Thursday, June 18, 2015

"The Trade Bill & Governing"

                     Sydney M. Williams

Thought of the Day
“The Trade Bill & Governing”
June 18, 2015

Perfection is not found in economics and governing. Reality interferes. The Trans-Pacific Partnership (TPP) is a case in point. The President and Congress may still find a way to pass this important piece of legislation (they have until July 30), but on Friday they failed – a set-back for President Obama. The House did, narrowly, pass the Trade Promotion Authority (TPA), commonly known as “fast-track” trade authorization, 219-211, but failed to pass a related and linked bill, Trade Adjustment Assistance (TAA) that would have extended a decades-old training and income-support program for workers dislocated because of trade. Because the two bills were linked, both were aborted. TPA must precede passage of TPP. Other nations will not provide concessions, if they believe Congress can re-write the Treaty.

The failure of TAA, historically a union-supported bill, reflects how far left the Democratic Party has moved. Private sector unions, which have been in decline for sixty years and which have seen an increase in right-to-work states, are fighting a rear-guard action. In doing so, they have turned inward. Union leaders see TAA as inadequate. Global trade, from their perspective, is an accelerant poured on declining membership rolls. Union leaders pressured Democrats whose campaigns they had financed to vote against the bill.

The importance of TPP should not be underestimated. In increasing trade, it would help the economy. It would lower tariffs, set rules for settling trading disputes and patents. It would protect intellectual property. The Partnership involves twelve countries that ring the Pacific Ocean. It includes Canada, the U.S., Mexico Chile and Peru in the Western Hemisphere, Australia and New Zealand in the South Pacific; and, in Asia, Japan, Brunei Darussalam, Malaysia, Singapore and Vietnam. (In time, the Partnership could and should expand to include other countries, like China, the Philippines, Indonesia, Colombia, Ecuador and Central America.) The founding dozen countries account for 40% of global GDP, and the United States would play the pivotal role. Were the U.S. to drop out, China would step in. Holding TPP hostage to union demands risks losing this opportunity. The best medicine for current economic blahs is economic growth. TPP would give it a boost.

Barack Obama’s problem reflects his personality. While he has kowtowed to labor – among the most frequent White House visitors have been SEIU president Mary Kay Henry, along with her predecessor Andy Stern, and Richard Trumka, president of the AFL-CIO – his supercilious treatment of people prevents him from getting close, including Mr. Trumka whose backing was integral to the passage of TAA. Apart from showing up for a few photo-ops at the 54th annual Congressional softball game on Thursday evening at Nationals Park, Mr. Obama did not make a personal visit to Congress regarding this vote until the day it was held. Nancy Pelosi stands accused of abandoning her President, which she did, but the fault lies with Mr. Obama who has always distained the personal-relations aspect to governing.

Global trade, despite labor’s claims, is not a zero-sum game. In the long-term, trade lifts living standards for all people. It is a real-life manifestation of David Ricardo’s principle of “comparative advantage.” Production is done where it is most efficient and expedient, lowering costs for consumers everywhere. Unfortunately, in the short term Joseph Schumpeter’s precept of “creative destruction” also applies, as trade dislocates some domestic workers during the transition. But life does not stand still. Change, like death and taxes, is a constant. Good leaders keep their eye on the long term, while trying to limit short-term damage. TPP would provide long-term benefits, while TAA was designed to address the short-term concerns of affected workers. By voting no, Mrs. Pelosi sacrificed the long-term welfare of all of her constituents for the short-term demands of a few union leaders. Following Nancy Pelosi’s lead, Hillary Clinton displayed her inner Bernie Sanders by taking refuge within the folds of Mrs. Pelosi’s skirts. She let politics trump what is in the long-term best interest of America’s poor and middle classes.

In one sense, the failure of TAA is indicative of a constituency that has attention deficit disorder. Individuals don’t take the time to listen to reasoned debate. They rely on Twitter for news. Most TV news programs use sound-bites. An “in-depth” analysis is concluded in five or ten minutes. People read what supports pre-determined opinions. But the failure to pass TAA also suggests politicians are incapable of explaining, in simple terms, complex issues.

While Mr. Obama has been the most liberal and progressive President the country has ever known, he is aloof. He comes across as uninterested in the opinions of others, especially with those who disagree with him. Individuals who don’t need the help of others are often abandoned when they, in turn, seek help. Mr. Obama has made wide use of executive orders and strengthened agencies, like the EPA, that report directly to him. Apart from his first two years, when both Houses in Congress were controlled by Democrats, Mr. Obama has shown little interest in working with the Legislative branch. Congress, to his thinking (or so it seems), is an inconvenient nuisance. The same is true for his views on the Supreme Court, as have been seen in his dismissive comments.

When Mr. Obama finally made his belated trip to Congress last Friday, he arrogantly demanded: “A vote against trade is a vote against me.” Democrats, including Nancy Pelosi, listened politely and then voted against him. So-called progressives – so-called because what they are doing is the opposite of progressive – are circulating petitions asking people to block TPP. Even the easily-forgotten Martin O’Malley is into the act.

None of those who support the trade bill have given up. Republicans have proposed separating TPA and TAA, voting on the latter first. The President will lobby as best he can. The secret to governing is not finding the perfect balance. It is to find compromise, so that, in this case, an in-coming tide will lift all boats, perhaps not in unison, but over time. Giving Mr. Obama fast track authority so that he can complete TPP is a good thing. I recognize the risk associated with his less than stellar history of negotiating in the international arena. Nevertheless, this is a battle I hope he wins. The economy needs it. It is ironic, however, that he now needs those he dismissed a little more than six years ago, for example when he silenced Paul Ryan with the words, “I won.” Elephants have long memories, but that was one insult that is best forgotten…at least for now.


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