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Wednesday, March 19, 2008

There's No Such Thing as a Free Trade?

Andrew Leonard notes the administration's unwillingness to share the benefits of trade with the losers:

"Free" trade has a price, President Bush, by Andrew Leonard: On Tuesday, President Bush stumped for free trade in Jacksonville, Fla. Compared to at least one other speech delivered the same day, it would be stretching to call his address newsworthy. He picked a port town that benefits from trade to deliver a well-worn message: trade is good for America.

This is not an argument that How the World Work disagrees with, fundamentally. But "trade," in general, is a quite different beast from bilateral free trade agreements designed to gain market access for highly-capitalized special interests, such as the pharmaceutical industry. And that's what Bush was really stumping for: The President wants the Senate to get moving on three FTAs currently awaiting ratification: deals with Colombia, Panama, and South Korea. You might imagine that during a week in which the deepest financial crisis to threaten the U.S. economy in many years reached a fever pitch, Bush would find other matters to occupy his attention, but no: in Jacksonville, Bush's big lament was how unfair it was that "many U.S. exports going to Colombia face heavy tariffs."

Unhappily for the President, the Senate is evincing very little interest in ratifying the Colombian FTA. Sen. Max Baucus, D-Mt., chairman of the Senate Finance Committee, has his own priorities. He wants the government's Trade Adjustment Assistance (TAA) program beefed up before he is willing to even consider a vote on the Colombian FTA. ...

The Trade Adjustment Assistance program is designed to compensate manufacturing sector workers who are displaced by trade. It includes financial support for education and training, a health care credit, wage insurance and other goodies. But its scope is limited, not just to the manufacturing sector, but also to trade that takes place with countries with whom the U.S. already has signed free trade agreements.

TAA, theoretically, has bipartisan support. In Jacksonville, the President made a gesture towards it:

Now, you're going to hear the word trade adjustment assistance talked about in Congress.... That basically says that we're going to have education programs aimed at helping people find skills... And I'm a supporter, and I believe it's important that trade adjustment be a component of our trade policy. I look forward to working with Congress to reform it and to reauthorize it, to make sure it does the job that it can -- is supposed to do. Just like I'm looking forward to signing those trade bills, particularly starting with the one from Colombia.

A supporter? In October, when the House of Representatives passed a revamped and expanded TAA, the White House immediately announced that the President would veto the bill if it was presented to him. The House bill would have, among other things, doubled funding, extended coverage to service sector workers, included trade with non-FTA countries, and significantly boosted the health care credit. The White House opposes all of those elements. When George Bush says he is looking forward to a "reformed and reauthorized" TAA what he really means is a bill without teeth.

Thus, the deadlock in the Senate -- a classic case of horse-trading in action. Sen. Baucus has made his position clear -- no new FTAs without a bigger safety net.

A very good argument can be made that the existing Trade Adjustment Assistance program isn't the best way to take care of American workers who have been adversely affected by globalization. It is expensive to administer, covers a relatively small number of workers, and requires a lot of governmental judgment calls -- were those Ohio workers laid off because of competition with China, or because technological productivity enhancements made their jobs obsolete, or because their employer mismanaged the business? Does it make sense to try to shoehorn a health care credit for unemployed workers into a program that covers only a fraction of Americans, instead of a comprehensive national health care plan that would cover all Americans, and make a real difference in a world of global competition? These are questions that policy wonks can get righteously agitated about for weeks on end.

But such policy parsing is not relevant to the political fight now taking place in the Senate -- a struggle that once again demonstrates how utterly tone-deaf the Bush administration is to the concerns of working class Americans in the early 21st century. Preaching the benefits of free trade without being willing to take care of the "losers" created by trade isn't very bright in an election year when workers are feeling squeezed, and the opposition party controls Congress. And pretending to support trade adjustment assistance when in actuality you are opposed to meaningful trade adjustment assistance is just shameless.

When the administration says it will veto proposed enhancements to TAA, it's telling that they don't suggest amendments that would be acceptable or come up with their own counterproposal - perhaps through a different program - that will provide relief to those displaced by trade. It seems to me that an administration that truly cared about the working class would be eager to find a way to help those who are hurt from trade, that they would make it a high priority and insist it get done, but there's little indication - through actual action - that helping workers hurt from trade, or from economic conditions more generally, is a priority (remember how they insisted that business tax breaks come with an increase in the minimum wage -- no lack of willingness to play hardball for business, why not play as hard on worker's behalf?).

On a similar note, I think a lot of people are missing the point about John McCain's lack of knowledge about economics. The main point is not that he doesn't understand it, though that that is certainly a red flag - will he even know who to trust for advice? But the fact that, by all indications, he never took the time to try to learn anything about it, that's what's troubling. Anyone who really cared about economic policy and its effect on households would have taken the time to become familiar with the basics. How will he know how best to help workers if he has no idea about the underlying economics? If he asked, there are very prominent economists who would be happy to spend an hour once or twice a week - kind of like a principles course - explaining how the economy operates. But he never bothered, never took the time, because he apparently doesn't care enough to give up the time necessary to actually understand the polices he is voting on. I wouldn't mind the ignorance so much if there was any indication at all that he had tried to over come it, any indication he thought it was important enough to learn about, but there isn't. I think it's pretty clear that if you care about helping those who are hurt from trade, or care about economic issues more generally, the Republican party is the wrong place to be.

    Posted by on Wednesday, March 19, 2008 at 10:46 AM in Economics, International Trade, Politics | Permalink  TrackBack (1)  Comments (27)


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