February 4, 2011 11:04AM

Trade Adjustment Assistance Set to Expire?

James Sherk of the Heritage Foundation has an excellent report out today on Trade Adjustment Assistance, and why Congress should allow the program to expire. Without action, it is set to do so on February 12 [$].

Trade Adjustment Assistance is a collection of programs that have been with us since the mid‐​1970s. The programs provide taxpayer‐​funded benefits to workers (and firms, and farmers, and entire “communities”) who are harmed — e.g., by losing their job — from import competition. The main program is the Trade Adjustment Assistance for Workers program, administered by the Department of Labor and the subject of a paper I wrote in 2007

It pains me to say that my 2007 call for its abolishment was instead followed in 2009 by an expansion of the program as part of the ‘stimulus’ package. Some of the extra goodies included allowing government workers access to the benefits, extending TAA to service workers (previously the program was applicable only to manufacturing workers) and weakening the link between trade and job losses (i.e., by removing the requirement that the job loss had to be linked to increased imports following a trade liberalization agreement).

Sherk gives a thorough critique of the program in his report, which I encourage you to read in full, but to my mind the important factors are:

First, very few unemployed people are in their unfortunate predicament because of import competition (you heard it here first, folks!). Why should we discriminate between workers based on the cause of their unemployment?

Second, it costs a bundle, an estimated $2.4 billion in 2011 according to the Department of Labor. Research, including the government’s own studies, has shown the program is poor value for money, even by government standards.

Third, and this is where I put on my free trader hat, TAA was originally sold as a way to get those who are harmed from import competition — or, to put it more accurately, those who have become accustomed to artificially created demand for their services by government intervention and taxing consumers — to go along with trade liberalization. But as recent events have shown, that “deal with the mob” has well and truly broken down. Even though TAA was expanded almost two years ago, Democrats are only now making tentative noises about passing the trade agreement with Colombia (nothing on Panama), and the administration agreed to promote the agreement with South Korea only after renegotiation and “improvement.”

TAA — along with much of current Federal activity — belongs at the state level, where local people can decide which benefits unemployed workers (of all stripes) should receive given state resources and priorities, and how best to deliver them.