Though some Democratic Congressional candidates correctly raised the issue of trade deficits as a negative factor slowing economic recovery, as proxy representatives of the Obama administration, they could not halt the GOP wave against a White House that has done nothing to correct the trade problem within a larger, failed economic policy.

However, on September 29, a large, bi-partisan majority in the U.S. House of Representatives approved two bills indicating that Congress has finally woken up to the economic threat the People's Republic of China (PRC) poses to the prosperity and security of America.

The first piece of legislation was the Currency Reform for Fair Trade Act (H.R. 2378). China's exchange rate is not set by the market but by government fiat to gain a competitive advantage in trade. The bill asks the Commerce Department to define currency manipulation as an illegal export subsidy under U.S. law. If American firms can prove they have been harmed by Beijing's policy, countervailing duties could be applied to Chinese exports. Most of those who spoke on the House floor from both parties said the bill was just the first step.

The second piece of legislation was the Rare Earths and Critical Materials Revitalization Act of 2010 (H.R. 6160) It was a quick response to China's embargo on the export of rare earth metals to Japan. Beijing had run overseas competitors into the ground with low prices to gain 97& control of this strategic industry. The bill would provide government funds to restart U.S. production.

The currency bill was passed 348-79 and the rare earths bill by 324-92. These are impressive tallies in a Congress that has too often been marked by a partisanship that has pushed national interests to the side.

Christopher Wenk of the Chamber of Commerce (which opposes the China currency bill) said in an interview with Inside U.S. Trade published Oct. 29 that his organization will try to "educate" the incoming freshmen members of Congress on the value of the free trade. "We will have our work cut out for us," he said. An understatement since the record shows the value is gained only by transnational corporations and foreign regimes, not the American people.

Since the U.S. joined the World Trade Organization in 1994, the trade deficit has increased ten fold; from $70.3 billion in 1994 to $759.2 billion in 2006 before the global downturn. Over 5 million jobs were lost in American industry before the recession started, while the explosion of foreign debt weakened the financial system, helping to bring on the crash.

A U.S. Treasury report released Nov. 3 stated, "Domestic demand increased at a 2.5% pace last quarter, though a significant share of that demand growth continued to be met by higher imports." The report on Third Quarter GDP released by the Commerce Dept. Oct. 29 again showed that the trade deficit had cut the nation's real growth rate in half. Real imports of goods and services increased 17.4 percent during the July-September period, knocking GDP down by 2.0 percent against the 4.0 percent aggregate increase in other sectors. Trade is the largest negative factor in the GDP equation.

A recent Wall Street Journal/NBC News poll found that 61% of those who identified themselves as Tea Party supporters believe that "free trade" deals have hurt the U.S., while 53% of all respondents held the same view. The GOP rank and file do not agree with the party's Big Business elites that the impact of trade deficits on domestic employment and industrial capacity can be ignored as long as corporations make a profit overseas.

The Republicans should realize that they won because the Obama administration has not been able to reduce high unemployment, and that to gain credibility as the future governing party heading towards 2012, they must close the trade deficit and enable American firms and workers to recapture the domestic market, a source of economic opportunity greater than anything that is available overseas. The public wants results and will not settle for academic theories about "free trade" to which history has never been kind.

Three Cheers for "Free" Trade! Three Cheers for the destruction of the American working class and the inevitable decline of the U.S. to Third World Status!

Congrats, Phil Levy, your fantasy football team won.

""Since the U.S. joined the World Trade Organization in 1994, the trade deficit has increased ten fold"

And remarkably, it kicked off the largest economic growth period in world history.

I like how people bitch about 'trade imbalances' while they twitter on their iphones and browse Gap fashions. Yes, it would all be so much nicer if we had more steel and auto workers. Don't blame 'free trade'; blame the unions that made US industry uncompetitive. Yes, they killed a few industries, but hey, their health plans were better than anything people on Wall St ever got....

Three cheers for William Hawkins! Eloquent and insightful, with actual EVIDENCE rather than a mindless recitation of Wall Street ideology.

It is very strange for anti-deficit Republicans to cheer on free trade: a sales tax targeted on imports would be a way to encourage investment in the US while simultaneously reducing the budget deficit. There is no way debt can not rise without the US bringing its current account into surplus. Either personal or government debt (or both) will keep inexorably rising so long as the US has a trade deficit.

Famous "protectionists" include: Paul Samuelson (JEP 2004), Paul Krugman, Kenneth Rogoff, John Maynard Keynes....