Topic: Trade and Immigration

‘The Democrats’ Dangerous Trade Games’

Listening to the Democrats talk about trade on the campaign trail and in Congress, you might conclude that the party is monolithically skeptical about the merits of new trade agreements.

As they campaigned in Ohio and elsewhere, Hillary Clinton and Barack Obama tripped over themselves in competing to see who could denounce NAFTA and other trade initiatives in the harshest terms. Meanwhile, Democratic House Speaker Nancy Pelosi re-wrote established rules on handling proposed trade agreements by shelving the agreement the Bush administration signed with our South American ally Colombia.

In a welcome dissent in this morning’s Wall Street Journal, C. Fred Bergsten, founder and director of the Peterson Institute for International Economics in Washington, sounds a warning against “The Democrats’ Dangerous Trade Games.”

Bergsten has long-standing ties to the Democratic side of the aisle, having served in Jimmy Carter’s administration as assistant secretary for international affairs at the U.S. Treasury during 1977–81.

Bergsten pulls no punches in his op-ed this morning:

[O]ur venerable House of Representatives, in the context of the Colombia agreement, has recklessly changed the rules for congressional action on trade legislation. By rejecting long-settled procedures that prevented congressional sidetracking of trade deals negotiated by presidents, the House has hamstrung U.S. trade policy and created the gravest threat to the global trading system in decades.

By effectively killing “fast track” procedures that guarantee a yes-or-no vote on trade agreements within 90 days, lawmakers in Washington, led by House Speaker Nancy Pelosi, have destroyed the credibility of the U.S. as a reliable negotiating partner.

The op-ed is well worth a read, especially among Democrats who are feeling uneasy about the direction of their party on trade.

Is Bob Barr a Libertarian? Certainly Not on Trade

Former Georgia congressman Bob Barr announced this week that he wants to be the Libertarian Party’s presidential nominee in 2008. Party members have only another week to kick the tires of this former Republican before they decide at their May 22 convention whether he should be their standard bearer in the fall.

I’ll leave it to others to dissect his overall record, but on international trade Barr is no libertarian.

During his eight years in the House, from 1995 to 2003, Barr voted on 24 major bills and amendments affecting the freedom of Americans to trade and invest in the global economy. He voted in favor of lower trade barriers only four times, voting in favor of higher trade barriers 20 times.

You can check out his trade voting record (or that of any other member of Congress) by using the “Trade Vote Records” search tool on the Cato Institute’s Center for Trade Policy Studies web site.

On the pro-trade side, Barr did vote twice to approve presidential trade promotion authority, to expand visas for foreign-born doctors, and to relax computer export controls. But he also voted:

  • Numerous times to uphold the trade embargo and travel ban against Cuba.
  • Against normal trade relations with China and Vietnam. Denial of NTR would have resulted in drastically higher tariffs on imports from those countries.
  • In favor of mandatory “country of origin” labeling on imported food, a federal mandate aimed at discouraging consumers from buying imported food.
  • Against lower tariffs on imports from Andean countries, including Colombia.
  • Against capping farm subsidy payments to the largest farm operations.
  • Against lower tariffs on goods imported from Caribbean and Sub-Saharan African countries.
  • And in favor of quotas on steel imports.

Barr’s libertarian credentials were solid when it came to trade subsidies such as farm price supports and export promotion. He voted against both versions of the 2002 farm bill, against subsidies for sugar, wool and mohair, and against the Export-Import Bank, Overseas Private Investment Corp. and Market Access Program, which all shovel tax dollars to large multinational corporations.

His votes in favor of trade barriers are easy enough to explain politically. Georgia has lots of cotton farmers who have been protected and subsidized over the years. The state is also home to a small and shrinking textile and apparel industry that has traditionally hid behind trade barriers against lower cost imports from China, Latin America and to a lesser extent Africa.

The Libertarian Party, however, promotes itself as “The Party of Principle,” with those principles being “Smaller Government … Lower Taxes … More Freedom.”

Before Bob Barr becomes the party’s presidential nominee, he needs to explain to delegates why he voted so consistently to impose or maintain high tariff duties on products millions of Americans buy everyday, why he could not bring himself to cap farm subsidy payments, and why he supported trade and travel restrictions against a pathetic Cuba that poses no national security threat to the United States.

Free trade is not just a quirky side issue for libertarians. It is a basic pillar of free-market economics. None other than Adam Smith devoted an entire book of his monumental work The Wealth of Nations to arguing for the freedom of people to trade across international borders. Milton Friedman was an uncompromising advocate of free trade. The same Frederic Bastiat who wrote the libertarian classic The Law also made a career of ridiculing the kind of protectionist measures that so consistently won Bob Barr’s support during his time in Congress.

When he stands before the Libertarian Party convention next week, Bob Barr needs to tell delegates either that he was wrong all along about free trade or that Adam Smith was wrong.

Hitler’s America? Only to an Anti-Trade Liberal

In an op-ed in today’s Wall Street Journal the political liberal Thomas Frank paints a Depression-era picture of American workers and households.

“Real hourly wages for most workers … have risen only 1% since 1979,” he writes. Median “non-elderly” household income is down since 2000. Americans work more hours per year than their counterparts in other industrialized countries. The phrase “modern American slave labor” even finds its way into his column. All this reminds Frank of “those what-if stories in which Hitler wins World War II. Could this really have happened to my country?”

What is to blame for this “disaster”? According to Frank, “tax cuts, trade agreements, deregulatory measures, and enforcement decisions all finely crafted to benefit one part of society and leave the rest of us behind.”

Facts on the ground show a far different America. In a study from last October, titled “Trading Up,” I found that expanding trade and trade agreements have actually lifted the living standards of most Americans. Consider a few facts that directly contradict Frank’s doom-saying:

  • In the past decade, the average hourly real compensation—wages and benefits adjusted for inflation—earned by American workers is up 22 percent.
  • Median household income for all Americans (what, don’t the elderly count, too?) is up 6 percent in the past decade.
  • The share of American households earning LESS than $35,000 a year continues to fall.
  • The median net worth of American families, adjusted for inflation, is up by more than one-third since the mid-1990s.
  • Total employment is up by 16.5 million and the unemployment rate is down. (And since when did liberals find it objectionable that Americans seem to have plenty of work to do?)

Critics of free markets and free trade may find it politically expedient to paint a grim picture of economic “stagnation,” but in the real world Americans continue to progress.

Prevention Is Better than Cure: More on That Veto Override

As I should have mentioned in my previous post, the House and Senate are likely to vote on the Farm Bill conference report tomorrow.

The bill, an abysmal one that carries a price tag of roughly $300 billion, will likely pass easily in the Senate, where an earlier version of the bill sailed through the chamber last year in a 79-14 vote.

So the questions over the possibility of an override center mainly on the House, which will likely see a closer vote, but not by much.

If House Republicans are unable to secure enough votes to sustain a veto, it would signify a remarkable failure of their leadership, especially of House Minority Leader John Boehner. Boehner has publically opposed the bill, but - along with House Minority Whip Roy Blunt - has refused to actively push his Republican colleagues to do the same.

An article in today’s The Hill notes:

[L]obbyists said members were being told to “vote their districts,” meaning they could support the measure without fearing any consequence from leadership.

What’s worse is that the bill probably could have been improved upon, much earlier in the process. The Republican leadership has full discretion over committee assignments. Instead of seating on the Agriculture Committee a balanced array of viewpoints, the House GOP leadership has chosen a collection of members that hail almost universally from farm-heavy districts and are greatly predisposed to support an increase in agricultural spending.

In fact, an informal vote count compiled by the office of Rep. Jeff Flake suggests that every single Republican member of the House Agriculture Committee is likely to support the Farm Bill tomorrow.

What would the bill look like if Rep. Flake or another critic of current farm policies was a member of the committee? Sure, one member can have only so much impact on a committee of 46. But at least that would give taxpayers a voice at the table.

Veto Override Possible for Farm Bill

Further to my quasi-post on the farm bill Friday, I may have been premature in my enthusiasm. According to an article [$] today in Congress Daily, the ranking member of the Senate Finance Committee Charles Grassley (R, IA) is confident that Congress will be able to override the President’s threatened veto:

Grassley expects the White House will not push Republicans to sustain the expected veto. If Bush does push support for the veto, cautioned Grassley, he should expect “very weak loyalty in the Congress from his own party.” Bush has said that some Republicans in safe seats who represent districts without agriculture might not worry about offending anti-hunger advocates by turning down the bill’s $10 billion increase in nutrition programs. Grassley said today that such a scenario is the only way he could envision the White House getting enough House support to sustain a veto.

The full conference report, in all its glory, available here for the strong-of-stomach.

Also alarming: the conference report apparently includes language that would nullify a federal appeals court decision under the Freedom of Information Act that has done so much (via the great Ken Cook at the Environmental Working Group) to shed light on these egregious subsidies. See here.

Measuring the Cost of E-Verify Red Tape

A recent story in the Arizona Republic describes the rising practice of using “registered agents” to take care of the paperwork associated with the E-Verify system, which is mandatory for employers in Arizona. Registered agents know how to navigate this system, which requires employers to submit information about their new hires to the federal government for an immigration-status background check. Registered agents are there to step in and reap the rewards when employers throw up their hands.

The story reports that registered agents charge from $7.50 to $10.00 per new hire. There are about 50,000,000 new hires per year in the country (according to Labor Department statistics), and let’s assume that average employer is a little more efficient than those who use a registered agent - so make it $5.00 per new hire. That’s $250,000,000 per year, just on basic administration of the E-Verify system.

There are plenty of other costs to electronic employment elgibility verification, which I wrote about in my recent paper, “Franz Kafka’s Solution to Illegal Immigration.”

At a recent hearing, Representative Ken Calvert (R-CA) reportedly said, “There are certain interests that simply do not want employment verification.” He was referring to an internecine fight with a human resources group. But I found in my paper that “successful internal enforcement of federal immigration law requires an overweening, unworkable, and unacceptable identity system.”

Freedom-loving Americans do not want employment verification. They think it’s doubly or triply foolish to spend taxpayer dollars and burn employers’ time on policies that reduce our economic growth.