- The Washington Times - Thursday, May 2, 2002


A strong dollar is in the best interests of the United States, and the Bush administration won't change its policy on the subject anytime soon, Treasury Secretary Paul H. O'Neill told Congress yesterday.

"There's no intent in anything that I say to give comfort to those who think we're going to change our policy today," Mr. O'Neill testified to the Senate Banking, Housing and Urban Affairs Committee.

The hearing was called to air complaints from American companies that say they are being hammered by the high value of the U.S. dollar, which has priced their goods out of overseas markets.

Mr. O'Neill said the United States could reduce imports to help bring down the trade deficit, but that would hurt consumers.

"Lots of people come to Washington and tell us how they are hurting, and I think we have to be sympathetic with that. But, at the same time, we are better off to help the casualties if it produces a better economic outcome for the whole society," he said.

Sen. Paul S. Sarbanes, Maryland Democrat and committee chairman, continued to press Mr. O'Neill, saying he was "really taken aback" that the Treasury secretary was not alarmed by the trade deficit.

"At some point, it is a problem," Mr. Sarbanes said.

Mr. O'Neill responded, "I don't find it appealing to suggest we cut off our arm because we might get a disease."

The Bush administration's allegiance to a strong dollar follows the same commitment from the Clinton administration. Both maintained that the U.S. economy reaps enormous benefits from a strong dollar, which helps to hold down inflation, provides consumers with a wealth of product choices from all over the world and attracts the billions of dollars in foreign investment that the country needs to offset its huge trade deficits.

Mr. O'Neill took issue with a recent warning by the International Monetary Fund that the country's huge trade deficits were one of the biggest risks facing economic recovery in the United States.

Officials of the National Association of Manufacturers (NAM), the AFL-CIO, farmers groups and others told the committee that the huge U.S. trade deficit is a threat to the economy and has already cost thousands of jobs. They blamed much of the deficit increase on a 30 percent rise in the value of the dollar since early 1997.

"Many of these jobs will never come back," said AFL-CIO Secretary-Treasurer Richard Trumka. "These are higher-paying jobs that have been the ladder to the American Dream for millions of Americans. But now we are kicking away that ladder."

NAM President Jerry Jasinowski said the administration needs to work with U.S. allies to reduce gradually the dollar's value against other currencies, such as the Japanese yen and the European euro.

"The overvalued dollar is perhaps the single most serious economic problem facing manufacturing in this country," Mr. Jasinowski said. "It is decimating U.S. manufactured-goods exports, artificially stimulating imports and putting hundreds of thousands of Americans out of work."

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