The Wall Street Journal reported Friday, 30 March 07 that in addition to the housing slump, business investment is slowing. Business investment fall off is often a prelude to a recession as warned about by Alan Greenspan. The Federal Reserve continues to act as if monetary inflation is the worry and will not lower interest rates. In the mean time Americans trying to keep afloat in the face of higher energy and medical costs are buying record cheap goods from China. Last year’s trade deficit with China was 232 billion dollars and China now holds 400 billion dollars in U. S. debt.
Yet China is not happy with its advantage, they are subsidizing certain industries in a way which some see as designed to drive local producers (in trading partner countries) out of business. The Bush administration has finally responded according to Bloomberg.com. See the article below. The problem with the Administration response is that even if they were successful our own tax and regulatory policies still tilt the field to importers over domestic producers (people who hire us). We need fundamental tax reform. Look carefully at the candidates for President in 2008. It may be our last chance to keep our dominate economic position in the world.
March 30 (Bloomberg) — The U.S. Commerce Department, reversing more than two decades of practice, decided today to levy new duties on imports from China to compensate for Chinese subsidies to exporters.
The change of policy by the Bush administration, which debated the action for months, applies initially to imports of coated paper from China. It also opens the way for steel companies, textile producers and other manufacturers facing competition from China to apply for the same protection.
“This decision is the most significant step toward a stronger trade policy with China than we have experienced in this decade,” Republican Representative Phil English of Pennsylvania said in a statement.
Concern that the decision might provoke trade tension with China sent the dollar lower and stocks down earlier in the day. The dollar fell 0.2 percent to $1.3358 against the euro at 4:19 p.m. in New York. The Dow Jones Industrial Average rose 5.60 or 0.05 percent, to 12,354.35 today after earlier falling as low as 12,242.60.
China is the second-largest U.S. trading partner behind Canada and holds more than $400 billion of U.S. debt. The overall U.S. trade deficit with China reached $232.5 billion last year, the largest trade gap between two nations in history.
Some Chinese producers “are being singled out by the government to receive subsidies, and, therefore, represent unfair competition,” Commerce Secretary Carlos Gutierrez, who announced the change today, said in an interview. “We don’t see this as protection. We simply are applying the rules.”
The department’s action comes as U.S. lawmakers, aggravated by the record trade deficit, are preparing to consider stiffer measures aimed at fighting what many call China’s weak currency, unfair subsidies and other trade practices.
No `Body Blow’
“This is a response to the size of the trade deficit and Congress,” said Jeffrey Bader, who heads China studies at the Brookings Institution in Washington. “The administration wanted to do something that doesn’t deliver a body blow to trade, but will be seen as responsive to domestic concerns.”
Under decade-old practices, antidumping duties are the only ones that have been applied on products from countries such as China with managed economies because it is difficult to identify subsidies in those nations.
Antidumping duties apply to goods sold overseas at or below the price they are sold for in the home country. Separate tariffs, called countervailing duties, aim to offset the benefits of government subsidies, and those are the tariffs Gutierrez announced today in Washington.
The decision to levy countervailing duties is preliminary. The initial duties will range from 10.9 percent to 20.3 percent. The average tariff on the glossy paper, used in glossy magazines and art books, will average 18.16 percent for China.
Court Ruling Yesterday
The Chinese government lost a U.S. court case yesterday aimed at preventing this decision. The combination of yesterday’s court ruling and today’s decision may spur industries to hire lawyers and file similar complaints.
“You are going to see a proliferation of these cases now,” said James Jochum, a partner at the law firm of Mayer, Brown, Rowe & Maw LLP in Washington and the former top Commerce Department official responsible for deciding import complaints. “This is a significant move. It isn’t a one-off thing.”
Gutierrez said that in the 1980s and 1990s, Chinese or other companies in non-market economies wouldn’t change their behavior in response to other nations’ tariffs.
Now, as China becomes a greater participant in world markets, “Chinese companies do change their behavior,” he said.
U.S. retailers and companies such as General Motors Corp., which import goods from China, oppose levying countervailing duties, arguing it means duties would be applied twice on many Chinese products — once for dumping and once for subsidies. Any advantage a company in China gets from a subsidy is already offset by steeper antidumping duties levied against non-market economies, they argue.
Steel producers, such as Charlotte, North Carolina-based Nucor Corp., and textile makers say that expanded tariffs are necessary to protect them from unfair, subsidized Chinese competition.
The immediate case concerns a complaint by NewPage Corp. that low-cost imports of subsidized glossy paper from China, South Korea and Indonesia are harming its profitability.
The preliminary duties on South Korean paper products will be 1.76 percent with some companies exempted. Indonesian companies will have to pay 21.24 percent rates, Commerce also announced.
More Than Doubled
China’s exports of coated paper more than doubled in 2006 to $224 million from their level in 2005, according to U.S. government data.
Dayton, Ohio-based NewPage, the largest maker of coated paper in the U.S., has operations in Kentucky, Maine, Maryland and Michigan. The complaint was also backed by the United Steelworkers, which represents workers at NewPage.
“The administration’s decision only comes after years of public outcry over Chinese subsidies,” said union president Leo Gerard.
Importers of this paper will be charged these duties once this decision is published in the Federal Register. The duties will be adjusted — and may be withdrawn — in a final Commerce ruling that must be made before mid-October. After that decision, the U.S. International Trade Commission will rule one last time before the tariffs are officially imposed. If the ITC rejects the duties, companies will be refunded tariffs they paid.
To contact the reporter on this story: Mark Drajem in Washington at
Last Updated: March 30, 2007 19:19 EDT
Government flubs new wireless system? 27 March, 2007Posted by stoptaxing in federal.
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Could it be another 195 million of your taxdollars down the drain?
IG Criticizes Work On Wireless Network For Law Enforcement
The federal government has spent $195 million on a long-promised wireless radio network for the nation’s law enforcement agencies that is at “high risk of failure,” the Justice Department’s inspector general reported yesterday.
(By Spencer S. Hsu and Charles Babington, The Washington Post)
Is the death tax back? 22 March, 2007Posted by stoptaxing in federal.
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The estate tax was phased out with the original Bush tax cuts, but due to a Senate accounting gimmick a provision made it and most of the other tax cuts temporary. Next year the tax should go away, but if the new Congress has its way, it will be back with a vengeance in 2010. Will the money from the Death tax be used for middle class and business tax cuts?
The new spending proposals from the House and Senate shows across the board spending hikes. Does that answer the question?
FYI Here is a recent partisan view.
Democrats Propose Largest Tax Increase in American History
Campbell slams Dem Budget Proposal
(Washington, DC) – Today, U.S. Rep. John Campbell (R-Calif.), chairman of the Budget and Spending Taskforce for the Republican Study Committee, made the following statement regarding the release of Democrat’s proposed budget for 2008:
“The Democrats have proposed a budget that is full of empty promises – except one; they promise to implement the largest tax increase in American history. Their budget is so packed with gimmicks and accounting tricks we can’t take seriously the claim that it will eventually balance the budget. Their talk of fiscal responsibility and the realities of this budget just don’t match up.
“The Democrat’s idea of fiscal responsibility is to tax and spend Americans out of economic prosperity. At the heart of this anti-taxpayer budget is a $400 billion tax increase. That is larger than any tax increase Americans have ever had to pay for. Worse of all, the hardest working Americans would be the ones hurt the most. This enormous tax increase would increase every tax bracket, slash the child tax credit, reinstate the marriage penalty and eliminate the tax relief that has benefited the economy the most.
“Looking at the Democrat’s budget it is easy to see why they want to raise taxes – to spend more and make government bigger. They have proposed to increase spending by billions more than the president proposed and they have done nothing to address the looming fiscal crisis presented by ballooning entitlement programs. They are even raiding the Social Security Trust Fund to pay for new spending.
“We don’t have deficits because we aren’t paying enough taxes, we have them because Congress has a spending problem, and the Democrats in Congress are adding to that problem. It is possible to balance the budget without raising taxes or raiding Social Security. However, that requires fiscal discipline and smart decisions with our spending priorities – which is something the tax and spend Democrats seem unable to do.”
FYI from the Republican Study Committee
Over 3 Billion Dollars and Whining. 22 March, 2007Posted by stoptaxing in State, Uncategorized.
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Recent revenue projections have a slow down in the rate of growth in state revenue. It is time for the state to start setting priorities. Watch for analysis this weekend.
Let the sun shine in. 13 March, 2007Posted by stoptaxing in Action Item, State, Taxpayer rights.
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There is new hope for the open government bills. As the public starts to pay more attention to these bills, Democrats and recalcitrant Republicans are feeling the heat. The government belongs to the people, yet we are excluded from the budget process when the key decisions are being made.
There are inadequate shelters, but we can buy golf courses. We can’t fund school expansion, but we can give private interests money at the waterfront. We can’t build roads, but we can buy thousands upon thousands of acres of open land with highway money. We can’t fund child health care, but we can buy homes in flood plains. We need to change the way this state operates. This is only a start, but start we must.
Contact your State officials (link in state ) and support these bills. Esp. the two I am listing. The third bill mentioned goes as far as to open the caucuses which is unnecessary and unlikely to pass. Oddly enough the article fails to mention HB 4 which kicked this off, it will come up this week. HB 70 is really just the Democrat version of HB 4. Whichever version passes is an improvement. Excerpt from Newszap follows.
House Bill 60, sponsored by Rep. RobValihuraalihura Jr., R-Wilmington, would require legislative committees to follow FOIA for meetings.
The bill is co-sponsored by all three Republican leaders in the GOP-led House and other Republican members.
House Bill 70, sponsored by House Minority Leader Rep. Robert F. Gilligan, D-Wilmington, would open the General Assembly – except caucuses – to all FOIA requirements
Deficit continues to fall 13 March, 2007Posted by stoptaxing in federal.
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Even with two war fronts the federal deficit continues to fall. http://news.yahoo.com/s/ap/20070312/ap_on_bi_go_ec_fi/monthly_budget
Hopefully the tax raisers will be kept at bay with this news. We need to address the long term structural entitlement issues not the short term deficit. It is a lot easier to raise taxes than deal with the real problems, but doing so will only hurt both the short term economy and in long term deficit will be even worse.
Thomas Sowell Rebutts the National Debt Alarmists 9 March, 2007Posted by stoptaxing in Economic Policy, federal.
|Jewish World Review Nov. 25, 2004 / 12 Kislev, 5765 Thomas Sowell
A taxing experience
http://www.NewsAndOpinion.com | When liberals in the media or in politics start being alarmed about the national debt, it means just one thing: They want higher taxes. The thought of reducing spending would never cross their minds.
David Walker: The Sky is Falling 9 March, 2007Posted by stoptaxing in federal.
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Federal Comptroller and alarmist in chief appeared on 60 minutes with his sky is falling tantrum. The Wall Street Journal has labeled him Chicken Little for a reason. Here is the link in case you missed it. http://www.cbsnews.com/stories/2007/03/01/60minutes/main2528226_page2.shtml
Could this be the fiscal equivalent of global warming? Some real indications surrounded by a lot of hype and exaggeration. It seems to me these guys seem to find one solution over and over raise taxes. The truth is you can not tax your way out of a spending problem.
These programs were poorly designed in the beginning and add ons have made them worse. The only way to solve the social security problem is with investment accounts. The only way to solve the medical cost issue is with a paradigm shift in the way we pay for health care. It will happen; will we choose wisely?
Now lets get a little realism. The other part to the solution is economic growth and fundamental tax reform. If we can average 4% growth, our economy will quadruple by 2040. This makes the numbers a lot more manageable. If we raise taxes and cut our growth to 2% our economy will only double. This means the federal budget would have about 6 trillion compared to 12 or 13 trillion annually to deal with these issues.
In the meantime, as popular programs are being dismantled, do you not think the politicians will come to terms with these social giveaways? They will not continue to grow. People will be hurt, but the country will not collapse. Would it be better if we deal with it now? Yes. Do we need to stampede down chicken Little’s road of panic. NO! The wrong solution is worse than none.
How is the best way to deal with the problem? First we need fundamental tax reform like Governor Huckabee’s flat tax or even better the Fair Tax or a combination like Gov. Jerry Brown proposed in 1992. We could increase tax compliance with these proposals (see closing the tax gap). We would also encourage investment, wealth creation, and domestic job creation ( The Fair tax would treat imports and American made products equally thereby eliminating the advantage imports have).
Allow your social security trust fund to grow with the economy by allowing private investment and municiples.
Health care costs will have its own article or two.
Get the federal government closer to its constitutional purposes.
Yes, there is a structural problem, but the sky is not falling and we do not need to destroy our economy in a futile attempt to solve it.
Local School tax referendum analysis 8 March, 2007Posted by stoptaxing in Local.
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Capital passed it 58% to 42% http://wboc.com/Global/story.asp?S=6193078 .
Do the recent passage of referendums mean voters were concerned about taxes this year and not so much concerned this year? No , it may just mean that the anti-growth protest is abating slightly. The fact is the last three in CR, Smyrna, and Capital school districts were clearly needed. Costs of continual delay would only increase the burden for taxpayers.
The people understand this. This is why the people can be trusted and the referendum process should be expanded. We will keep government growth under control, but not be unreasonable when a real need exists. The opponents of referendum have claimed the process is unwieldy and should be abolished. They want to remove any check and balance from the process. In other words they don’t care if you can balance your checkbook as long as they get the higher tax check.
Here is what the establishment thinks. You are too dumb to know what is good for your community anyway. That is why they run campaigns so dumbed down that you can’t learn anything. They talk about everything but the real issues. Personal attacks and gottcha games have replaced dealing with the problems which matter in our lives. Mudslinging and “I am concerned about education, jobs, and growth” passes for vision. They give no real solutions–just concerns. Why? Their main solution is just spend more money. That is why we have become frustrated with these requests for more. We know that fundamental restructuring is needed or else we just pay more for the same mess.
Here is what we think. We the people need to establish forums which establish priorities for spending. We need to find solutions which work for the perplexing problems and adapt them locally. We need a paradigm shift in our thinking. Government is a tool in solving our problems not the solution. Our solutions must enhance the sovereignty of the individual thereby utilizing the strength of the diversity of our nation. We need governments, churches, businesses, community organizations, labor, and families aligned to grapple with the great problems of our day.
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Presidential Candidate Mike Huckabee has added STOP to his webblog. We will recipicate his good taste.
The Governor has taken the pledge. He kept his word given this weekend at CPAC and officially signed the Americans for Tax Reform pledge not to raise the income tax.
The Governor was the first to cut taxes in Arkansas in at least 60 years and was the first in the state’s history to pass a broad base tax cut. He led the way to lower 90 taxes. Among his achievements were doubling the child tax credit, eliminating the marriage penalty, lowering the tax burden well over 300 million dollars, and balancing the state budget with a 800 million surplus . He is making a pro-economic growth flat tax a vital plank to his platform. In a year when the other candidates are playing prevent defense, he is offering bold solutions for a long term economic growth. Check out the link. http://www.explorehuckabee.com/index.cfm?FuseAction=News.View&PressRelease_id=17
Here we are.