McMahon consultant has link to Beijing

Republican Linda McMahon's chief adviser on economic policy is a renowned expert on China and trade policy, a veteran of the supply-side tax-cutting policies of the Ronald Reagan and George W. Bush presidencies, and a frequent commentator on Fox Business Network.

John Rutledge is also the only adviser to any candidate in the U.S. Senate race who has boasted about attending a birthday party for North Korean leader Kim Jong-Il.

McMahon's campaign has paid Rutledge $100,000 so far this year for "policy consulting," according to the campaign's filings with the Federal Election Commission.

Rutledge describes himself on his website as one of the "principal architects" of Reagan's economic policies in 1980 and 1981. Rutledge also runs the private equity firm Rutledge Capital, with $150 million in investment in manufacturing and service companies, according to his website.

Trade issue

Rutledge did not respond to a request for comment about his economic views and his advice to McMahon, but he has been an outspoken figure on key economic matters, including one that has already arisen in the Senate campaign: international trade and the controversy over China's currency valuation.

Democrat Richard Blumenthal, McMahon's rival for the Senate, has said he believes China is manipulating its currency, keeping the value artificially low and thereby hurting American exporters and manufacturers.

Blumenthal repeated that stance at a recent campaign appearance with Sen. Charles Schumer, D-N.Y., who has led efforts in Congress to combat what both men characterize as China's violation of world trade practices.

McMahon has made few if any public comments on Chinese currency valuation, but Rutledge, who serves as chief adviser for finance and investment to the governor of the Haidian District in Beijing, has defended the Chinese government's policies.

Speaking on CNBC in 2006, when the Bush administration wanted the Chinese to allow the value of its currency to float, Rutledge called that "a terrible idea."

"That's reason for political turmoil in China," Rutledge said, according to a transcript. "China has the best economic performance in the world both on inflation and growth in the last 10 years. And it's because they have pegged their currency to the dollar. That's not manipulating. Most countries in the world over most of history have had a fixed exchange rate. It's a way of outsourcing your inflation rate to the Federal Reserve which is in their interest.

"And, remember," he added, "just before the 1989 Tiananmen Square riots, there was an inflation problem in China. That's what got them scared. That's why they're so fixed on the fixed exchange rate."

The Blumenthal campaign lashed out Friday at Rutledge's views on China.

"Linda McMahon and the government of China have the same economic adviser at a time when China is manipulating its currency and pursuing economic policies that undercut Connecticut and American businesses and jobs," Blumenthal campaign manager Mindy Myers said in a statement. "Once again, the people of Connecticut have proof that they can't count on Linda McMahon to put their interests ahead of her own."

A McMahon spokesman did not respond Friday to a request for comment on Rutledge and China trade policy.

McMahon's website includes a call to increase U.S. exports by immediately enacting proposed free trade pacts with Columbia, Panama and South Korea, but makes no mention of China or its currency value. McMahon's economic plan was produced "in consultation with" Rutledge, the website says.

Rutledge also has worked in North Korea, traveling there in 2009 for a meeting with Kim Jong-Il, at which he later said he had discussed the desire in the east for an Asian currency, perhaps one modeled on the Euro.

"I'm traveling tomorrow ... to the birthday party for Kim Jong-Il in North Korea," Rutledge said in an appearance on Fox Business Happy Hour in February 2009.

His host and fellow guests kidded Rutledge about whether he'd be meeting Kim himself, or a body double.

"The real one or the fake one?" one asked.

"That's the question: who is running what over there right now?" Rutledge replied. "But I hope to find that out next week. I will have some time with (Kim) and his number two on Tuesday and then visit schools. I'm going to do some work in some grade schools and so I'll be back here next - end of next week and we'll talk about it then, if I get to come back."

Rutledge did return, and spoke about his visit to the dictatorship on another visit to the Fox Business network in April of 2009, drawing an incredulous reaction from host Neil Cavuto.

"Really?" Cavuto asked repeatedly, after Rutledge said he had just been to North Korea, which at the time was preparing for its eventual test of a nuclear weapon.

That display of power, Rutledge said, was coming over the objections of China, but was "all a matter of face. It's a matter of remaining in power."

"They think that a big currency in that part of the world might not be a bad idea," Rutledge said of China and its neighboring nations, but added that he did not believe the countries had the "cohesiveness" necessary to form a regional currency modeled after the Euro.