Tonight, both candidates tangled on trade policy, with Mitt Romney promising to “get tough” on China, while President Obama criticized Romney for being soft on outsourcing. President Obama raised one example that he apparently was proud of:
We’ve brought twice as many cases against unfair trading practices than the previous administration and we’ve won every single one that’s been decided.
When I said that we had to make sure that China was not flooding our domestic market with cheap tires, Governor Romney said I was being protectionist; that it wouldn’t be helpful to American workers. Well, in fact we saved 1,000 jobs. And that’s the kind of tough trade actions that are required.
Romney’s accusation of “protectionism,” raised by David Axelrod often throughout the campaign as if it were an unpatriotic term, is as true an accusation as any you heard all night. Aggressive trade policy like this can sometimes have tangible effects in jobs saved (often it soon fails at that too), and Obama is correct that it’s estimated that the tire tariffs did save up to 1,200 American jobs. In return, as we can expect, costs rose for consumers significantly, a number that is often ignored and rarely quantified. But here we know how much: Obama’s policy cost American consumers’ $1.1 billion, or $900,000 out of their pockets for every job saved.
That’s the price of protectionism, and it’s a good example of how Obama’s “New Economic Patriotism” has real costs that most Americans would deem unacceptable if they, well, really kicked the tires on his proposals. As to the larger question of the “outsourcing loophole” and taxes, this is a pretty well known fiction, but Kevin had a nice treatment after the last debate.
Ramesh’s excellent Bloomberg View column today was about this campaign’s propensity for protectionism, and I wrote about that illusion and the differences between Romney’s and Obama’s trade policy proposals back in May. Romney has talked up policies like labeling China a currency manipulator, but as some of his better moments in the debate tonight revealed, he understands that real growth lies elsewhere:
What’s key to bringing back jobs here is not just finding someone else to punish, and I’m going to be strict with people who we trade with to make sure they — they follow the law and play by the rules, but it’s also to make America the most attractive place in the world for businesses of all kinds.
That’s why I want to down the tax rates on small employers, big employers, so they want to be here. Canada’s tax rate on companies is now 15 percent. Ours is 35 percent. So if you’re starting a business, where would you rather start it? We have to be competitive if we’re going to create more jobs here.