(What’s Left of) Our Economy: First Thoughts on the Fast Track Defeat

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2016 elections, David Schweikert, fast track, free trade agreements, Gerry Connolly, House of Representatives, infrastructure, John Boehner, Nancy Pelosi, TAA, TPA, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Washington Post, {What's Left of) Our Economy

Make no mistake about it: Even though supporters of the president’s trade agenda can still muster immense amounts of money and political power to reverse the results of yesterday’s House vote on fast track trade negotiating authority, the measure’s effective (and potentially final) rejection is a big milestone in American political and economic history.

The crucial vote yesterday – on a secondary issue regarding government aid for workers who lose their jobs via trade – was so lopsided (302-126) that literally dozens of Democratic and Republican Members of Congress would have to change their minds in the next few days to win it for the offshoring lobby. That’s not impossible, but defeat for these powerful forces, which include Big Business, Big Finance, and Big Media, isn’t unprecedented, either. President Bill Clinton was denied fast track authority twice, in 1997 and 1998 – and when nearly everyone (mistakenly, in my view) thought the economy was strong. In addition, Congress refused to renew fast track, which prevents it from amending proposed trade agreements, for President George W. Bush in 2007.

Nonetheless, if yesterday’s House action stands, U.S. trade policy, and a lot of American politics, will be brought to a cross-roads, since it will mark an end to Congress’ more recent record of approving trade deals reached by presidents (like the 2011 agreements with Colombia, Korea, and Panama), and supporting related trade policies (like enabling currency manipulation by China). So here are some preliminary reactions and thoughts on what just happened, What It All Means, and what it could portend.

>In politics, time is almost always on the side of forces trying to prevent something, and that’s much of what you need to know about why the fast track advocates want and need to hold a re-vote ASAP on the crucial Trade Adjustment Assistance (TAA) issue. Much of the rest has to do with the ongoing intensification of the 2016 presidential and Congressional cycle. Even trade supporters widely acknowledge that their positions are risky politically, and that therefore it’s best to approve trade deals or take similar actions as long before upcoming elections as possible. Both sides of the fast track debate know that the closer to November, 2016 a vote gets, the less likely it is to pass – or even come up. So if the bipartisan fast track champions can’t win next week, the proposal’s goose really does look cooked.

>Also interesting on timing: In 2011, when the economy was weaker, and job-creation much less impressive, those three aforementioned trade agreements passed by respectable margins. Yesterday, after four years of improvement (however slow), legislation to boost the chance of future deals failed. That upcoming election cycle might account for much of the explanation in two respects. First, there’s that overall political unpopularity of current trade policies. But the second concerns the dramatically differing positions of the president and Congressional Democrats. After all, he’s not running for re-election; most of them are. So not only are the latter freed of the pressure to support their White House incumbent as his reelection campaign approaches. His political future is no longer at risk at all.

>My happiness over the TAA vote was almost matched by my discouragement during the preceding floor debate. The economic case against new TPP-style trade agreements is overwhelming, as I’ve written in this previous post, and in articles like this and this. But fast track supporters just trotted out the same talking points debunked here. Not that I’m saying that it’s about me or my work. Instead, I’m worried that if current trade policies aren’t rejected for the strongest possible substantive reasons, the most valuable lessons might not be learned, and shifting political winds could blow policy right back on the wrong course.

>Indeed, House Democratic leader Nancy Pelosi nicely illustrated that point after her game-changing declaration of opposition to TAA renewal under these circumstances. Addressing her Republican colleagues in particular, Pelosi pointedly stated that fast track’s prospects would “greatly increase” if they helped her pass a highway bill. Not that America doesn’t urgently need major infrastructure repair and upgrades. But are they worth passage of the current fast track bill? Even if stronger Buy American requirements are added to it, not in my opinion – because fast track’s passage threatens further erosion of the nation’s industrial and technology base. If those capabilities keep getting hammered by offshoring-friendly trade policies, it will matter a lot less how efficiently Americans can move goods and services and data, communicate with each other, and utilize the internet.

>Speaking of the debate, let’s thank Republican House Speaker John Boehner of Ohio and his GOP colleague David Schweikert of Arizona for its two lowest points. Clearly playing to the strong, growing partisanship of his caucus, Boehner repeated a major talking point aimed at those Republicans reluctant to empower Mr. Obama to do much of anything. The fast track bill, he claimed was needed “to make darn sure that there’s less authority for the president…..”  Really?  Is that why this president asked for the measure? Because he relishes losing power to act independent of Congress’ wishes?

>But at least Boehner didn’t get into the political gutter like Schweikert. As he put it in his floor remarks, fast track opponents have been spreading so much blatant misinformation that Hitler’s chief propagandist, Joseph Goebbels, “would be proud of them.” Anyone agreeing with me that invoking Nazism in this or any other domestic political context is contemptible, please call Schweikert’s office Monday and demand that he apologize or resign.

>President Obama didn’t cover himself with glory, either. The president made the most personal possible plea for support from House Democrats yesterday morning, asking that they not reject “my trade agenda.” In other words, Mr. Obama ultimately believed that the fast track dispute was all about him. He also reportedly impugned the opponents’ motives, slamming their switch on TAA as a cynical legislative ploy. And this attitude on top of his arrogant, repeated dismissals of trade policy critics as know-nothings. Not surprisingly, many Democrats have shot back that the president himself needed to explain why he finally dropped his longtime reluctance to engage lawmakers directly in order to rescue a policy favored most ardently by many of his fiercest political opponents.

>Also unimpressive – the Washington Post’s editorial reaction to the fast track defeat. On top of being childishly petulant in their tone, dogmatically pro-offshoring Post editorial writers boneheadedly quoted Virginia Congressman Gerry Connolly, one of fast track’s few House Democratic supporters, to make their point that opponents were shrinking from “shaping America’s future.” As I’ve pointed out, Connolly represents Virginia suburbs of Washington, D.C. whose economies are dominated by direct and indirect (through contracting) federal spending. In other words, he’s as much of a paragon of capitalism and competition and free markets as the Kardashians are of discretion.

>We’ll have to wait till the work week begins to start getting foreign reactions to the fast track vote, and the other countries so far included in the TPP talks may hold off until its final fate is clear. But if fast track is indeed dead, we’re likely to see just how ludicrous one of the measure’s supporters’ main talking points has been. Fast track backers have always insisted that without passage, other countries wouldn’t negotiate seriously with Washington, since whatever they agreed to could be rejected by Congress. This is nonsense, I’ve argued, because the U.S. market is far and away the biggest prize of any trade negotiations America is involved in. Especially for export-led economies like those in Asia, walking away from the TPP for lack of fast track would amount to cutting off much more than their noses to spite their faces.

Tomorrow, let’s look at two more purely political implications of the fast track vote.

Im-Politic: A Trade Gimmick That’s (Finally!) Backfiring?

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AFL-CIO, Congress, Democrats, fast track, Im-Politic, Jobs, Obama, reeducation, Republicans, retraining, TAA, TPA, TPP, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Trans-Pacific Partnership, wages

As must be clear to anyone following the issue, the final twists and turns of the Congressional fight over President Obama’s fast track trade bill are so inane that they make the sausage-making process often compared to legislating look pretty. At this point, no one can know the final fate of the bill, which would among other provisions prevent Congress from amending any of the president’s new trade deals, like the Trans-Pacific Partnership (TPP). But one especially noteworthy feature of this climactic phase is how the chronically cynical use of a program called Trade Adjustment Assistance (TAA) is being hoisted on its own petard – and may actually sink the president’s trade agenda.

TAA aims at providing government-sponsored re-education and retraining for workers whose jobs are displaced for trade-related reasons. The first and most important thing to know about it is that it’s a proven failure. As made clear in numerous studies, the intended beneficiaries only rarely find new jobs that pay as well as the ones they’ve lost. Moreover, no one would should be surprised by this. As economist Ricardo Hausmann has once again reminded us, the evidence is clear that the best kind of job training is that provided by the private sector – on the job to start with.

The program is up for renewal, and Republicans generally oppose it because of their deeply held skepticism about government’s competence in any area outside national security and law enforcement. But many often vote for it for the same reason as some Democrats who tend to support trade agreements: They think it provides them with political cover for backing the trade policies that have wiped out these jobs and crushed their industries’ wage structures in the first place.

But despite the program’s proven ineffectiveness, many trade policy critics in Democratic and liberal ranks favor it as well for substantive reasons. Their rationale seems to follow “half a loaf” reasoning: TAA is far from perfect, but it’s better than nothing. And largely as a result, backers of offshoring-friendly trade deals have sometimes been able in effect to buy enough Democratic votes to secure their passage.

It’s clear that the White House and Congress’ Republican leadership were banking on this tactic this time out, too. But then something extraordinary happened. To simplify just a bit, very late in the game, large numbers of Democratic trade critics seem to have decided not to be played any more. Even the AFL-CIO, which has always supported TAA as strongly as it has opposed flawed trade agreements, has now evidently decided that it’s much more important to save large numbers of jobs by defeating trade policies that have destroyed them than to help an at-best-tiny number of workers with TAA. (Its stated rationale, to be sure, concerns allegedly inadequate funding levels and other specific shortcomings.)  And because of possibly too-clever-by-half tactical decisions by House Republican leaders, the scheduled sequence of votes today could enable the trade critics to kill the fast track bill with an anti-TAA vote.

In fact, fast track’s advocates have become so desperate that they’re now making the logically absurd argument that if fast track is defeated, TAA will go down as well. In other words, if you scuttle the trade policies responsible for job destruction, programs that respond with a few flimsy band-aids for wounded labor markets will come to an end. As my father would have asked, “Is that a threat or a promise?”

Defeating fast track won’t swiftly cure all the trade woes ailing American workers. It doesn’t even guarantee defeating the TPP. But fast track’s demise certainly makes that outcome much more likely, and therefore at least reduces the odds of Washington doing further harm. These stakes explain why the offshoring lobby and its White House and Congressional supporters are tying common sense – not to mention themselves – up in knots. Therefore they explain why it would be so delicious, as well as economically encouraging, to see the fast track supporters fail. But however this trade saga ends, it’s great to see so many trade policy critics finally realize that threadbare handouts can’t possibly compensate for destructive trade policies.     

 

(What’s Left of) Our Economy: The Senate’s Messy but Historic Anti-Fast Track Vote

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2016 elections, Africa, AGOA, currency manipulation, fast track, Harry Reid, Jeff Sessions, Mitch McConnell, Obama, Orrin Hatch, Ron Wyden, Senate, TAA, TPA, TPP, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Trans-Pacific Partnership, {What's Left of) Our Economy

So far, the Senate’s vote this afternoon to block debate on granting fast track trade negotiating authority to President Obama stands out mainly for two somewhat contradictory but equally valid reasons.

First, just one look at the actual roll call is enough to remind that even lawmakers’ decisions on the highest profile, emotionally charged issues can be an incredibly nuanced mix of substantive and procedural considerations. For example, Majority Leader Mitch McConnell of Kentucky, who has helped lead the charge to grant the president a virtual blank check for concluding new trade agreements, voted against proceeding, even though the triumph of the Nays puts fast track’s future in major jeopardy. The reasons reportedly were tactical, related to Senate procedures. Alabama’s Jeff Sessions, one of the few Republicans on Capitol Hill understanding the need for fundamentally new approaches to both trade and immigration policy, is recorded as voting for the measure. Unless that’s a typo, I’m dying to find out why.

Then there’s Ron Wyden, Democrat of Oregon and ranking minority member of the Finance Committee – which takes the lead on trade issues in the Senate. Wyden brokered a fast track compromise with Republican Finance Chairman Orrin Hatch of Utah that resulted in a bill strongly opposed by most Democrats in both Houses of Congress. Yet Wyden cast a ballot against starting a fast track debate on the Senate floor – avowedly because McConnell and other Republican leaders refused to guarantee strongly enough that related trade measures would be voted on as well. So did several other Senate Democrats who normally support standard trade deals.

Even stranger, these related bills are at best a mixed bag when it comes to affecting trade policy, trade flows and, most important, the U.S. economy’s growth and hiring performance – which could certainly use a helping hand. For example, one is a measure that would fund so-called Trade Adjustment Assistance (TAA) for workers who lose their jobs because of import competition or trade-related offshoring. These retraining and reeducation programs are widely viewed as chronic failures by those who have studied their results. Their continued popularity in Washington reflects their ability to enable trade deal supporters to claim genuine concern for Americans whose livelihoods they repeatedly vote to devastate. In other words, TAA support historically has provided a measure political cover for trade liberalization votes. But this year so far it’s throwing a major major monkey wrench into the president’s trade agenda.

Another trade-related demand made by fast track opponents is legislative movement on extending a free trade deal with sub-Saharan Africa. Although this arrangement’s impacts on the U.S. economy are modest, it’s involved a sacrifice of American jobs, mainly in the apparel industry, for African jobs. Even those believing that this tradeoff makes sense for U.S. interests should be troubled by how the African deal has become a back door for shipping Chinese-made garments, and clothing made from Chinese, not U.S.-manufactured fabric, into the American market.

At the same time, despite the byzantine array of motives on display, this Senate vote was a genuine milestone. For whatever their narrower and even cynical concerns, Senators who opposed launching the fast track debate had to know that any delay could well doom the measure, and with it any hopes for new trade agreements for the foreseeable future. The reason? The longer these decisions take, the deeper they get pushed into the already unfolding 2016 presidential cycle, when few politicians relish running as champions of current U.S. trade strategies.

Indeed, for all the White House efforts to dismiss today’s events as an “procedural snafu,” this anti-fast track vote represents the first time in decades that the Senate has rejected a major trade policy measure that didn’t require approval in the House as well. (In 2011, the Senate passed a stringent anti-currency manipulation bill, but many of the Yes voters no doubt knew that the measure was going nowhere in the House.)

As a result, Mr. Obama’s trade agenda, including his proposed Pacific Rim trade deal, is by no means dead. Indeed, Senate Minority Leader Harry Reid of Nevada, till now a bulwark of opposition to fast track and that Trans-Pacific Partnership (TPP) agreement reportedly is already trying to figure out how to save the president from complete humiliation. But given the Senate’s usually friendly disposition to standard trade liberalization policies, and given how its reservations may further stiffen the spine of the traditionally balkier House, there can be no doubt that U.S. trade policy history was made today. And given the current strategy’s record of slowing both economic growth and job creation, it’s history that even the most ambivalent, even Machiavellian fast track opponents can be proud to have made.