US: The President’s Poison Pill On Trade

US: The President’s Poison Pill On Trade – Investors.com

On Wednesday, President Obama urged Congress to pass three stalled free-trade pacts now that a dubious deal for worker “retraining” has been welded onto the bill. It’s nothing but a last sop to unions ahead of elections.

The president’s sudden interest in passage of free trade agreements with Colombia, South Korea and Panama is something of an Eddie Haskell-like reversal, given that he’s spent most of his presidency stalling the pacts, particularly at times when it looked as if he might let them pass. That’s because Big Labor opposes all free trade and calls the shots in his presidency.

Now he’s changed his tune. With unemployment at 9.1%, the economy stalled and the U.S. fast losing its global trade predominance, the momentum is there for free trade. The votes for congressional passage are already in place, so now it’s only a matter of whether the pacts pass now or at some time in 2013 when he might no longer be president.

That’s not a long time.

That seems to be why Obama’s congressional allies have attached a poison pill to the three free trade treaties as a means of getting them through with a little something extra for Big Labor.

Tuesday, the House and Senate reached a deal to attach Trade Adjustment Assistance (TAA) to the U.S.-South Korea free trade pact. That act forces Congress to vote on both the pact and a program to retrain workers who can claim their jobs are lost to trade together instead of consider each pact and program on its own merits. The deal moves ahead in the Senate on Thursday.

That’s what Obama is really after now. Free trade is just a locomotive to get TAA through because it’s such a bad idea on its own.

Trade Adjustment Assistance is a favorite of Big Labor. Ostensibly a program to retrain workers who’ve lost their jobs to foreign competition, it’s anything but that. Like most government programs, it started out small in 1962, was revamped with the 1974 Trade Act and then ballooned with the 2009 stimulus. The once-tiny bipartisan program became a $7 billion expense of “dubious” value in getting workers new jobs, according to a 2009 American University study.

The new deal scales down the program by about 20%, but it remains as ineffective as ever.

That’s immaterial to Obama’s labor allies because the TAA basically amounts to a jobs bank. It hands laid off workers two-and-a-half extra years of “training” (which can be as lowly as getting a high school diploma) in addition to their unemployment insurance.

It also offers health care credits, job relocation assistance, “income support” and other benefits, but only if the workers can blame their lost jobs on trade. Other laid-off workers get unemployment insurance, but this privileged group gets a four-and-a-half year taxpayer-paid holiday. Not surprisingly, its main effect is to encourage workers to blame all job losses on free trade. It’s an odd thing to attach to a free trade pact.

But it fits the union agenda neatly. After all, if a unioned-up politico raises taxes and drives local factories abroad, trade gets the blame.

The current deal before Congress sours what should be a superb energizer to the U.S. economy.

In contrast to TAA, free trade has an authentic record of job creation. Obama’s own International Trade Commission found that the three deals will create 250,000 American jobs and increase U.S. exports by $13 billion.

What’s more, time is running out. A U.S. Chamber of Commerce study found that 384,000 U.S. jobs will be lost if other nations go through with their own free trade treaties while the U.S. stalls. Most will be in place before the congressional summer recess.

Obama’s move is nothing but a political gift to Big Labor as campaign season heats up. No wonder some principled Republicans such as Sens. Orrin Hatch of Utah and Mitch McConnell of Kentucky have grave reservations about going along. Treaties that deserve votes on their own merits shouldn’t be vehicles for pork.