Interview: New Jersey Republican Representative
>> yahoo today reported earnings of just over $1 billion last quarter. some of that revenue no doubt comes from china’s 111 million internet users. with chinese president hu jintao now visiting america, members of congress and free speech advocates are asking whether yahoo, google and other tech companies are hurting the cause of democracy by agreeing to censor chinese websites. companies like google say they would rather make a contribution to the overall expansion of access to information in china, even if imperfect. representative christopher smith, new jersey republican, is sponsoring legislation that would forbid companies from cooperating with online censorship. i would imagine the progress of your bill would depend much on what comes out of this week’s meetings between the president and the chinese president.
>> that’s a very good point. my hope is that president bush will raise a very, very concerted way, the concerns of the individual chinese persons being discriminated against, being tortured, regrettably, religious freedom does not exist in the people’s republic of china and as you pointed out in introducing this piece, increasingly the internet companies like google, yahoo, cisco systems, are aiding and abetting the dictatorship in a way that is allowing them, enabling them to become stronger in cracking down on the dissident community. as we saw in eastern europe and the former warsaw pact nations and the soviet union, it broke up because of the pressure from within, not from without. the real changes occurred because people on the ground, lec walisa were able to make their case i.. the chinese company finds these people, they use the internet to do it and they put them in jail. when we had our hearing and heard from yahoo, for example, you just mentioned it, one of their top people testified and made the point to us that they couldn’t tell us how many times they allow their email servers to be looked at by the chinese secret police. 35,000 cyber police in the p.r.c. combing through those cyber files to find people who write human rights, falon gong, religious freedom or any one of thousands of words that are triggers for the chinese government to crack down on that individual.
>> they say some access to the internet is better than none and that will help the cause of freedom.
>> i think that’s a naive argument in the extreme. i do believe in openness and freedom but when dictatorships these two basic things to survive―a strong secret polts and the ability to control the propaganda. when google sends you, on google c.n., the chinese search engine, to what the government wants you to hear from the people’s daily or one of the other propaganda organs, you are depleting the -- completing the loop for the government as to what they want you to hear and so much of it is anti-american. when you enable the police as cisco did with police net to give them the ability to network efficiently to find, detect, incarcerate and also they torture the dissidents and religious believers outside of the government line they put in the sand, like the falon gong, you have a situation where this dictatorship can exist and thrive in perpetuity because of u.s. technology and whether witting or unwitting, i don’t know. but the bottom line is, if i were sitting in the dictator’s shoes and had this access to control my dissidents in my country to suppress them and send tome to torture―many political prisoners―this is like a treat for them.
>> your bill would not actually affect google and yahoo as they operate now in china, correct?
>> it would require that every year the state department designate those countries that are internet-restricting countries, and a series of restrictions would flow from that. we would hope, for example, yahoo, its email servers are operating inside the people’s republic of china. the secret police has unfettered access to those emails, the address book and everything else contained within that file system. what happens is that they get someone who is looking or asking questions about human rights or raising a stir somewhere, anywhere in china, and all of a son they have all of those with whom he or she has been in contact with. police net is a good name for it, a net being used by a nefarious police force to crack down on these individuals and if they don’t see the irreparable harm they’re doing to the best and the bravest and brightest in china who yarn for―yearn for freedom. we had a glimpse during the tiananmen square massacre before the crackdown occurred, that’s what would thrive in china if we didn’t enable, now, the secret police to go after these individuals. they can shut it all down. your program won’t be shown in china, except in the hotels. radio-free asia is routinely blocked there.
>> unfortunately we’re going to have to leave it there. new jersey representative christopher smith, thank you for joining us. quick campaign news to tell you about, first-quarter fund-raising numbers in for this year’s u.s. senate campaigns. on top new york senator hillary clinton, she’s raised just over $6 million for her re-election bid even though she’s expected to win comfortably. anything she’s left over can be transferred to a possible presidential campaign. republican senator rick santorum of pennsylvania also having a good quarter, though in a tough race with bob casey. santorum has the money advantage, $3.5 million in the first quarter compared to $2.2 million for casey. as the chinese leader comes to the u.s. and president bush appoints a new trade representative, we take time to find out what americans think of free trade. the “poll of the day” is next.
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Listen Interview: Former Fed Governor
>> a phrase today investors have been waiting to hear from the federal reserve. minutes of their march 28 policy meeting show that at that time most members thought that the end of the interest rate tightening process was likely to be near and some expressed concerns about the dangers of tightening too much given the lags in the effects of policy. that sentence sent bonds off and stocks soaring as investors bet the fed may stop after raising rates one more time in may. former fed governor lyle gramley told our kathleen hays that’s a good bet.
>> i think the fact that most members think that the fed’s nearly at the end of the tightening phase is probably the most significant sentence in the release. they recognize the fact that growth is probably going to slow but they can’t be sure but there was also a comment that some of them were worried about the possibility that they could go too far taking into account the lags in monetary policy.
>> i want to underscore for our viewers that you served on the federal reserve board and you’re in contact with many of these people that you know pretty well. give us some sense of what it takes for the fed to get to a moment like that where they agree, hey, you guys, we are at the point where after a year and a half or more of raising interest rates, we’re about to stop.
>> i think they have to begin to see signs that the economy is in fact in the process of slowing. and there were signs at that time and i think they have multiplied since the march meeting. we have had a further runup in long-term interest rates, oil prices over $70 a barrel and a drop in single-family housing starts in march of 12%. all of those things will weigh heavily on their decision at the next meeting in may.
>> let’s look at some of the things you just touched on, though. oil over $70 a barrel today. gold at a 25-year high. commodities like copper, to ever-higher heights. there was a lot of people in the bond market , in the commodities market , who take this seriously, lyle, as a sign of overheating in the global economy and sign of inflation. does the fed run the risk of looking like it’s not tough enough on inflation if it stops now?
>> no, i don’t think so. i think the fed is facing a situation in which at the moment, at least, there’s been very little evidence of spillover of high oil prices, rising commodity prices, in the core inflation. and certainly the environment has been changing in ways that makes spillover more likely as we get closer to full employment. what the fed has to contemplate with seriousness is whether or not the economy is going to slow to near its potential growth rate as they anticipate. and they’re going to have to watch for signs for that between now and the may meeting.
>> former fed governor lyle gramley now with the stanford washington research group. the air force wants a new deal on tankers, india says no deal on a test ban, and the treasury imposes a deal on i.m.f. reform. that’s next on “money & politics.”
