President Obama suffers from a chronic disability that renders him unable to allow a piece of legislation to clear his desk without attaching a sop for his labor-union and public-sector supporters, and the most recent symptom of that malady is his attempt to turn three pending trade deals into Democratic gravy trains. Sen. Orrin Hatch is leading a group of eleven Republicans who aim to stop his doing so.
At issue is something called Trade Adjustment Assistance (TAA), which usually is described as a program that helps workers who lose their jobs as a result of U.S. free-trade deals make the transition to a new position. It does so by providing extraordinarily generous benefits — made even more generous by the stimulus bill — which include a year and a half of payments for workers in job-training programs, allowances for relocating to a new job, tax credits for 80 percent of health-insurance costs, and more. Lest you think that this is only fair compensation for workers disadvantaged by free-trade deals, the stimulus bill changed the rules so that any worker displaced by foreign competition, trade deal or not, is eligible. Incredibly, the stimulus also made government workers eligible for trade-adjustment benefits. Naturally, the budget was doubled, too.
But TAA is hardly limited to paying benefits to uncompetitive workers, a dubious proposition to begin with. Simply put, TAA is yet another political slush fund designed to put money into the hands of Democratic politicians who will then transfer that money into the hands of their political supporters and constituents. It began with programs for workers, soon included a program for farmers — and, eventually, Congress created TAA “for firms,” i.e., a program under which money is put directly into the hands of businesses.
How does that work? Take last week’s bit of TAA news from U.S. Sen. Kirsten Gillibrand, a New York Democrat:
New York Senator Kirsten Gillibrand on Friday announced more than $1.1 million in Trade Adjustment Assistance funds for the New York State Trade Adjustment Assistance Center administered by the Binghamton University Research Foundation to help New York businesses remain competitive in the global economy.
“This is a great investment for our high-tech sector in Binghamton and throughout the state,” Gillibrand said. “These federal dollars will support research and innovation in our high-tech industry, and help keep New York on a fair playing field in the global economy so we can grow and create these good-paying jobs right here.”
What, exactly, does that mean? Only this: “The grant, worth a total of $1,113,271 from the U.S. Department of Commerce Economic Development Administration, will help NYSTAAC enable companies stressed by foreign competition to successfully adapt to changing conditions in the worldwide market.” Translation: “Here’s a million bucks for politically connected New York businesses, courtesy of Senator Gillibrand. How’s about a donation?”
Our friends on the left usually call this sort of thing “corporate welfare” when it is done for a strictly private, for-profit concern. When the money is laundered through a public agency, in this case the New York State Trade Adjustment Assistance Center — you knew there’d be one of those, right? — it’s called “economic development.” One might as accurately call it “legalized graft.” Like much of what is done by politicians in the name of economic development, it is corrupt and corrupting, though not illegal.
Such agencies are, it must be admitted, job creators — inasmuch as they usually operate as full-employment programs for political hacks. NYSTAAC has a director, a sub-director for “client development,” his administrative assistant, etc. Winning the Future, one federally subsidized bureaucrat at a time.
The center picks up 50 percent of the costs for “competitiveness” projects, paying half the freight for “consultants, engineers, and outside professional service providers.” It’s your money going into somebody else’s pocket through the hands of a politician.
All this has, you will notice, precious little to do with international trade.
Pending before Congress are three very important trade pacts — with Panama, Colombia, and South Korea. These deals already have been negotiated. Each promises to open up new opportunities for American businesses, not the least of them easier access to overseas markets. With unemployment topping 9 percent, you’d think the Obama administration would be looking to help American businesses connect with business opportunities anywhere in the world they may be found. But there are a fair number of union guys collecting TAA payments, and politicians at all levels love being able to hand out grants in the grand tradition of bribing citizens with their own money. And so an extension of TAA funds at the current stimulus-inflated level has been attached to the South Korea deal.
Beyond the inherently distasteful nature of TAA, there are other problems. Trade pacts submitted to the Senate cannot be amended, a consequence of the Trade Promotion Authority (TPA) procedures under which such deals are negotiated. Senator Hatch rightly objects that using TPA to prevent the Senate from directly addressing a controversial piece of legislation only tangentially related to trade with South Korea involves an improper (and possibly unconstitutional) delegation of congressional powers to the executive. Such concerns, Senator Hatch wrote in a letter to the president, “are beyond the scope of TPA authority and unduly infringe on the rights of Members of the Senate to carefully weigh and debate the merits of TAA.”
And that’s the Obama administration’s trade agenda in brief: hostile to free trade, oleaginous in its courting of labor-union and public-sector interests, inclined to aggrandize executive power, and bereft of intellectual honesty. Congress should not sit idly by, and Senator Hatch is right to lead the resistance.