by Patrick J. Buchanan – October 13, 1998
As Congress adjourns in an orgy of capitulations to President Clinton to avoid a government shutdown, for which the GOP would be blamed, the two great questions of the coming 106th Congress are clear:
Will Congress impeach the president, and will Congress be forced to choose between protecting U.S. industry and saving Big Money?
Two articles suggest the second issue is now at hand.
In an Aug. 29 lead editorial on the global crisis, London’s Financial Times wrote: “The United States must … be prepared to accept that, as consumer of last resort, it will suffer a deteriorating trade deficit for some time to come.” A week ago, The New York Times quoted a central bank governor of Mexico, Guillermo Ortiz, as saying that the Third World might need $200 billion in new loans by 1999.
In short, saving the Global Economy may require massive new U.S. wealth transfers to the International Monetary Fund and U.S. permission to Asia, Russia and Latin America to expand their dumping of manufactures into our market — even if it means the collapse of U.S. industries. But any reading of history suggests this is not going to happen. For either political party to adopt this course would be suicidal.
After caving in to Clinton’s demand for $18 billion for the IMF, the GOP cannot return to vote it still more tax dollars without energizing the Reform Party and jeopardizing Republican hopes for 2000.
And with U.S. steelworkers uniting with industry to demand a halt to Japanese, Russian and Korean dumping, Democrats cannot allow the United States’ $250 billion merchandise trade deficit to explode. Unions are the backbone of that party, and union members rely on those industries for many of their best jobs. If Democrats reject their just pleas to stop the dumping, Al Gore will have a revolution on his hands.
Indeed, look to the Big Three car companies and their unions to join Big Steel and the steelworkers, for imported vehicles and parts have now replaced oil as the largest component of our trade deficit.
History shows that in international crises, statesmen put their country ahead of the Global Economy. In 1933, FDR torpedoed a London economic conference to focus on New Deal remedies for the USA. In 1971, to prevent a British raid on Fort Knox, Richard Nixon shut the gold window and terminated the Bretton Woods commitment to buy European-held dollars with American gold at $35 an ounce.
Ronald Reagan preached free trade but did not let his sermons get in the way of doing what was best for America. He imposed import quotas on steel and machine tools, demanded that Japan slash auto exports to the United States, hit Tokyo with a 50 percent tariff on big motorcycles to save Harley- Davidson, and informed the Japanese that they had to buy 20 percent of their computer chips abroad.
If global recovery is not here by spring, America will be forced to choose — between the Global Economy and the U.S. economy.
As of now, Clinton and the GOP establishment are still trying to save everyone’s bacon. They have shoveled out billions to the IMF and demanded that Japan and China open their markets. Thus far, Asians and Russians have happily taken the bailout billions, but Japan and China are not taking in more foreign goods, and a global recession seems to be spreading and deepening.
Prediction: If the Brazilian bailout fails, if the IMF bellies up to the bar again, and if the auto and steel industries are joined by other industries — enraged at being sacrificed to save investors — the tides of economic nationalism will start rolling in fast.
To date, however, Republicans have failed to offer a credible alternative to Clintonite internationalism. Herewith, a suggestion. As Henry Hyde and his committee go about their business, the GOP should seek out populist and conservative Democrats to agree on:
# a $500 billion five-year tax cut for workers, families and employers to prevent the Asian contagion from sinking the U.S. recovery.
# congressionally mandated import quotas on autos and steel to roll them back to 1997 levels and stop the devaluation dumping.
# 20 percent tariffs on all Japanese and Chinese imports, as Japan and China are running $60 billion trade surpluses at our expense while denying us full access to their markets. (The $40 billion in revenue could be used to end taxation of U.S. small business.)
# a directive to Alan Greenspan to prepare to replenish the lost liquidity when the foolish foreign loans and investments of the big banks and hedge funds begin to go sour.
For once, let’s put the home folks first, and let the fellas who got into this mess dig themselves out.