
lower-priced goods. Adopting the policy urged by supporters of this 
bill would cause consumer prices to increase, thus reducing consumers 
wealth. Other producers would suffer as a result of the consumers 
decreased purchasing power.--While there is not an organized lobby 
arguing against the-policy recommendations of H. Res. 414, I doubt many 
of our constituents want us to increase the prices they pay for goods 
and services.
  Congress should also consider how the Chinese benefit the United 
States Government by holding our debt. The dollars the Chinese acquire 
by selling us goods and services must be returned to the United States. 
Since the Chinese are not buying an equivalent amount of American goods 
and services, they are using the dollars to finance our extravagant 
spending.
  In fact, Mr. Speaker, our ability to continue to fund the welfare-
warfare state without destroying the American economy depends on 
foreigners buying our debt. Perhaps we should think twice before we 
start bullying and browbeating our foreign creditors to change their 
economic or other polices to our liking.
  H. Res. 414's underlying premise is that sovereign countries have a 
duty to fashion economic policies that benefit the United States and it 
is a proper concern of Congress if these countries fail to do so. H. 
Res. 414 attempts to justify Congressional interference in the internal 
economic affairs of China by claiming that China is not living up to 
its obligations as a member of the World Trade Organization (WTO). I 
would remind my colleagues that the WTO has oftentimes ruled against 
the United States and Congress is right now changing United States tax 
laws to please the WTO. Ceding control over United States tax and trade 
policy to this international organization violates the United States 
Constitution and is contrary to the interests of American citizens. 
Therefore, it is not wise to endorse the WTO process by encouraging 
other countries to submit to WTO control.
  Instead of promoting global economic government, the United States 
Congress should reform those policies that reduce our manufacturers' 
competitiveness. Recently, a financial journalist visited with 
businessmen who are launching new enterprises in China. When he asked 
them why they chose to invest in China, they answered: ``It is so much 
easier to start a business in China than in the United States, 
especially in places like Massachusetts and California.'' This answer 
should send a clear message to every lawmaker in America: the taxes and 
regulations imposed on American businesses are damaging economic growth 
and killing jobs. If we were serious about creating jobs, we would be 
working on an aggressive agenda of cutting taxes and repealing needless 
regulations.
  Congress can also improve America's competitive position by ending 
the practice of forcing American workers to subsidize their foreign 
competitors through organizations such as the Export-Import Bank and 
the International Monetary Fund. I have introduced the Steel Financing 
Fairness Act (H.R. 3072) to accomplish this goal. H.R. 3072 prevents 
taxpayer funds from being sent to countries, such as China, that 
subsidize their steel industries. Of course, our ultimate goal should 
be to end all taxpayer subsidies of foreign corporations and 
governments.
  In conclusion, Mr. Speaker, I remind my colleagues that stability in 
currencies is something we should seek, not something we should condemn 
Instead of urging China to adopt a floating rate, Congress should be 
working to adopt a stable, commodity-backed currency whose value is 
determined by the market and encourage other countries to also adopt a 
market-based currency. This will benefit American workers, 
entrepreneurs, and consumers. Congress should also strengthen America's 
economy by reducing taxes and repealing unnecessary and 
unconstitutional regulations and stop forcing American taxpayers to 
subsidize their foreign competitors.

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