THE BLOG
04/28/2008 12:07 pm ET Updated May 25, 2011

Clinton Criticizing Closure of Indiana Factory That Clinton Helped Close

In my upcoming book, The Uprising, one of the threads tying together the disparate forms of populism on both the Right and Left is a sense of confused frustration at a political system whose politicians employ disinformation and propaganda to make basic economic issues indecipherable. This has been no more obvious than on the issue of trade and globalization in the presidential race -- and Hillary Clinton's latest television ad (which is also a standard part of her stump speech) shows exactly what I'm talking about.

Clinton is airing this advertisement in Indiana, bemoaning the closure of a defense contractor Magnequench's manufacturing plant in Valparaiso (she is also echoing this line in her stump speeches). Looking at the camera, she tells us she's upset that the 200 jobs that were sent to China, and that "now America's defense relies on Chinese spare parts." And then comes the kicker: She tells viewers that "George Bush could have stopped it, but he didn't."

Clinton is certainly right that it is a tragedy that 200 American jobs were killed in a corporate deal that also exported sensitive military technology to China. But she forgets to mention that it wasn't George Bush who was in the key position to stop it -- it was Bill Clinton.

Back in 1995, a Chinese consortium, which included two Chinese state-owned companies, made a bid to take over Magnequench. Because the company makes key parts for smart bombs, the takeover had to be approved by the Clinton administration's Committee on Foreign Investments in the United States. Despite the national security and economic problems with selling off such critical manufacturing capacity to the Chinese -- and despite the knowledge that such a deal would likely end in a domestic mass layoff -- the Clinton administration approved the deal. This same deal -- not surprisingly -- paved the way for those 200 Indiana jobs and that sensitive military technology to be shipped to China.

The Clinton administration's move was not surprising. This was an administration whose NAFTA and China PNTR record more than proved it was intent on helping Big Money interests face as little resistance to international financial transactions as possible -- consequences be damned. But the move was very controversial, raising the ire of key Hillary Clinton surrogate Sen. Evan Bayh (D-IN). As the Los Angeles Times reported in 2005, "Bayh was particularly disturbed by the committee's decision in 1995 to approve a Chinese consortium's takeover of Magnequench Inc." In 2006, Bayh specifically slammed the Clinton administration's approval of the deal to the South Bend Tribune, saying "It's not smart to put ourselves in the position of relying on the Chinese for a critical component of a vital weapon system, and yet that is what the CFIUS process has allowed."

Unfortunately, as he has campaigned around Indiana with Hillary Clinton listening to her decry the Magenquench fiasco, Bayh has suddenly gone silent on the matter. Apparently, the power-worshiping pursuit of the vice presidency is enough to silence a senator whose constituents were so brazenly sold out and who had previously feigned outrage at the situation.

Luckily, at least some Hoosiers have not forgotten. Here's just one recent letter to the editor -- this one from the Merrillville Post-Tribune on 4/17/08:

Hillary Clinton must have been hoping we Hoosiers have short memories when she decided to take Magnequench as her main talking point in Valparaiso. Apparently Evan Bayh didn't tell her the company was sold in 1995 to an investment group, Sextant, that included two Chinese companies. Her husband was president at the time and allowed this to happen.

In 1995, Beijing San Huan New Material High-Tech Inc. and China National Non-Ferrous Metals Import & Export Corp. partnered with an investment firm, the Sextant Group Inc., to acquire Magnequench.

The sale required approval from the Committee on Foreign Investments in the U.S. That committee is chaired by the secretary of the treasury. It was approved by the committee even though it was known that China National Non-Ferrous Metals is run under the State Council, an arm of the Chinese government.

That same year, it was found by the U.S. International Trade Commission that the San Huan New Materials was associated with the Chinese government and was engaged in illegal practices that harmed domestic industry.

The Clinton White House had one more chance in 1999 to stop the move when the Anderson, Ind., plant shut down and started shipping the equipment to China, but it failed to act. Can we really trust a Clinton not to let our jobs and national security go overseas?

Ed Dixon, Valparaiso

Certainly, some will attempt to argue that Hillary Clinton is not Bill Clinton and therefore she is perfectly justified in criticizing what happened in Valparaiso. But that strained logic crashes into two walls of truth.

First and foremost, Clinton has been citing her experience as a top economic and national security adviser in the Clinton administration as proof she's the most experienced candidate running. Either you take her at her world and you believe her experience in the administration was very real and very serious, or she's the most inexperienced person ever to make a major bid for president of the United States. I, for one, take her at her word about her experience -- and that means it is perfectly appropriate -- nay, essential -- to ask her to answer for major decisions like the Clinton administration's approval of a deal shipping sensitive military technology to the Chinese and eliminating critical jobs in an economically hard-hit part of the heartland. And let's not forget -- Hillary Clinton was an outspoken supporter of the China PNTR deal that helped smooth these kinds of deals for the long-haul.

Then there's the issue of blame. Even if you somehow don't think Clinton should have to answer for a major policy of the administration she brags about working in, it's hard to argue that she's being forthright by airing an ad blaming the deal on George Bush -- and not on Bill Clinton. After all, her ad is saying that Bush should have used the Committee on Foreign Investments to stop the outsourcing -- when Clinton should have used the very same Committee to stop the whole thing in the first place.

And that gets us back to the intense sense of outrage brewing all over the country. It is an outrage inherent in Ed Dixon's letter to the editor -- one that suggests more and more Americans know they are be treated like fools. Politicians like Clinton head to Indiana airing ads pretending to care about economic havoc that they helped sow, denying their own long-record of advocating for NAFTA, then manufacture staged photo-ops so that the national press corps can snap pictures of them downing a shot of whiskey -- as if that proves their down-home credentials. But more Americans have a sense that something is wrong -- that these politicians are lying to them in a desperate attempt at election-year pandering.

It is this awakening and corresponding outrage that is now being channeled into a populist uprising on both the Right and Left. And as my book will show, that populism is not just impacting the presidential election, but changing American politics before our eyes.

Join the book club for David Sirota's upcoming book, The Uprising, due out on 5/27.