USATODAY  • Cars • Jobs • Franchise • Business Opportunities • Travel • Real Estate • Tickets • More
Posted 7/29/2003 2:01 PM     Updated 7/29/2003 11:42 PM
Today's Top Money Stories

Bush team stumps for economy
WAUWATOSA, Wis. — The White House economic team rode a bus caravan through the politically pivotal Midwest on Tuesday, talking up the president's latest tax cuts — and getting an earful about factory closings, unemployment and, especially, the rising economic power of China.

During an open house at a Harley-Davidson motorcycle plant here, Treasury Secretary John Snow, Commerce Secretary Donald Evans and Labor Secretary Elaine Chao were peppered with tough questions about the future of U.S. manufacturing, which has bled 2.6 million jobs since mid-2000. The three were asked repeatedly what they planned to do to ensure fair trade with China, which is running an enormous trade surplus with the USA. The worldwide U.S. trade deficit hit a record $418 billion in 2002.

Among the questioners was Michael Retzer, a consultant for Harley supplier Ram Tool, who expressed skepticism that President Bush's economic program would quickly turn the economy around, given the huge trade imbalance and the fact people were using their tax cut dollars to buy foreign-made products.

"Foreign trade has targeted America's supply chain," Retzer told reporters later. "I have been a Republican most of my life. Right now I am very disillusioned."

The Cabinet officials, on a two-day trip through Wisconsin and Minnesota — states that Bush narrowly lost in 2000 — promised to push for tighter enforcement of trade rules.

Snow said the administration wanted China to loosen its policy of pegging its currency, the yuan, to the dollar, citing some economists' estimates that the currency is undervalued by 15% to 40%.

China has become more competitive in many markets in the past year as the dollar has fallen, because the yuan is tied to the dollar. Against foreign currencies that are not pegged to the dollar, such as the euro, a lower dollar makes U.S. products cheaper overseas, while making foreign goods more expensive in the USA.

"I'm encouraged by the fact the Chinese government has given indications that it wants to relax the peg. ... We'd encourage them to move in that direction," Snow said, adding the administration would use quiet diplomacy to encourage what seems to be growing recognition in Beijing that change is needed.

But in conversations with reporters, Snow also acknowledged that China faces internal financial and economic barriers that would complicate efforts to alter its policy.

Evans also said a forthcoming report on the competitiveness in U.S. manufacturing would include suggestions about China.

The Cabinet officials' trip is part of a carefully timed administration effort to talk up the economy and the president's $350 billion tax cut. The government is now mailing checks to families that qualify for an expanded child credit.

Snow predicted the checks, along with reduced income tax rates, other tax breaks and low interest rates would push the economy to more than 3% annual growth in the second half of the year and 4% in 2004. By comparison, the economy grew 1.4% in the first three months of the year.

The trip, heralded with blue-and-white "Jobs and Growth" banners at events, including a round table with small-business owners in Green Bay, ends today — a day before the government issues data that are expected to show the economy grew at an anemic 1.8% annual rate in the second quarter.

The trip is a sign that the White House sees the tepid economy as a possible liability going into the 2004 election. Democrats, many of whom voted against Bush's tax cut, were quick to criticize the bus excursion as a political stunt, saying unemployment and federal deficits have swelled since Bush took office. A dogged group of about 40 protestors followed the bus route, holding up signs reading "Read Bush's Lips — No New Jobs."

Some of the activists got into a screaming match with Bush supporters outside a Culver's frozen custard restaurant in Wausau. Police hustled some protestors away, crumpling up their signs.

"If they're so confident about the economy, why don't they invite the public in? Why don't they start a dialogue?" asked Larry Marx of Wisconsin Citizen Action, complaining that the state has lost thousands of high-paying manufacturing jobs in the past several years. Manufacturing accounts for more than 18% of the employment in Wisconsin, slightly higher than the national average of 12% to 13%.