I wrote in the Jan. 21 issue of National Journal magazine about the divergence between Mitt Romney and the two economists advising his presidential campaign, Glenn Hubbard and Gregory Mankiw, on the crucial economic issues of housing and monetary policy. On Wednesday, on his blog, Mankiw appears to have opened another divide with Romney, this time over China.
Mankiw’s post is directed at President Obama’s State of the Union address. First, he criticizes the president’s oft-repeated statement that billionaire Warren Buffett pays a higher tax rate than his secretary, citing evidence to the contrary. Then Mankiw--a Harvard professor and former chief economist for President George W. Bush--turns to Obama’s riff in the speech about cracking down on China for unfair trade practices.
“I was disappointed, and even a bit surprised, that the president adopted the xenophobic approach to outsourcing and international trade,” he wrote. “Usually, on issues of international trade, the president plays the role of grown-up and leaves it up to Congress to gin up populist ire. That is true of both parties. Recall that President Clinton pushed NAFTA through.
“When President Obama bragged that his administration had substantially increased trade cases against China compared with his predecessor, it made me proud to be one of President Bush's advisers. (Not that the Bush administration was perfect on trade issues. It is just good to know we were better.) These trade cases include such things as antidumping claims, which in many cases are just the modern face of protectionism.”
That critique could well apply to Romney, too. In his economic plan, the former Massachusetts governor takes a hard line against Chinese trade practices--and attacks Obama for not fighting them aggressively enough.
“It is time to end the Obama administration’s acquiescence to the one-way arrangements the Chinese have come to enjoy,” Romney says in his plan. “We need a fresh and fearless approach to that trade relationship.”
Compare the rhetoric for yourself.
Here’s Obama on Tuesday night:
“I will go anywhere in the world to open new markets for American products. And I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration--and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized. Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trade practices in countries like China.”
And here’s Romney from his plan:
“The Office of the United States Trade Representative (USTR) in a Romney administration will be tasked with pursuing all significant claims of unfair trade practices…. Mitt Romney believes we need to consider the use of targeted unilateral and multilateral sanctions. For instance, if the United States identifies a Chinese firm or industry that is relying on unfair practices or misappropriated American technology for its competitive advantage, we should be in a position to impose punitive measures in response…. If China fails to move quickly to bring its currency to fair value, the Department of the Treasury in a Romney administration will designate China a currency manipulator and the Department of Commerce will impose countervailing duties.”
Mankiw declined to comment for this article.