Jobs and Trade Pacts Stifled by Petty Politics
Policy + Politics

Jobs and Trade Pacts Stifled by Petty Politics

How is it possible that we are still waiting…and waiting…for enactment of our trade agreements with South Korea, Colombia and Panama? These pacts, which have been in limbo for years, have been revised and rejiggered to the point where they absolutely benefit the United States, and will unquestionably produce jobs.  Is President Obama, who has embraced higher exports and these agreements in particular, so hapless that he cannot even secure passage of treaties that are popular with both parties? Are Republicans so mired in partisan combat that they cannot work for the good of the country?

No wonder the country’s spirits are depressed! If there were no other issues pressing on our national self confidence, this indifference to our nation’s jobless would wring the bounce out of Pollyanna herself. Will these trade pacts put 16 million Americans back to work? No, but they will provide work for some, and that, today, is our country’s scarcest commodity.

The latest hold-up to passage of the trade agreements is that the White House will not submit them to Congress without that body agreeing to fund Trade Adjustment Assistance (TAA).  This program has long been organized labor’s quid pro quo for going along with expanded trade. Indeed, the effort was first conceived in 1962 and the program established in 1974 when the country’s workers were first waking up to the threat posed by fast-rising imports. As with nearly all well-meaning government programs, however, TAA has taken on a life of its own, and has moved well beyond its original mandate.

Are we outsourcing tax collection? Passport
renewals? The war in Afghanistan? (If only!) This is
a program run amok.

The GOP is specifically objecting to changes made in TAA that were incorporated in the American Recovery and Reinvestment Act of 2009, aka the Stimulus Bill. At that time, both eligibility for and the benefits from TAA were substantially expanded. Originally intended for those in manufacturing industries who lost their jobs to imports or to outsourcing allowed under trade pacts, the program now welcomes service employees and also government workers. Imagine…Uncle Sam employees who are laid off can claim that trade stole their work, and receive job training, job search and relocation financing, healthcare tax credits and extended unemployment benefits. How, one wonders, are government jobs being lost to trade? Are we outsourcing tax collection? Passport renewals? The war in Afghanistan? (If only!) This is a program run amok.

President Obama’s budget in 2009, the year that the changes were made, forecast additional spending of $116 million, and then $360 million in 2010.  Various estimates today of the bill’s add-ons (including healthcare tax credits) range as high as $1 billion. This year, TAA is expected to cost more than $2 billion. Because of a goof in the legislation, the expansions to the program that were contained in the Stimulus Bill lapsed in February. It is the resuscitation of the expanded program—and for some the entire TAA -- that is now in the crosshairs.

Interestingly, the Chamber of Commerce (and other trade groups like the Computing Technology Industry Association) supports funding the bigger, better TAA. Certainly business groups are keen to see the trade treaties pass and are willing to barter with taxpayer dollars. Also, industry’s endorsement of TAA may reflect the country’s need for highly trained workers – a challenge that led private companies and organizations to spend over $130 billion, or $1,068 per worker on training and development in 2008, according to the American Society for Training & Development.

Government help with that objective is welcome. At the same time, the Chamber recommends that “Federal training programs offered to displaced workers under TAA should not be conditioned on trade being identified as the cause of job loss.” 

Should workers disadvantaged by trade receive
“more generous benefits than the Krispy Kreme
worker who gets hit by the Atkins Diet craze or the
Blockbuster employee who loses out to Netflix?"

Studies at the conservative Heritage Institute indicate that the job training provided by TAA does little to help workers relocate. Also, senior labor analyst James Sherk questions why workers disadvantaged by trade should receive “more generous benefits than the Krispy Kreme worker who gets hit by the Atkins Diet craze or the Blockbuster employee who loses out to Netflix?” He argues that Bureau of Labor stats on mass layoffs show that only about 1% of job losses stem from trade; innovation and competition certainly play a larger role. 

Surely, given the opportunity for job creation afforded by the trade treaties now in limbo, Congress will figure out a compromise on this issue. Taking TAA back to its pre-Stimulus level would certainly be one approach. Cutting federal spending is essential, but moving ahead with exports is crucial as well. The South Korea agreement – the largest considered by the U.S. since NAFTA – is especially key. The EU-South Korea agreement passed late last year will become effective in July. At the moment, it appears that our European competitors will get the jump on us – possibly gaining access to significant business deals as a result. And, costing us jobs. This is a shame.

Related Links: 
Free Trade vs. Protectionism: Why History Matters (TFT)
Immelt to Head New Advisory Board on Job Creation (TFT)
Colombian Trade Deal: A Bipartisan Boon for Obama (TFT)