Monday, July 23, 2007

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Why TAA is not a valuable bargaining chip

I've had enough conversations with Hill staffers to know the political lay of the land on expanding Trade Adjustment Assistance to service sector workers:

1) Everyone recognizes that the current TAA rules -- which only apply to the manufacturing sector -- make little sense in a world where more and more services are tradeable;

2) Everyone also recognizes that the cost of expanding TAA is pretty small by federal gov't standards -- we're talking a billion or two;

3) Democrats want to expand TAA, but for the past five years Republicans have held TAA hostage for something valuable in return -- support on a particular free trade agreement, an extension of fast track, etc.

4) No deal has ever been made.

I bring all this up because of Lori Montgomery's front-pager in the Washington Post today:
As part of their campaign to soothe an anxious middle class, congressional Democrats are preparing legislation that would significantly expand federal aid to the most obvious victims of the global economy: workers whose jobs move offshore or are lost to foreign imports.

Under a Senate bill to be introduced today, computer programmers, call-center staffers and other service-sector workers who make up the vast majority of the nation's workforce would for the first time be eligible for a generous package of income, health and retraining benefits currently reserved for manufacturing workers who lose their jobs to international trade.

Democrats say the expansion of the Trade Adjustment Assistance (TAA) program would begin to reweave the social safety net for the 21st century, as advances permit more industries to take advantage of cheap foreign labor -- even for skilled, white-collar work. By providing special compensation to more of globalization's losers and retraining them for stable jobs at home, they say, an expanded program could begin to ease the resentment and insecurity arising from the new economy.

A similar bill is nearing completion in the House, and Democrats hope to approve the expansion before the program expires Sept. 30. Trade Adjustment Assistance typically gets strong bipartisan support; Sen. Olympia J. Snowe (R-Maine) is co-sponsoring the bill with Sen. Max Baucus (D-Mont.).

But this year, rancorous politics have developed around broader trade issues, threatening the proposed expansion and, potentially, the program's survival.

"This is not going to be a slam-dunk," said Howard Rosen, executive director of the nonprofit Trade Adjustment Assistance Coalition....

Republicans as well as Democrats have long called for an overhaul of Trade Adjustment Assistance. President Bush has praised the program and promised to improve it. But the politics of trade have been complicated since Democrats took control of Congress with the help of many candidates who campaigned against further trade liberalization.

In the past, Trade Adjustment Assistance has been renewed alongside legislation granting the president fast-track authority to negotiate trade deals without congressional interference. But Bush's fast-track authority expired in June, and House Democrats have made it clear that they do not intend to restore it.

In addition, many Republicans feel scalded by Democratic delays on free-trade deals that the Bush administration has negotiated with Peru and Panama. Those agreements, and more politically divisive agreements with South Korea and Colombia, have not been brought to a vote since a deal to move them forward was made in May.

Now, even some Republican champions of Trade Adjustment Assistance say they are reluctant to sign on to its renewal unless Democrats reconsider their opposition to fast-track authority.

"Frankly, TAA is a very integral part of our efforts to reduce barriers and expand trade . . . and my view is they ought to go together," said Sen. Charles E. Grassley (R-Iowa), the senior Republican on the Finance Committee.

The Bush administration was actively working on a reauthorization proposal for Trade Adjustment Assistance when fast-track expired, the program's advocates said. Now, the administration appears to have backed off to recalibrate its strategy.

I'd love it if the GOP could get this quid pro quo, but it ain't gonna happen. I can't see any TAA program that would convince Democrats to renew fast track.

This is so partly because although many Democrats genuinely want to expand the program, others are offering it only lip service. Unions, in particular, loathe TAA, because even if it provides fiscal relief to their members, it also facilitates the movement of workers to non-union sectors. In other words, TAA undercuts the organizational power of unions. They can't outright oppose it, because they've been calling for it for decades now, but they don't love it.

So, an interesting question -- knowing that fast track ain't happening, should TAA be exapanded? I say yes, because of the poll numbers discussed in the last post. My hunch, however, is that GOP congressmen are going to say no.

The two direct losers from this kind of impasse: service sector workers displaced by offshore outsourcing, and free trade advocates. The first group is small -- the second group is smaller.

posted by Dan on 07.23.07 at 12:14 PM


I was laid off in a NAFTA/TAA event, and I got a retraining on a CAD software. That was 3 years ago. When I walked out of the two week training, I was the "most in-experienced drafter" out there. I've been unemployed ever since. My COBRA is over. I'm not counted as unemployed, because I can't apply - it's over. As am I, I fear.

posted by: Richard W. Crews on 07.23.07 at 12:14 PM [permalink]

Excellent blog you have here :). Thanks for adding another conservative light to the net! I am trying to get a conservative digg alternative going called GOP Hub ( Anything you can do to help spread the word would be awesome. Plus feel free to submit any articles you write here on your blog :). Take care and have a great week!

posted by: Jon on 07.23.07 at 12:14 PM [permalink]

Economically, I think the TAA is a bad idea because I don't see any reason to privilege those who lose jobs because of trade vs those who lose jobs because of automation or changing consumer tastes or poor management or whatever. The need for a safety net is the same in all cases.

But I recognize that of the causes of 'creative destruction', only trade is really being identified as the bogey-man and so, politically, an expansion of the TAA may make sense, for those who would like to see those poll numbers change. But I, too, am not optimistic about any bills passing.

posted by: Slocum on 07.23.07 at 12:14 PM [permalink]

A broader approach to transitions and training would be desirable, but sometimes things are more valuable as issues than as solutions.

posted by: Lord on 07.23.07 at 12:14 PM [permalink]

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