Post by jacquelope on Mar 27, 2011 23:53:51 GMT -6
www.americanthinker.com/2011/01/a_scaled_tariff_would_help_bal.html
January 09, 2011
A Scaled Tariff Would Help Balance the 2011 Budget
By Howard Richman, Raymond Richman, and Jesse Richman
January 09, 2011
A Scaled Tariff Would Help Balance the 2011 Budget
By Howard Richman, Raymond Richman, and Jesse Richman
The last Congress passed a dangerous mixture of spending increases and tax cuts financed by borrowing. The American people saw this as a mistake and in the 2010 elections elected a Republican House of Representatives and an increased number of Republican senators. In the exit polls, 40 percent of voters said that the highest priority should be reducing the budget deficit (65 percent of them voted Republican). As a result, the Republicans were given a mandate to balance the federal government budget.
But the United States faces not only a huge budget deficit, but also a huge foreign trade deficit. A December 2010 National Review/Allstate Heartland Poll contained an extensive battery of questions on trade and U.S. manufacturing. The poll revealed strong public majorities in favor of a variety of measures that would move trade towards balance. For example, 68 percent of respondents supported a policy requiring that "a certain percentage of every high-end manufactured product, such as automobiles, heavy machinery, and transportation equipment, sold in the U.S. also be produced or assembled within the U.S., even if that means higher prices for their products." In 2006 and 2008, the Democrats won elections by advocating protectionism. The conservative pro-free-market alternative is balanced trade. When trade again becomes a dominant issue, Republicans could go back to minority status unless they address the trade issue themselves.
But the United States faces not only a huge budget deficit, but also a huge foreign trade deficit. A December 2010 National Review/Allstate Heartland Poll contained an extensive battery of questions on trade and U.S. manufacturing. The poll revealed strong public majorities in favor of a variety of measures that would move trade towards balance. For example, 68 percent of respondents supported a policy requiring that "a certain percentage of every high-end manufactured product, such as automobiles, heavy machinery, and transportation equipment, sold in the U.S. also be produced or assembled within the U.S., even if that means higher prices for their products." In 2006 and 2008, the Democrats won elections by advocating protectionism. The conservative pro-free-market alternative is balanced trade. When trade again becomes a dominant issue, Republicans could go back to minority status unless they address the trade issue themselves.
Simplicity of the Scaled Tariff Bill
Bills passed by the last Congress often numbered thousands of pages in length; in contrast, a scaled tariff bill would be extremely short. In fact, we have written up a scaled tariff bill that is only four pages in length, and two of those pages are the preamble!
The scaled tariff would be applied only to countries that had a sizable trade surplus with the United States over the most recent year (four economic quarters). The duty on imported goods from that country would be designed to collect, as government revenue, half of the value of the trade deficit (goods plus services) with that country. The Commerce Department would simply charge the scaled tariff at the appropriate duty rates to imported goods from the trade surplus countries and rebate scaled tariff payments to the United States exporters to the extent that they were paid on inputs to those particular exports.
The Commerce Department publishes complete trade data (both goods and services) with twenty countries. We can calculate from these data for the last four economic quarters that eleven of these countries would not have any duty applied to their goods (Argentina, Australia, Belgium, Brazil, Canada, Hong Kong, Luxembourg, Netherlands, Singapore, South Korea, and the United Kingdom), while the other nine would have the following initial duty rates applied:
China - 36%
Venezuela - 28%
Italy - 25%
Germany - 24%
India - 22%
Japan - 16%
South Africa - 14%
Mexico - 13%
France - 12%
Taiwan - 8%
A duty of 36% on Chinese goods is just about right since the Chinese yuan is about 40% undervalued. A 13% duty on Mexican goods is also about right since Mexico has been placing tariffs on U.S. goods lately while intervening in foreign exchange markets to keep the peso undervalued.
Bills passed by the last Congress often numbered thousands of pages in length; in contrast, a scaled tariff bill would be extremely short. In fact, we have written up a scaled tariff bill that is only four pages in length, and two of those pages are the preamble!
The scaled tariff would be applied only to countries that had a sizable trade surplus with the United States over the most recent year (four economic quarters). The duty on imported goods from that country would be designed to collect, as government revenue, half of the value of the trade deficit (goods plus services) with that country. The Commerce Department would simply charge the scaled tariff at the appropriate duty rates to imported goods from the trade surplus countries and rebate scaled tariff payments to the United States exporters to the extent that they were paid on inputs to those particular exports.
The Commerce Department publishes complete trade data (both goods and services) with twenty countries. We can calculate from these data for the last four economic quarters that eleven of these countries would not have any duty applied to their goods (Argentina, Australia, Belgium, Brazil, Canada, Hong Kong, Luxembourg, Netherlands, Singapore, South Korea, and the United Kingdom), while the other nine would have the following initial duty rates applied:
China - 36%
Venezuela - 28%
Italy - 25%
Germany - 24%
India - 22%
Japan - 16%
South Africa - 14%
Mexico - 13%
France - 12%
Taiwan - 8%
A duty of 36% on Chinese goods is just about right since the Chinese yuan is about 40% undervalued. A 13% duty on Mexican goods is also about right since Mexico has been placing tariffs on U.S. goods lately while intervening in foreign exchange markets to keep the peso undervalued.