Archive for the ‘Trade and Immigration’ Category
Trade Agreements Promote U.S. Manufacturing Exports
Do trade agreements promote trade? The answer appears to be yes. In a new Cato Free Trade Bulletin released today, I examine the record of trade agreements the United States has signed with 14 other nations during the past decade.
The impact of those agreements on U.S. trade is a timely subject because Congress may soon consider pending free-trade agreements (FTAs) with South Korea, Colombia, and Panama. Opponents of such deals often argue that they open the U.S. economy to unfair competition from low-wage countries, displacing U.S. manufacturing. Advocates argue the agreements do open the U.S. market further to imports, but they open markets abroad even wider for U.S. exports.
Based on actual post-agreement trade flows, I found that both total imports and exports with the 14 countries grew faster than overall U.S. trade since each agreement went into effect. For politicians obsessed with manufacturing exports, the study should be especially encouraging. Here is a key finding:
Politically sensitive manufacturing trade with the 14 FTA partners has expanded more rapidly than overall U.S. manufacturing trade, especially on the export side. U.S. manufacturing exports to the recent FTA partners were 10.5 percent higher in 2010 compared to our overall export growth since each agreement was signed. That represents an additional $8 billion in manufacturing exports.
I’ll be discussing the three pending trade agreements alongside William Lane of Caterpillar Inc. at a Cato Hill Briefing on Wednesday of this week. Along with the new study on the past FTAs, I’ll be talking about our recent studies on the Columbia and Korea agreements.
“Made in …” Where, Exactly?
Whenever you shop for clothes or furniture or any other consumer item, you can always find the “Made in Such a Place” label. It’s actually a requirement of U.S. law. Vital consumer information, of course. How can we make an intelligent choice on what suit or computer or grapes to buy if we don’t know where they were made or grown?
Quite easily, as a matter of fact. Consumers in the otherwise more regulated European Union do it all the time. Unlike the United States, the EU has no requirement that goods contain a label of where they were made. According to a story in today’s Wall Street Journal,
It is odd that the heavily regulated EU doesn’t already have country-of-origin labeling. Similar tags are mandated around the world, including in Japan and China, as a way to help domestic producers compete against foreign manufacturers. The U.S. has had origin labeling since the 1930s. Roughly a quarter of consumers make choices based on where a product was made, according to EU surveys.
The EU is currently reconsidering imposing such labels, prompted by domestic textile firms and other producers looking for an edge over their foreign rivals. Country of origin labels allow them to play on anti-import biases even though imported products, in the EU as in the United States, must meet all domestic safety and quality requirements.
Country of origin labeling raises costs to consumers—up to $3 per item, according to an EU study cited in the story. The Swedish furniture company IKEA must employ 70 people just to handle all international labeling requirements, a cost of doing business that can only drive up final prices for consumers.
Those requirements also raise perplexing questions of determining just where an item was actually made. As my Cato colleague Dan Ikenson has examined in a paper entitled, “Made on Earth,” the growing complexity of global supply chains means that a single imported product can in fact be “made” in lots of different countries.
If companies want to voluntarily tell consumers where their products are made, including all component parts, they are always free to do so, but the government should not force them to include information that is increasingly irrelevant in our more complex and interconnected world.
Whitewashing the Auto Bailouts
With his appearance at a Toledo factory today, President Obama seems to want to make the auto bailout a campaign issue. Let’s welcome that. Americans should understand what transpired.
Fancying himself “Savior of the Auto Industry,” the president deserves credit only for choosing to insulate two companies (and the UAW) from the consequences of their decisions. But with that credit he must accept responsibility for sluggish U.S. business investment, limited job creation, and the anemic economic recovery, which is due in no small measure to the regime uncertainty that descends from his intervention in the auto industry.
The administration suggests that the entire cost of the auto bailout is captured by the outlays that haven’t or won’t be returned. Despite much smaller claims from the administration, that figure will be about $5.5 billion in Chrysler’s case (the administration is overlooking $4 billion written off when New Chrysler emerged from bankruptcy) and somewhere from $7 to $15 billion in GM’s case (depending on average share price for 500 million shares). Should that loss have to be reported to the FEC on a dollar-per-auto-worker-vote basis?
But the costs are much greater than these outlays.
The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help Chrysler and GM. On the contrary, the most compelling objections were over concerns that the government would do just that. It is the consequences of that intervention — the undermining of the rule of law, the confiscations, the politically driven decisions, and the distortion of market signals — that animated the most serious objections. Ford never publicly objected to the interventions to rescue its rivals. Do you think Ford may feel entitled to a future bailout if needed, having foregone the recent one? Does Ford think it has a pretty good insurance policy if it takes excessive risks that go awry? This is a cost that’s tough to measure, but an important cost nonetheless.
Any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt as a result; the costs of denying the other, more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at Chrysler and GM); the costs of rewarding irresponsible actors (like the UAW) by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad; and the corrosive impact on America’s institutions of the illegal diversion of TARP funds to achieve politically desirable outcomes.
Let’s make the auto bailout a campaign issue and see if we can’t reconcile all of its costs.
The Flawed Logic of Trade Adjustment Assistance
A recently posted article from Reuters contains quotes that are worth sharing, because they perfectly encapsulate what I think is the flawed logic behind trade adjustment assistance, the program that extends enhanced benefits to workers who lose their jobs because of import competition. There are many reasons to oppose this program, as I have outlined before. And the fact the Obama administration is choosing to hold trade agreements hostage unless a stimulus-enhanced version of TAA is renewed is a strong indication that the grand bargain of trade policy — special benefits in exchance for trade liberalization — has broken down.
But one of the most important reasons to oppose TAA is that its very existence implies that “damage” is done when trade is liberalized:
“In large part, workers who lose jobs because of trade do so because of a policy decision by government. The government decided to allow imports, the government decided to allow a liberal investment policy,” [lobbyist Greg] Mastel said.
“I happen to agree with those policies, but you can’t deny they sometimes disadvantage groups of workers,” he said.
Howard Rosen, a visiting fellow at the Peterson Institute for International Economics and executive director of the TAA Coalition, argued the roughly $1 billion annual cost for the program is tiny compared to large benefits the U.S. economy gets each year from trade liberalization.
Workers displaced by foreign competition have a harder time adjusting than other laid-off workers because they tend to be older and less educated and have higher earnings, Rosen said. [emphasis added]
A few things. First, a “policy decision” is made when government decides to respond to special pleading from domestic industry and protect the market by raising taxes on imports. The innocent consumers foot the bill for this, and the fact the tax is hidden and diffuse does not make it morally acceptable. Second, trade liberalization policies may “disadvantage groups of workers” but so do many other policy decisions — the decision to allow the growth of, say, e-commerce, for example. I happen to agree with those policies, too, but I don’t see Mr. Mastel lobbying for special benefits for bricks-and-mortar retail workers (actually, I shouldn’t give him any ideas). Governments make policy decisions every day about which industries die or survive, sometimes by policy commission, and sometimes by letting certain policies expire. There is nothing special about trade policy in that sense.
Similarly, Mr. Rosen’s objection can be countered by pointing out that perhaps the “higher earnings” trade-displaced workers received were artificially inflated by granting their industry a false, consumer-funded monopoly (in fact, by definition they almost certainly are). Why do we have to compensate them when that monopoly finally expires?
I was speaking to a trade policy wonk friend last week at a lunch about TAA, and he pointed out that “plenty of innocent people are harmed by trade liberalization.” I said to him, and I will repeat here, that plenty of innocent consumers have had their pockets picked for decades so that certain groups can collect rents. So you’ll excuse me if my sympathies are, to say the least, conflicted.
The (Beginning of the) End of the Shameful U.S. Cotton Deal?
Heartening news from the Appropriations Committee yesterday: they voted to cut aid to farmers generally, and to make significant changes to an egregious cotton program. But first, some background. You’ll recall the embarrassing deal made by the Obama administration last year to head off Brazil’s right to impede American exports in retaliation for WTO-illegal cotton support. The United States is, in other words, now sending almost $150m worth of “technical assistance” and “capacity building” funds to Brazil, just so we can continue to subsidize American cotton growers without penalty (so much for U.S. promotion of the rule of law in international commercial relations). Rep. Ron Kind (D-WI) tried to end that deal earlier this year, but to no avail. Big Ag’s friends in Congress argued, unfortunately successfully, that any changes to the cotton bribes should be dealt with in the context of the 2012 Farm Bill, and by the agriculture committees (good luck with that).
But yesterday, the Appropriations Committee approved by voice vote an amendment from Rep. Jeff Flake (R-AZ) to take the fiscal 2013 payment to Brazil from funds that would normally go to supporting U.S. cotton growers. According to an article [$] in the Congressional Quarterly, Rep. Flake argued that “American cotton growers should pay the bill since the United States was making the payment on their behalf.” Well played, sir. Rep. Rosa DeLauro (D-CT) filed an amendment that would send the FY2012 cotton payment to the Women’s, Infants and Children nutrition program instead.
The Committee also voted to lower the income eligibility cap to $250,000 AGI.
The CQ article did contain this worrying footnote, however:
Support for the amendments may be tenuous — especially if lawmakers cannot hide behind the anonymity of a voice vote. After winning the voice vote in committee, Flake sought a roll call, prompting appropriators of both parties to suggest that he did not need the recorded vote. Flake took their advice and demurred.
Leglislators are usually shy about publicizing their positions only when they think it could get them in political hot water, so let’s not uncork the champagne yet.
Inflation Expert
Who knows more about inflation, Richard Galanti or Ben Bernanke? I maintain that, when it comes to the facts, Mr. Galanti knows more than the Fed chairman. Galanti is the CFO of Costco Wholesale Corp.
The Wall Street Journal reported last Thursday (May 26th) on a conference call with Mr. Galanti. He said “we saw quite a bit of inflationary pricing” in the 3rd quarter.
Price increases occurred in a broad range of products” dry dog food (3.5%). Detergents (10%+), plastic products (8-9%). Costco will “hold prices as long as we can.” When it can no longer, the consumer will face rising prices.
Costco is a good leading indicator of inflation at the retail level. It turns over inventory quickly, and is leading other retailers in restocking at higher prices. Costco offers a forward-looking view of consumer price inflation.
Meanwhile the Fed and its chairman, Ben Bernanke, rely on backward looking measures of inflation, like the CPI. That index, and the “core” component that excludes food and energy prices, overweight the depressed housing sector. And they are yesterday’s news.
For years, American consumers have benefitted from cheap imports from China and India. When those countries liberalized and opened up to global commerce, Americans got the benefit of the hard work and low wages of 2 ½ billion workers. The era of cheap labor is coming to an end, and with it the flood of imports that held down prices in the U.S. Especially in China, wage rates are rising rapidly.
Heretofore, the flood of dollars has chiefly affected asset prices and inflation in other countries. The flow through to U.S. consumer prices will now be quicker. You’ll experience it when you go to Costco to restock.
E-Verify and Common Sense
This weekend, New York Times op-ed columnist Ross Douthat wrote a piece full of common sense thinking about immigration control and the E-Verify federal background check system.
“Common sense”—or “what most people think”—is an interesting thing: When generations of direct experience accumulate, common sense becomes one of the soundest guides to action. Think of common law, its source deep in history, molded in tiny increments over hundreds of years. Common law rules against fraud, theft, and violence strike a brilliant balance between harm avoidance and freedom.
When most people lack first-hand knowledge of a topic, though, common sense can go quite wrong. Such is the case with ”common sense” in the immigration area, which is not a product of experience but collective surmise. Douthat, who has the unenviable task of leaping from issue to issue weekly, indulges such surmise and gets it wrong.
Take, for example, the premise that American workers lose when immigration rates are high: “Amnesty,” says Douthat, would “be folly (and a political nonstarter) in this economic climate, which has left Americans without high school diplomas (who tend to lose out from low-skilled immigration) facing a 15 percent unemployment rate.”
On the whole, American workers do not lose out in the face of immigration. To the extent some do, it is penny-wise and pound foolish to retard our economy (in which displaced workers participate) and overall well-being (which affects displaced workers, too) in the name of protecting status quo jobs for a small number of native-borns.
Full immigration reform that includes generous opportunities for new low-skill workers is not folly, whatever its political prospects may be.
But I want to focus on Douthat’s conclusion that E-Verify is the way forward for immigration control. He cites a study finding that Arizona’s adoption of an E-Verify mandate caused the non-citizen Hispanic population of Arizona to fall by roughly 92,000 persons, or 17 percent, over the 2008–2009 period, and concludes:
[M]aybe — just maybe — America’s immigration rate isn’t determined by forces beyond any lawmaker’s control. Maybe public policy can make a difference after all. Maybe we could have an immigration system that looked as if it were designed on purpose, not embraced in a fit of absence of mind.
Though tentative, his implication is that a national E-Verify mandate is the solution. Everything that came before was the product of fevered impulses. Maybe E-Verify is the most practical solution. Douthat’s calm tone sounds like common sense.
Ah, but neither Douhtat or the authors of the study have thought that problem all the way through (and the study doesn’t claim to): The decline in Arizona was not produced simply by moving illegal immigrants from Arizona back to Mexico and Central America. They went to Washington state and other places in the United States that are less inhospitable to immigrants. A national E-Verify mandate would offer no similar refuge, and the move to underground (or “informal”) employment would occur in larger proportion than it did in Arizona.
The report also cautions that the honeymoon in Arizona may not hold:
[T]he initial effects of the legislation are unlikely to persist if actors in the labor market learn that there are no consequences from violating these laws. Hence, for long-term effectiveness, policymakers should also consider the role of employer sanctions, which have not played a large role in Arizona’s results so far. However, policymakers must weigh the sought-after drop in unauthorized employment against the costs associated with shifting workers into informal employment.
That’s antiseptic language for: investigations of employers, raids on workers, heavy penalties on both, and growth in black markets and a criminal underground. “Balmy” is a way of describing the temperature potatoes pass through in a pressure cooker.
It’s hard, on analysis, to see Arizona’s experience being replicated or improved upon by an E-Verify mandate that’s national in scale without a great deal of discomfort and cost. I surveyed the demerits of electronic employment eligibility verification in “Franz Kafka’s Solution to Illegal Immigration.”
Antidumping Reform Crucial to U.S. Competitiveness
The Cato Institute today published its 13th policy paper on the topic of antidumping. “Economic Self-Flagellation: How U.S. Antidumping Policy Subverts the National Export Initiative” describes with compelling anecdotes and data how the outdated assumptions of a 90-year-old law—one purported to “level the playing field” and protect U.S. companies from “unfair” foreign competition—conspire with its overzealous application to erode the competitiveness of U.S. firms.
During the decade from January 2000 through December 2009, the U.S. government imposed 164 antidumping measures on a variety of products from dozens of countries. A total of 130 of those 164 measures restricted (and in most cases, still restrict) imports of intermediate goods and raw materials used by downstream U.S. producers in the production of their final products. Those restrictions raise the costs of production for the downstream firms, weakening their capacity to compete with foreign producers in the United States and abroad.
In all of those cases, trade-restricting antidumping measures were imposed without any of the downstream companies first having been afforded opportunities to demonstrate the likely adverse impact on their own business operations. This is by design. The antidumping statute forbids the administering authorities from considering the impact of prospective duties on consuming industries—or on the economy more broadly—when weighing whether or not to impose duties.
That asymmetry has always been insane, but given the emergence and proliferation of transnational production and supply chains and cross-border investment (i.e., globalization)—evidenced by the fact that 55% of all U.S. import value consists of raw materials, intermediate goods, and capital equipment (the purchases of U.S. producers)—it is now nothing short of self-flagellation.
Most of those import-consuming, downstream producers—those domestic victims of the U.S. antidumping law—are also struggling U.S. exporters. In fact those downstream companies are much more likely to export and create new jobs than are the firms that turn to the antidumping law to restrict trade. Antidumping duties on magnesium, polyvinyl chloride, and hot-rolled steel, for example, may please upstream, petitioning domestic producers, who can subsequently raise their prices and reap greater profits. But those same “protective” duties are extremely costly to U.S. producers of auto parts, paint, and appliances, who require those inputs for their own manufacturing processes.
President Obama acknowledges as much. On August 11, 2010, at a White House signing ceremony, the president offered the following rationale for a bill that he was about to sign into law:
The Manufacturing Enhancement Act of 2010 will create jobs, help American companies compete, and strengthen manufacturing as a key driver of our economic recovery. And here’s how it works. To make their products, manufacturers—some of whom are represented here today—often have to import certain materials from other countries and pay tariffs on those materials. This legislation will reduce or eliminate some of those tariffs, which will significantly lower costs for American companies across the manufacturing landscape—from cars to chemicals; medical devices to sporting goods. And that will boost output, support good jobs here at home, and lower prices for American consumers.
Higher input prices stemming from antidumping measures are only the first assault on these downstream firms. The next wave usually takes the form of stiffer competition from firms in countries where there are no antidumping duties on the critical input. As a result, the foreign competition often operates at a cost advantage in the United States and in other markets that enables it to sell profitably at lower prices than U.S. firms can charge.
Antidumping and Bedroom Furniture from China: The Real Story
The Washington Post ran a story in yesterday’s print edition about the U.S. antidumping order against Wooden Bedroom Furniture from China—a case I described seven years ago as the “Poster Child for [Antidumping] Reform” because its sordid details explode the myths upon which rest the rationalizations for the law’s existence.
Those details are nowhere to be found in the WP article, which was published, presumably, to make a few other points. One such point—the only one with which I agree—is that antidumping duties aren’t very effective at restoring or preserving U.S. jobs. As the article demonstrates, since the imposition of AD duties on Chinese furniture beginning in 2005, imports from Vietnam, Indonesia, and other countries not subject to the AD restrictions have emerged to fill the vacuum created by declining imports from China. Not much news in that, though. This kind of trade diversion is a typical consequence of antidumping restrictions. Likewise, furniture production and the jobs it used to support has not undergone a renaissance in the United States – despite that being the rallying cry of the domestic producers who brought the case in 2004. (More on that in a moment.)
But the article—beginning with its title (“Chinese Make a Run Around U.S. Tariffs”)—leads readers to the faulty conclusion that those cunning Chinese are at it again, looking for ways to prosper at the expense of innocent, upstanding U.S. producers and their workers. A pretty good tip-off that an article about China and trade is going to miss the mark, mislead, and misinform is when the author describes trade as a contest between two countries with the trade account characterized as a scoreboard.
The United States and China have exchanged accusations of dumping for years and imposed tit-for-tat duties. All along, though, China has generally come out on top: Its trade surplus with the United States rose to $273 billion in 2010…more than three times the level of a decade earlier.
Is the reader to conclude, then, that more antidumping measures against Chinese products are integral to reducing the trade deficit and, ultimately, “com[ing] out on top”? That conclusion doesn’t really dovetail with the point about how antidumping does nothing to restore U.S. production. But I digress.
The main problem with the article is that it escorts readers to the incorrect conclusion that it was Chinese furniture producers who initiated efforts to get around the U.S. antidumping duties. Implied throughout the article is that a man named Lawrence Yen, president of a Chinese furniture company, was the architect of some crafty plan to avoid U.S. duties. It reports that during a meeting of Chinese furniture makers in Dongguan: “[Yen] told them [he] would set up a factory in Vietnam,” which was presented in the article as though it were the idea’s genesis. The caption to the inset chart of furniture imports in the article reads:
To avoid a 2005 U.S. tariff on Chinese-made wooden bedroom furniture, Chinese furniture companies moved operations to other Asian countries, thwarting U.S. efforts to curb “dumping,” the export of goods at unfairly low prices.
This presentation of events may serve the clichéd theme that Americans are in a pitched battle with the Chinese, who are willing to stretch and break the rules to “win,” but it fails to give readers critical parts of the story. The fact is that this strategic tariff aversion plan, which is as legal and common as off-the-shelf tax minimization software at Best Buy, was the brainchild of the U.S. domestic furniture industry before it filed the case in 2004.
TAA Reversal on Grand Bargain
On Monday, a group of 41 Senate Democrats, led by Sen. Debbie Stabenow (MI) sent a letter to President Obama, praising his administration’s recent decision to abandon its erstwhile promotion of the three pending trade deals as “job creators” and instead warn Congress it won’t submit the pacts for a vote unless they can be assured that a stimulus-enhanced version of trade adjustment assistance will be renewed.
The letter contains much about the benefits of the program, with little mention of its costs to taxpayers and even less concern shown for the innocent consumers whose pockets have been picked for decades to maintain the jobs lost when trade is allowed to flow more freely. That’s pretty standard fare for protectionists, who rely on the hidden and dispersed nature of the costs to get support for their policies. What’s new about this situation is the ratchet effect — the base TAA program is still in place, so what they are asking for is a renewal of part of the stimulus as a pre-condition for supporting trade liberalization. Note that the stimulus changes included a removal of the requirement that job losses be linked to a trade agreement (a feature, not a bug of the program, according to the Senators).
Wait, did I say a renewal of TAA-plus would be a pre-condition for supporting trade agreements? Not necessarily. Note this telling paragraph of the letter:
While we the undersigned may have differing views on elements of the trade agenda – with some of us looking forward to supporting the pending trade agreements with South Korea, Colombia, and Panama, and others skeptical of the impact of the agreements -we are unified in our belief that the first order of business, before we should consider any FTA, is securing a long-term TAA extension. [emphasis added]
As I’ve said repeatedly, I understand (even if I don’t support) the political calculation that TAA is necessary — and worth it– if it secures votes for trade liberalization. But reading between the lines, some of the letter signers have no intention voting for the trade agreements, even if the mega-TAA is approved. What we have here is a reversal of the grand bargain on trade liberalization, that gave extra welfare to workers who lost their job because of freer trade in exchange for support for trade agreements that lowered trade barriers. That ‘grand bargain’ has been tenuous for years now, of course — witness the complete lack of movement on the trade agreements even after the 2009 enhancement of TAA, at least until recent months. But now, rather than using TAA to buy votes for trade liberalization, the administration and their allies appear to using pretty-much-assured votes for trade liberalization to buy TAA. As a Wall Street Journal editorial said on Friday, it’s extortion.
The Consequences of Our War on Low-Skilled Immigrant Labor
Credit: Chiapas state government website
Authorities in Mexico intercepted two semi-trucks on Tuesday containing more than 500 migrants being smuggled across the border from Guatemala and presumably headed for the United States. An x-ray of one of the trucks that revealed the migrants struck me for its resemblance to those 18th century woodcarvings of slave ships crossing the Atlantic.
That analogy shouldn’t be taken too far, of course. According to the news reports, the migrants voluntarily paid $7,000 each for the chance to be smuggled into the United States. But like the slave ships, the conditions in the trucks were horrific, putting the lives of the men, women and some children in real danger.
People across the spectrum will try to make hay from this, but to me it argues that the status quo is unacceptable. No respectable party is in favor of illegal immigration. The real debate is over how to reduce it and all the underground pathologies that accompany it.
We can continue to ramp up border and interior enforcement, as we have relentlessly for more than a decade, driving low-skilled migrants further underground while driving smuggling fees higher and higher. Or we can expand opportunities for legal entry into the United States, and by doing so shrink the underground network of smuggling and document fraud.
Like the repeal of Prohibition in 1933, real immigration reform would go a long way to eliminating the human bootlegging that was exposed in Mexico this week. A robust temporary worker program would allow foreign-born workers to enter the country in a safe, orderly, and legal way through established ports of entry. It would allow resources now going to smugglers to be collected as fees by our government and otherwise put to work in our economy. It would save the lives of hundreds of people who needlessly die each year trying to re-locate for a better job.
If Congress enacted the kind of immigration reform we have long advocated in my department at Cato, our economy would be stronger and the human smuggling networks a lot less busy.
A New Obstacle to Passing Trade Agreements
Despite previously supporting them, the Obama administration announced today that it would not submit the three outstanding preferential trade deals (with South Korea, Colombia and Panama) for a vote unless and until Congress reinstates an expanded version of Trade Adjustment Assistance, a program of benefits for workers who have lost their job because of competition from imports. Although the basic TAA program (with us since 1974) is still in place, a version expanded by the stimulus package in 2009 lapsed in February amid some Republicans’ concerns about its cost and its false premise: that workers who lose their jobs because of import competition are more deserving than other unemployed Americans. More on TAA here and here.
According to this article by Congressional Quarterly[$], the business community supports the enhanced TAA, seeing it as a worthwhile bribe compromise to secure votes for trade agreements. I understand that logic, even if I don’t support it. But the merits of that argument aside, and as I’ve outlined repeatedly, I’m not sure the deal holds anymore. While it is true that TAA has in the past been used to secure votes for trade agreements, that is not really necessary in this case. After all, if the Republicans all voted in favor of the agreements, then Democratic votes (those most likely to need some sort of assurance on welfare) would not be needed, unless the administration is implying a veto threat. Indeed, it is likely that making an expanded TAA a condition for the trade deals would cost some votes from conservative and tea-party minded Republicans. But the administration wants a larger TAA program in place, and this is their price. Stay tuned.
HT: Andy Roth at the Club for Growth
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