The Occasional Observer

Here's what Duncan Hunter had to say on the topic:

Duncan Hunter: Well, first, ...I'm a supporter of supply side economics and I think the general proposition that if you leave a few bucks in the pockets of American businesses rather than take it for taxes, ...(then) the tax base is actually increased and revenue is enhanced. I believe that's a valid proposition and I support that and that's been reflected in my voting record for tax cuts. So I think that's the way you supply - you increase the revenues into the federal government and you do that by encouraging growth.

Now there's one thing that I think is very, very important right now, where I diverge, I think, some from the Club For Growth...I'm a Ronald Reagan trader...let me quote you Ronald Reagan on trade. He said, "To make the international trading system work all must abide by the rules." He further said, "When governments assist their exporters in ways that violate international laws, then the playing field is no longer level and there's no longer free trade."

Right now...when we compete with China, China starts with 74 points on the scoreboard before the opening kick-off. They get a 17% rebate...to their exporters; they're exporting to the US. Basically they're allowed to operate tax-free. Then they put in place a 17% penalty on our importers. That creates a 34% disparity in the world's competition. Then they de-value their currency by 40%, through currency manipulation. So they start with 74 points on the scoreboard before the opening kick-off.

That disparity is so great that you now have lots of financial advisers who are walking into the boardrooms of companies throughout America telling their people that even if they have a more efficient labor and production rate than the Chinese in their particular industry, that it makes sense from a tax and tariff standpoint to move their jobs from the US to China. So we have actually...acquiesced to a system that doesn't allow the most efficient trader to win. It allows the subsidized trader to win and the effect of that is that you have businesses which pay high wages throughout this country -- not based on labor rates but based on the way government has set the rules and set the competition in this arena called trade, that are contemplating moving to China.

...Let me give you an example. I was in South Carolina. Nucor Steel in Charleston has 800 workers. They produce as much steel as... a Chinese plant which has 17,000 workers. They beat the Chinese 20 to 1 for labor efficiency and they pay their people an average of $75,000 a year. Labor cost is not a major issue with them because they're so highly efficient and they are so leveraged with technology and yet, they see now China which is expanding its steel production this year by 130 million tons which is more than the total steel production of the US.

That's not fair; that's cheating and that causes aberrations in the trade system and it moves massive amounts of income of what otherwise would be American revenues off-shore. So I don't think you're going to be able to get the US budget deficit under control unless we have a fair trading system. So I believe very strongly in the Reagan position on trade when he said what he said to make the international trading system work, all must abide by the rules. They're not abiding by the rules and it doesn't make a lot of sense to play in a league in which all the other teams have 74 points on the scoreboard before the game begins. If they're really that efficient and really that good and they really want the rules of Adam Smith to work, then they shouldn't need the 74 points before the game starts.

That has to be a part of any attempt to balance the federal budget - and one more point, we in government do lots of things that individuals should do for themselves. I'm a conservative; I believe that the government that governs the least governs the best. There is one area where only the government can make a difference and can control the situation and that's in international trading arenas. Only the government can sign a trade deal; individuals can't sign a trade deal. So, if China insists on a trade deal that gives them 74 points on the scoreboard before the opening kick-off, the workers and management at Nucor Steel can't change that. They have to live within the rules that their government has created so that's one obligation of government which not only should be discharged by government but government is the only entity which can discharge it. So that's a difference that I have with some of my colleagues.