by Donald Trump
Thomas W. Evans was an adviser to Presidents George H. W. Bush and Ronald Reagan. Evans says that when OPEC or its member nations realize the likelihood of the huge damages they would face and how their illegal actions would be curtailed, they would be forced to seek a settlement on production goals that would put prices in much closer alignment with actual costs. The net effect, says Evans, would be price reductions for heating fuel and gas at the pump that would be so large they might exceed the $168 billion the government spent on the 2008 federal stimulus package. As for concern over any potential fallout, he says what I say: getting tough is getting smart. Suing OPEC “would undoubtedly anger political leaders in the Middle East,” writes Evans. “But how stable is the Middle East right now? And isn’t starting a lawsuit better than starting a war?”16
Imagine how much money the average American would save if we busted the OPEC cartel. Imagine how much stronger economic shape we would be in if we made the Iraqi government agree to a cost-sharing plan that paid us back the $1.5 trillion we’ve dropped on liberating Iraq so it could have a democratic government. Just those two acts of leadership alone would represent a huge leap forward for our country. And by the way, it would also make us respected again in the world. It’s sad—truly sad and disgraceful—the way Obama has allowed America to be abused and kicked around. All we have to do is be smart and show some backbone to begin setting things right.
Use America’s Resources and Create Jobs
So number one, we take the oil through the cost-sharing plans that even the GAO says are smart and feasible. Two, we hit OPEC in the wallet and rein them in by signing into law the bipartisan NOPEC law. And the third thing we need to do is to take advantage of one of our country’s chief assets—natural gas. We are the “Saudi Arabia” of natural gas, but we don’t use it. Abu Dhabi recently had all of their transportation converted to natural gas so they can sell their expensive oil to us.17 Even they recognize how efficient natural gas is. It’s cleaner, cheaper, and better. So why aren’t we using it to our advantage?
Did you know that with the natural gas reserves we have in the United States we could power America’s energy needs for the next 110 years? Those aren’t my estimations, that’s what the United States Energy Department’s Energy Information Administration says. In fact, one of the larger mother lodes of natural gas, the Marcellus Shale, could produce the energy equivalent of 87 billion barrels of oil.18 Some critics believe those numbers might be inflated. Fine. Let’s say the real number is fifty-five years of energy, or that we only get 43 billion barrels’ worth of energy. So what? That buys us more time to innovate and develop newer, more efficient, cleaner, and cheaper forms of energy.
The point is that sitting around handwringing all day accomplishes nothing. Yes, I want us to extract the shale gas safely and responsibly. Who doesn’t? But too often, environmental extremists take things so far that they will never be pleased. They’re for nuclear energy, then they’re against it. They like natural gas, then they don’t like it because of new drilling techniques. They want windmills everywhere, then they oppose them because they hack birds to pieces and create “visual pollution” (about this, I agree!). They love ethanol, then they don’t anymore because it eats up vast amounts of farm land and sparks food riots in Africa when the price of corn goes up. They like electric cars, then they don’t because they realize that half of electricity comes from coal, and they hate coal. On and on, back and forth it goes. Meanwhile, our country’s economy is sinking like a stone.
What people need to know is what the great conservative economist and writer Thomas Sowell taught us: in the world of economics, there are no such things as “solutions,” only tradeoffs. Every action has a consequence. Every decision has an upside and a downside. So you make smart decisions that minimize harm and maximize freedom. One of the many reasons why I’m a conservative is because I believe in the so-called Law of Unintended Consequences—the idea that, no matter how good government’s intentions, when you start social engineering or messing around with the free market, more often than not you open a Pandora’s box of negatives you didn’t see coming.
So, in terms of energy, we need to be exploring and developing numerous approaches ... and I also include in that drilling for oil right here at home. We have oil all over the place in America. It’s incredible how much oil is right under our own land and water. But the Obama administration refuses to get tough with the environmental lobby and liberate our oil companies to drill for domestic oil.
Yes, the BP oil spill was bad, but it was no reason to put tighter clamps on domestic drilling. That showed no leadership at all. What it showed was that the Obama administration is driven more by hysteria than facts.
You want some facts? Here’s one that anyone who has ever studied oceanic oil supplies already knows: “Tens of millions of gallons of crude oil leak into the ocean every day. Naturally, from the sea floor,” as David Ropeik from Harvard University, hardly a rightwing institution, has written. 19 I also read from the U.S. National Academy of Sciences that the ocean itself is to blame for contributing “the highest amount of oil to the marine environment.”20 So if the extreme environmental crazies have a beef to pick with anyone, perhaps it should be with Mother Earth herself.
The real issue, of course, is that those who oppose drilling in the United States simply don’t want the drilling to occur in their own backyard. What they ignore is the fact that the holes are going to get drilled into the planet anyway. We should drill them on our soil and create our own jobs and keep the revenue here instead of exporting it to the Middle East. Remember when Obama gave his 2008 speech at the Democratic National Convention and said that he would “invest” $150 billion in renewable energy over the next ten years and create “five million new jobs?” How did that turn out? He spent $80 billion of your and my money and, by his own Council of Economic Advisors’ admission, “created or saved” just 225,000 jobs. Now run those numbers: that’s $335,000 for each so-called “green collar” job we created or “saved,” whatever that means.21
Sadly, when it comes to using the energy industry to create American jobs, Obama has been a total disaster. And that’s a shame, because he’s missing a huge opportunity that could give a lot of people good quality jobs while helping get our country back on solid economic footing. Just look at how he’s mismanaged offshore oil drilling. Here at home, he’s kept in place the bans on drilling off our coasts. But he goes to Brazil, gives them $2 billion through the U.S. Export-Import Bank, and brags that he’s proud and excited to make America one of Brazil’s “best customers.” Pull it up on YouTube and watch it for yourself, if you can stomach it. It’s the most ludicrous, anemic leadership anyone could imagine. Think about it. If Obama supports offshore drilling in Brazil, and puts billions of our dollars in their hands to do it, why can’t we drill in America and create more jobs and less dependence on foreign sources of oil?
The fact that Obama decided to tap into our nation’s Strategic Petroleum Reserve—a stockpile of 727 million barrels of emergency oil, or thirty-four days’ worth of America’s annual usage—and used up 30 million barrels to lower summertime gas prices so he could goose his sinking approval ratings is a national disgrace. But ironically, his decision only proves what everyone knows: more domestically produced oil on the market will drive down gas prices. Period.
So let’s drill already. And let’s do it in America. It’s not only economically smart, it’s strategic—the Middle East needs to get the message loud and clear that we’re done coming to them on bended knee. We’re waking up, getting up, and making America the powerhouse we once were.
Take the oil, sue OPEC, and drill domestically—if we do these three big things, we’ll be on the right track to rebuild American strength, wealth, jobs, and opportunity. Will it be tough? Sure. But that’s what makes us Americans: we do hard things, and we do them well . . . if we have the right leadership.
THREE
TAX CHINA TO SAVE AMERICAN JOBS
—Barack Obama
When it comes to China, Barack Obama practices “pretty please” diplomacy. He begs and pleads and bows—and it’s been a colossal failure.
Get it straight: China is not our friend. They see us as the enemy. Washington better wake up fast, because China is stealing our jobs, sending a wrecking ball through our manufacturing industry, and ripping off our technology and military capabilities at Mach speed. If America doesn’t get wise soon, the damage will be irreversible.
There is a lot that Obama and his globalist pals don’t want you to know about China’s strength. But no one who knows the truth can sit back and ignore how dangerous this economic powerhouse will be if our so-called leaders in Washington don’t get their acts together and start standing up for American jobs and stop outsourcing them to China. It’s been predicted that by 2027, China will overtake the United States as the world’s biggest economy—much sooner if the Obama economy’s disastrous trends continue. 2 That means in a handful of years, America will be engulfed by the economic tsunami that is the People’s Republic of China—my guess is by 2016 if we don’t act fast.
This didn’t happen overnight or in a vacuum. We’ve been kicking the can down the road and ignoring the warning signs for years. Truth be told, we took a strong jobs beating from China during President George W. Bush’s term. Even before the Obama-led employment disaster we’re stuck in now, from 2001 to 2008, America lost 2.4 million jobs to China.3
For the past thirty years, China’s economy has grown an average 9 to 10 percent each year. But under President Barack Obama, China has experienced unusually fast gains and America unusually fast losses. In the first quarter of 2011 alone, China’s economy grew a robust 9.7 percent. America’s first quarter growth rate? An embarrassing and humiliating 1.9 percent.4 It’s a national disgrace, and Barack Obama’s inept policies and weak response to China’s manipulation of its currency, assault on our jobs, and attack on our manufacturing base have made things worse—far worse—than they would otherwise have been. And yet, every time you turn on the television, what do you hear from Obama? Happy-talk rhetoric. It’s like that old “prosperity is right around the corner” mantra Herbert Hoover repeated when America was in the throes of the Great Depression. It’s a lot of hot air. We’ve got 14.4 million of our people out of work. We need action.
America’s relationship with China is at a crossroads. We only have a short window of time to make the tough decisions necessary to keep our standing in the world. Roughly every seven years, the Chinese economy doubles in size. That’s a tremendous economic achievement, and it’s also why they clean our clocks year in and year out on trade. Right now, we are running a massive $300 billion trade deficit with China.5 That means every year China is making almost $300 billion off the United States. When I go on television talk shows and news programs, I say that number and people can’t even wrap their minds around a figure like that, but it’s true. Just on the trade imbalance alone, China is banking almost a trillion of our dollars every three years. And sadly, whereas American manufacturing used to rule the day, now, because China cheats with its currency, American companies can’t compete on price, despite the fact that we make a far better product. So China is now the world’s top manufacturer and exporter. By the way, they also hold more than $3 trillion of foreign reserves.6 That’s enough money for China to buy a controlling interest in every large company in the Dow Jones Industrial Average—companies like Alcoa, Caterpillar, Exxon Mobil, and Walmart—and still have billions left in the bank.7
One out of every six people on the planet is Chinese. Their population of 1.3 billion people outnumbers us roughly four to one. That’s a huge pool of talent from which to build businesses, staff manufacturing facilities, fill elite educational institutions, and build an enormous and lethal military.
The other great concern is the fact that China graduates 7 million university students every single year. So far America still remains way ahead of China on college graduation rates as a percentage of our total population, but you have to ask whether our colleges are graduating students with the skills they need to compete. I read too many stories about corporations that have to offer remedial education classes for their employees. And when you look at test scores for middle school and high schools, there’s cause for alarm. In a 2010 authoritative international study of 15-year-olds, Americans ranked twenty-fifth out of thirty-four nations in math. China’s rank? Number one.8 In fact, the Shanghai students who were studied not only were number one in math, but in reading and science as well. They just absolutely ate our lunch—and everyone else’s. Sure, maybe the study was a little skewed because they sampled kids from Shanghai where many of China’s smartest students go to school. But as even liberal TIME magazine points out, when you consider the enormous demographic changes America is undergoing, there’s educational danger on the horizon. In a generation we will be a majority-minority nation, and currently a heartbreaking 40 percent of African-American and Latino-American children don’t even graduate from high school (to say nothing of college).9
In China’s Crosshairs
Where do you think Communist Chinese President Hu Jintao plans to direct most of China’s educational and economic edge? That’s right, the military and weapons industries. A new report from the Pentagon reveals that China is rapidly beefing up its army and navy and pouring billions of dollars into developing its first stealth fighter jet, advanced attack submarines, sophisticated air defense systems, high-tech space warfare systems, and adding to its ballistic missile stockpile.10 In response to China’s military buildup, Chairman of the Joint Chiefs of Staff Admiral Michael Mullen said this: “The Chinese have every right to develop the military they want. What I just have not been able to crack is why on some of these capabilities, whether it’s [the J-20 stealth fighter], whether it’s anti-satellite, whether it’s anti-ship, many of these capabilities seem to be focused very specifically on the United States.”11
What China is doing on the cyber warfare front is equally alarming. In his congressional commission testimony, Vice Chairman of the Joint Chiefs of Staff General James Cartwright said that China is heavily involved in cyber reconnaissance of American corporate and government networks. General Cartwright explained that cyber spying can isolate network weaknesses and allow the Chinese to steal valuable intelligence.12
So what should we do?
China presents three big threats to the United States in its outrageous currency manipulation, its systematic attempt to destroy our manufacturing base, and its industrial espionage and cyber warfare against America. The Chinese have been running roughshod over us for years. But the Obama administration, in its incredible weakness, seems almost complicit in wanting to help the Chinese trample us. Obama claims we can’t do what’s in our interests because it might spark a “trade war”—as if we’re not in one now. And if we are in trade war, Obama’s policies amount to virtual economic treason. Still, I believe we can overcome China’s threats with a smart strategy and a strong negotiator.
China’s massive manipulation of its currency is designed to boost its exports and wreck our domestic industries. When the Chinese government manipulates the yuan (China’s currency, sometimes also called the renminbi) and undervalues it, they are able to sell to other countries at a far, far lower price than a U.S. company, because our currency is valued at a more accurate market rate. That means our products are priced higher, which makes them less competitive.
Many analysts have tried to determine the actual value of China’s currency, but it’s hard to say for sure, since valuations change all the time. There does, however, seem to be a consensus that the yuan is likely undervalued somewhere in the neighborhood of 40 to 50 percent of its true value.13 That means the Chinese can charge up to half the price an American manufacturer would for a similar good or service. That spells job losses for American workers, and that’s exactly what’s
happening right now.
Just look at what China’s monetary manipulation did to our steel industry. As a builder of huge luxury buildings, I can tell you that the steel industry has been vital to our economic strength, and is an important cost in any building. According to the American Iron and Steel Institute (AISI), China’s currency undervaluation represents “the single-largest subsidy” to Chinese manufacturers, is the “key” to China’s explosive export-driven growth, and is “a major cause” of global structural imbalances that helped bring about America’s recent financial collapse.
China’s currency manipulation and other unfair trade practices helped China’s crude steel production jump from 15 percent of world production in 2002 to a jaw-dropping 47 percent in 2008. In 2002, the United States imported just 600,000 tons of steel (3 percent of our steel imports) from China. By 2008, China had us buying 5 million tons of steel.14 And again, much of this they achieved by undervaluing the yuan.
Economist Alan Tonelson got it right when he wrote:For eight long years, Washington’s China lobby—lavishly funded by multinational companies whose China facilities benefit from this 50 percent subsidy [from the undervalued yuan]—has trotted out rationalizations for inaction. The disastrous costs already incurred of following the China lobby’s advice amply justify ignoring its latest ploy.... American factories have kept closing, survivors’ profits have kept shriveling and even vanishing, job losses have kept mounting, and wages have kept sagging. Worse, U.S.-centric global economic imbalances kept mounting until they triggered the biggest American and worldwide downturn since the Great Depression.15
Other observers, like Republican Senator Richard Shelby of Alabama, have their eyes wide open too. “There is no question that China manipulates its currency to subsidize its exports,” said Shelby. As for China buying U.S. Treasury bonds, Shelby said, “It may be time for new legislation to ensure that Treasury looks out for American workers, not Chinese creditors.”16
