Experts in the art of negotiation will tell you never to take a hostage you are not willing to shoot. And it appears President Obama has identified his latest legislative hostage — the pending free trade agreements with Colombia, Panama and South Korea.
In a call with reporters, the White House’s top economist, Gene Sperling, explained that the administration would “not submit implementing legislation on the three pending [free trade agreements] until we have a deal with Congress on the renewal of a robust TAA program consistent with the objectives” of the 2009 stimulus expansion.
In non-Washington speak, President Obama is holding three job-creating free trade agreements hostage and demanding a stimulus-type funding increase of the Trade Adjustment Assistance (TAA) program as his ransom. This legislative maneuver, which could ultimately kill the free trade agreements, says a lot about the president’s priorities.
As scholars at The Heritage Foundation note, TAA provides overly generous benefits for just a small fraction of laid-off workers. TAA gives those workers two years of job training, a year of Trade Adjustment Allowances, money for job searching and relocation, a refundable health care tax credit and a two-year wage insurance program to supplement lower earnings.
Those benefits, which go far beyond what most unemployed workers receive, are expensive. Congress appropriated roughly $2 billion in 2010. The White House claims extending the program for another decade would cost taxpayers an additional $7.2 billion.
U.S. Trade Representative Ron Kirk described the White House’s insistence as an effort to keep “faith with America’s workers.” However, there is no evidence to suggest the program’s assistance and training improves workers’ future earnings. A study by the Government Accountability Office confirmed the predictable trend.
Rather than borrowing more money from our children and grandchildren to fund another failed stimulus program, the president should embrace real job creation and send the free trade agreements to Congress.
There is no doubt these free trade agreements would create jobs in America — the only question is how many: 70,000? 250,000? 380,000? Considering the number of unemployed Americans has increased by 2.1 million since President Barack Obama took office, one would think his administration would be pushing Congress to act quickly on all three agreements.
The cost to America’s economy and employers of these unapproved trade agreements is stunning. Since the Korea-U.S. Free Trade Agreement (KORUS) was first agreed to four years ago, the U.S. has missed $40 billion in potential exports. In the more than four years the U.S.-Colombia FTA has been stalled, U.S. companies have paid more than $3.5 billion in unnecessary duties to the Colombian government. American companies have also lost out on key opportunities because of the stalled U.S.-Panama FTA.
Free trade offers Americans tremendous opportunities, which is why in his first State of the Union Address, President Obama set an ambitious goal: “double our exports over the next five years, an increase that will support two million jobs in America.”
If the president were truly committed to increasing exports, why would he hold the free trade agreements hostage?