Tales from the Trail

Billionaire developer Donald Trump might like to be president. And if he were, he’d bring a hard view of China to the White House.

“I’d tax China,” he tells ABC News in an interview. “They laugh at us. They feel we’re fools. You know, they’re getting away with absolute murder. The products we used to make in this country, they’re making them in China. We’re rebuilding China.”

Trump, who set up an exploratory presidential committee in 1999, said he’ll decide on a 2012 White House run by June.

He doesn’t explain how he’d tax China — or whether taxing China would be any easier than taxing America.  But he’s sure the United States can still call the shots, even if China has effectively become America’s banker by holding so darn much of the U.S. national debt. 

“We have the cards because we’re the ones who are spending all of this money in China,” The Donald says. “I’ve had bankers over the years. I don’t think the bankers have the cards.”
    
As for the presidency, Trump’s worth a lot and says he’d spend a lot to get elected: ”It could be fun because I’d like to see some positive things happen for the country.”

Not too hot, not too cold, just right.

U.S. Treasury Secretary Timothy Geithner performed a delicate balancing act on the Hill today. On the one hand, Geithner had to tell an increasingly angry Congress that he was serious about trying to persuade China to revalue its currency, the yuan. On the other, he wanted to head off the kind of unilateral action from Congress that could provoke a trade war, and endanger the administration’s efforts to engage Beijing on a whole slew of issues.

Democratic Senator Charles Schumer raged that “China’s currency manipulation is like a boot to the throat of our recovery,” and accused Geithner of being the only person in the room who did not believe China was manipulating its currency.

“I share your frustration,” was the first part of Geithner’s message to Congress, acknowledging that the pace of the yuan’s appreciation had been too slow. But leave the response to us was the other, unspoken part of the message today. The administration would use the upcoming G20 summit in Seoul in November to try to mobilize other world powers to pressure China for trade and currency reforms, Geithner vowed, adding officials were looking at all the tools at their disposal to “encourage” the Chinese to move more quickly.

On Friday, President Barack Obama threw down the gauntlet to Republicans on taxes, effectively daring them to vote against a tax cut for the middle classes, just so that they can give an average of $100,000 in tax cuts to millionaires.

Over the weekend, Republican leader of the House John Boehner seemed to shirk the challenge, but on Monday, Senate minority leader Mitch McConnell picked up the gauntlet and threw it right back. McConnell has promised to introduce legislation “today” to ensure that “no one in this country pays higher income taxes next year than they are right now.” There are no Republicans who support a tax hike, he said, effectively daring Democrats to vote for higher taxes when the economy is in the mire.

Washington Extra is not sure who will blink first. But whichever side you take in this debate, one thing is for sure: this “wrestling match,” as Obama called it, or game of high-stakes political poker if you prefer, does the economy no good at all.

We hear the White House is not wildly pleased with former budget chief Peter Orszag for abandoning the party line on tax policy this week. Now Democrats in Congress are beginning to distance themselves from President Barack Obama’s push to let taxes rise for the wealthiest Americans. We are unlikely to see this resolved before the mid-terms anyway, and there are still several different ways this could pan out. One possible compromise would be a short extension of the tax cuts for the rich and a longer extension for the middle classes, keeping any crucial decisions as far away from the 2012 campaign season as possible.

More today on the potential for a reshuffle in Obama’s inner circle after the November elections, especially if Rahm Emanuel departs for Chicago. Democratic sources tell us Larry Summers, never that happy in his role, might be among those who leave, but that Treasury Secretary Tim Geithner is likely to stay the course.

One administration official who is flagging his own retirement is Defense Secretary Robert Gates. As we report from our Aerospace and Defense Summit in Washington this week, Gates used to be viewed by the defense industry with apprehension, but these days many industry executives see his efficiency drive as both sensible and as the best way to protect the overall defense budget. It seems he will be missed.

We travel the Karakoram Highway from China to Pakistan on today’s edition of Washington Extra.  Driving the agenda for Reuters today is news that the United States could be heading for another trade row with China, after it announced plans to toughen rules against what it sees as unfair trade practices. A number of the proposals are likely to irk Beijing and could provoke retaliation.

It is all part of the Democrats’ “Make it in America” agenda to save manufacturing jobs at home. Critics will no doubt see it as more evidence that President Barack Obama is a closet protectionist. Others argue that this is a shrewd move from the administration to head off still more damaging moves from Congress.

Over at the IMF, Pakistan’s finance minister is in town seeking more help to salvage his country’s economy in the face of the devastating floods. The mood so far seems hopeful. Abdul Hafeez Shaikh said Pakistan wanted to keep pursuing an $11 billion IMF loan program and demonstrate its resolve to take tough economic decisions, dismissing reports that it might abandon the program. The IMF, for its part, is already urging donors to give grants, not loans, for rebuilding projects, to avoid adding to Pakistan’s heavy debt burden.

Peter Peterson knows a little something about Republicans, Wall Street, and American business. He’s a former Commerce Secretary under Republican President Richard Nixon, a former New York Federal Reserve chairman and a former chairman and CEO of Lehman Brothers.

And what he sees right now is that Republicans and business are not stepping up to the plate.

“One of the things that troubles me about the position of the Republicans is they’ve also been the party of  ‘yes,’ not just the party of  ’no’,” he said in an interview with Reuters Insider TV.

Hillary Clinton has lots to worry about in Pakistan, but she has found one thing she can wholeheartedly embrace: Pakistani mangos.

The U.S. Secretary of State was treated to a mango dessert during dinner with Pakistani President Asif Ali Zardari and they clearly won a fan — Clinton repeatedly raved about the fruit.

“We’ll get a lot of people hooked on Pakistani mangos,” Clinton told a “townhall”-style meeting in Islamabad, where she was on an official visit.

New York Senator Chuck Schumer has called a foul on German sports equipment giant Adidas AG and its plans to shift production of official National Basketball Association uniforms to Thailand from a factory in upstate New York.

In a statement, Schumer said the shift could cut some 100 jobs at American Classic Outfitters in Perry, New York, which has made official NBA gear for about 40 years.

“It is flat wrong for Adidas to move the production of the jerseys worn by NBA players outside the United States when there are U.S. companies that have done this work so well for so long,” the Democratic lawmaker said in a statement.

We asked Senator Charles Grassley to grade President Barack Obama's performance (close your ears Sasha and Malia) and the top Republican on the Senate Finance Committee was a bit of a tough schoolmaster.

"He's still learning an awful lot," Grassley said at a Reuters Washington Summit.

But Obama gets a D on foreign policy, a C on domestic policy, and an F on trade (ouch!)

BEIJING – Does having “a Chinese face” help two top U.S. officials in hard bargaining on energy and trade issues with the Chinese?

U.S. Commerce Secretary Gary Locke, whose grandfather came to the United States from China, told reporters in Beijing not necessarily so.

But Chinese Premier Wen Jiabao expressed pride in Locke and U.S. Energy Secretary Steven Chu’s ancestory when he met with them on Thursday.