Six years after the start of the Great Recession nearly 8 million jobs are still needed to return to prerecession labor market health (EPI 2013). Job creation should still be goal number one. Yet prospects for any fiscal policy action to boost jobs have disappeared under the weight of congressional dysfunction, and the Federal Reserve has begun to wind down monetary stimulus (Wall Street Journal 2013). But besides fiscal and monetary policy, there is a third tool of macroeconomic stabilization that could provide a huge boost to economic activity and job growth: realigning exchange rates to lower the U.S. trade deficit. The best part of this solution is that there is broad, bipartisan support for congressional action on this issue. In addition, under existing authority, the president can initiate policies that would make currency manipulation costly and/or futile. Together, these policies could lead to exchange rate movements that would create 2.3 million to 5.8 million jobs over the next three years by ending currency manipulation by a group of about 20 countries, with China as the linchpin. These actions would create jobs in every state and in most or all congressional districts. They would boost GDP, boost jobs and reduce unemployment, and actually reduce the federal deficit by spurring economic growth—all without direct budget costs. No other policies could achieve this economic trifecta.

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U.S. Sen. Sherrod Brown (D-OH) spoke with reporters Wednesday as he unveiled a new report showing that cracking down on currency manipulation could create 5.8 million jobs in the U.S., including more than 250,000 jobs in Ohio alone.

The lead sponsor of a bipartisan bill that would stand up for American manufacturers by punishing countries, like China, that cheat by manipulating currency, Sen. Brown, who won a second term in 2012, said he will urge Congress and the Obama Administration to crack down on currency manipulation.

Brown’s bipartisan legislation, the Currency Exchange Rate Oversight Reform Act, would use U.S. trade law to counter the economic harm to American manufacturers caused when countries illegally undervalue their currency to give their exports an unfair price advantage. The bill would provide consequences for countries that fail to adopt appropriate policies to eliminate currency misalignment—all without adding a dime to the federal budget.

The new EPI report shows that ending currency manipulation could reduce the U.S. trade deficit by as much as $500 billion within three years, increase GDP by as much as $720 billion, while creating as many as 5.8 million American jobs—all while reducing the federal budget by as much as $266 billion.

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