In September, Democrats wrote a "jobs bill" that promised to save thousands of American jobs by erasing incentives for outsourcing. The bill offered a tax break for multinational companies that moved overseas jobs back to the United States. It promised to pay for this tax break for multinational companies by, well, taxing multinational companies.

It was a stupid, limited, and purely political bill designed to lure Republicans into a No vote to make them look like China apologists. In fact, the bill would have been nearly impossible to enforce. How does a company prove it has eliminated an overseas job? Was Congress willing to fly Chuck Schumer assistants to Bangalore to oversee the firing of call assistants? Just absurd.

Well, sure enough, we're two weeks from election day and the DCCC is running ad after ad slamming Republicans for their reasonable vote. The Democrats will almost certainly be smoked for more than 40 House seats, and politics being politics, I'll accept that parties say things they don't mean in the run-up to an election.

But what if this is more than a November issue? What if trade wars become The Issue in 2011, and the China bashing continues well into the new year?

Before we get into the wars, let's review the source of this aggression, much of which is aimed toward China. China is, without question, doing something quite tricky: running a huge trade surplus and buying up dollars to keep the price of the RMB low relative to the greenback. This makes China's exports cheap and popular, which helps China sell lots of products to the world and hold onto that huge trade surplus.

The upshot for the U.S. is that American products are relatively expensive compared to China and other countries that use similar currency manipulation tactics. With a stronger dollar, we buy more from the world and sell less to the world, meaning the net flow of dollars is away from our domestic economy. China-bashers are right about one thing: Less money here means fewer jobs at home and higher profits for overseas companies.

But what can we do? Realistically, our options are extraordinarily limited. We can hold hands with European trading partners and pressure China to let its currency appreciate. But that's soft diplomacy. We could label China a "currency manipulator," but alone, that term has little weight. We could sanction China, pass tariffs on Chinese goods and start a trade war. But why would we want to do that? We imported $300 billion worth of goods from China last year (at a favorable price, since the dollar is unnaturally strong against the RMB) and U.S. producers sold $70 billion to the Chinese. A trade shut-down would devastate the U.S. economy.

We'd like to increase exports to China and the rest of the world. We'd like China to wield more valuable money, which would enrich both Chinese families and international producers. An appreciating Chinese currency -- combined with gradually appreciating currencies throughout Asia -- would probably help us fulfill the president's goal of doubling exports.

But we need to be realistic about what we can and can't do to protect American jobs. We can revamp corporate income taxes to make it cheaper to do business in the United States. We can't close the wage gap between Americans and Chinese by tinkering with loopholes, walling off our most important trading partner, and pretending there are real benefits from instigating a Pacific trade war.

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