Thursday, May 26, 2011

Politix Can Make You Stoopid

It's often said that "politics makes strange bedfellows," but after yesterday's Senate Finance Committee hearing on the US-Panama FTA, I think you could safely add that it makes otherwise-smart people sound really, really dumb.  National Journal (no link - sorry) provides the latest proof:
A top administration trade official testifying Wednesday on Capitol Hill was short on specifics about how many American jobs, if any, could be lost because of a free-trade agreement with Panama.

Appearing before the Senate Finance Committee, Ambassador Miriam Sapiro, deputy U.S. Trade Representative for Europe, the Middle East, and the Americas, demurred on the question of which jobs would be lost and from what part of the economy they would come if the pact is ratified. The discussion was dominated by the Obama administration's renewed push to extend Trade Adjustment Assistance programs to help such workers.

Pressed on the jobs question repeatedly by Sen. Orrin Hatch, R-Utah, Sapiro became visibly frustrated.

“I don’t have an estimate for Panama,” she said, before adding that TAA is a “core value.”

Hatch pointed out that the Panama agreement, combined with pending Colombia and South Korea pacts, would bring an estimated $13 billion in business to the United States.

“Everything I’ve looked at says we can create jobs if we do these three trade agreements,” Hatch said. “What is there about this free-trade agreement that is going to cost any jobs?”

The federal Trade Adjustment Assistance program helps U.S. workers who have lost their jobs as a result of foreign trade through initiatives like job training and relocation allowances. The administration has tied renewal of the program to the three pending trade agreements going forward.

Sapiro told lawmakers that “a robust renewal of Trade Adjustment Assistance is so vital” and noted that the Obama administration “fully want[s] to see TAA restored in a manner that benefits those” workers displaced by trade.
So to recap: the Obama administration is loudly demanding that FTAs with Panama, Colombia and South Korea proceed through Congress with TAA - a program which is specifically designed to help American workers harmed (allegedly) by international trade. The White House thus has expressly and proactively linked the pending trade agreements to a policy that mitigates their (again, alleged) harms, but when asked to simply quantify these harms, the White House's spokesperson (DUSTR Sapiro) instantly sounds like a babbling doofus.


And look, it's not like Hatch is playing politics here (well, at least not entirely).  The inherent contradictions of the White House's TAA-FTA stance couldn't be more obvious to anyone paying the least bit of attention, regardless of his or her politics.  Folks who support free trade instantly noticed; for example, the editors at Investors' Business Daily stated:
Three days ago, U.S. Trade Rep. Ron Kirk in testimony before Congress described free trade as a job-creating machine. 'Continued growth in agricultural exports depends on accessing new markets for America's farmers and ranchers and ensuring their continued access to existing markets,' he told the House Agriculture Committee. Now, suddenly, it's a job killer.
Not to be outdone, the anti-trade left also cried foul (albeit for unsurprisingly different reasons):
While White House officials are claiming that a trio of pending trade pacts will result in job creation, they have tacitly revealed that they know the opposite to be true by the actions they have taken in recent days.

The fact that the president is demanding the extension of Trade Adjustment Assistance before sending bilateral free trade agreements with Colombia, Panama and South Korea to congress is a pretty good indicator that he’s aware of the consequences, according to David Sirota, writing at

“The administration is simultaneously selling the trade deals as engines of job growth while admitting that the deals will likely kill so many American jobs that Congress must preemptively cough up money to clean up the corresponding economic wreckage,” he writes.
Awesome.  So if both pro- and anti-trade groups immediately noticed the absurdity of the White House's FTA/TAA demands, you'd think that USTR would have some sort of canned response all ready to go when someone like Sen. Hatch dared to ask the blatantly obvious, right?

Then again, I guess Sapiro had no choice but to dodge because she couldn't just respond with the truth, like: "Well, Senator, we don't have those numbers because, quite frankly, our TAA demand has nothing to do with these economically beneficial FTAs and instead is simply a political payout to one of our favorite and most powerful supporters, as well as a shrewd way to split the GOP and get congressional Republicans on the record as supporting a big chunk of the Stimulus*.  Sorry."

(Although that would've been awesome.)

And, hey, it's certainly not like Sapiro's the first smart White House official to magically lose a few dozen IQ points when confronted with the obviously problematic results of her boss' cynical political decisions.  Indeed, former CEA Chair Christina Romer became kinda infamous for her valiant-yet-futile attempts in 2009 and 2010 to defend her boss' ridiculous claims about the mythical job-creating effects of the Stimulus* (see, e.g., this hilarious video).  So Sapiro's certainly in good and plentiful company.

Of course, she and her bosses could've avoided this silly dance (and the continued delay of GDP-expanding FTAs that were completed and signed about 4 years ago) if they had just put politics aside for a split second, followed their own advice about these trade agreements and free trade more broadly, and submitted the FTAs to a Congress that had already indicated an overwhelming desire to approve them as soon as possible.  But that would have meant, you know, expending an iota of political capital to confront US labor unions and the ever-expanding protectionist wing of the President's own party.

And I guess anyone who expected this White House to actually do that is the real doofus, eh?

(h/t Andy Roth)


Joe S. said...

I don't see this as necessarily contradictory. The FTAs will expand GDP and create jobs overall. However, there will be job losses in certain sectors. We want TAA in order to assist those who have lost jobs to transition to sectors with more demand. What part of that is absurd?

Scott Lincicome said...

Hi Joe,

Well, the economic absurdity of treating one set of displaced workers differently from all other displaced workers is pretty obvious (see, e.g., here:

But here are the political problems:

1) TAA already is in effect for FTAs, so the White House's surprise demands have nothing to do the Panama FTA. (Expanded TAA - what was implemented in the Stimulus* and is now being debated - deals with non-FTA partners like India and China).

2) TAA has always been a "sweetener" to get hesitant politicians on board with passing FTAs or other trade-liberalizing legislation; now, this "grand bargain" has been turned on its head - the FTAs are being used to get Expanded TAA. The votes for the FTAs are already there - thus the TAA "sweetener" is totally unnecessary.

3) Because the votes are already there, the White House demands are nothing more than extortion - telling FTA supporters in Congress that their FTAs ain't going nowhere unless they approve billions in dubious - and non-FTA-related - TAA spending.

4) And the White House is already on record as saying how great these FTAs are. They WANT these FTAs implemented, yet they're now holding them hostage to unrelated, costly TAA legislation (that blames trade for job losses). It's like the classic scene in blazing saddles - putting a gun to your own head in order negotiate your escape from the angry townspeople.

It was absurd (and hilarious) in the movie, and it's absurd (and not funny at all) in real life.

Joe S. said...

Thanks for the response. Now I have a few links to go over with my coffee. It is frustrating when politics befouls sound economic decisions.

As a future customs/int'l trade lawyer, I enjoy following your blog. Keep up the good work.