How Will the (Defeated) Jobs Bill & the (Passed) Chinese Currency Bill Impact Connecticut Manufacturers?

On Tuesday, two very controversial bills, President Obama's jobs bill and the Chinese currency bill were voted on by congress...
By a vote of 63-35, the Senate passed the Currency Exchange Rate Oversight Act, which allows sanctions against China if the U. S. Treasury Department finds China is undervaluing its currency.  Later Tuesday night, President Obama's $447-billion jobs was defeated by the senate. One of the more popular items in this bill is a further payroll tax cut.  Remember, last year, congress reduced the Social Security payroll tax rate paid by employees to 4.2 percent, from 6.2 percent.  Under this proposal, workers would pay 3.1 percent next year.  Democratic leaders are now looking into dividing this bill into specific pieces that have wide enough support for approval.

So what does all this mean for Connecticut?   To find out, we called Connecticut Business & Industry Association economist, Pete Gioa.  The following is a synopsis of our conversation.

While the President's Jobs bill proposed moderate to good ideas such as tax credits, payroll tax holidays the problem was how to go about paying for them.  Any tax increase at this period of time in our economy would not be a positive move.  Furthermore, the new regulations on businesses promulgated by this administration are only hampering job creation.  Congress needs to take a time-out on new regulations on businesses and do some cost-benefit analyses before they impose any additional regulations.  New regulations are only adding to business uncertainty.  Business unsure about their return on investment for investments made, will be more hesitant when it comes to job creation.  It is critical that Democrats and Republicans improve business confidence.  In Connecticut, the governor has been working hard to bring together Republicans and Democrats to help business build jobs.  Unfortunately, this is not the case with the President and the Congress.  So, it's a positive development for Connecticut overall that this bill failed.

When it comes to the Chinese currency, the highly valued yuan is causing issues and is not a healthy situation for the U S.  However, this is not the time to start a trade war with China.  China is the fastest growing trade partner for exports from the U. S. and Connecticut.  Serious discussion on how to deal with the yuan needs to occur, but if the recent actions of Congress place us into a trade war it will not give us any competitive advantage with China. There are probably better ways for dealing with balancing the yuan vs dollar that should be looked into.  So, perhaps, this one should have failed as well.

Only time will tell if portions of President Obama's jobs bill will see the light of day and if the currency bill results in a trade war.  One thing is certain, until congress and this administration can bolster business confidence and reduce regulation, the economy will lag, and, unfortunately, so will Connecticut manufacturers!