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Leo Hindery, Jr.

Leo Hindery, Jr.

Posted: July 13, 2010 09:30 AM

Although John Edwards had no business running for President in 2008 given the tawdry marital indiscretions that he was hiding from nearly everyone, including from his senior campaign team, he nonetheless clearly established the agenda on jobs (and labor) and trade for all of the Democratic candidates, especially as it later turned out for then Senator Obama.

Following Edwards' second-place finish in Iowa his other top advisor and I (at the time, I was serving as his Senior Economic Policy Advisor) compressed into a single 'manifesto' all of his statements over the prior year on these issues. For the short remainder of his campaign, he spoke continuously about keeping a robust number of manufacturing jobs in America, on the order of 20% of overall employment. He spoke of the need to forge a new partnership between organized labor and government. He pledged to make passing the Employee Free Choice Act (EFCA) a major and immediate priority and to passing a ban on hiring permanent replacement workers for strikers.

Concerning trade and globalization, we espoused investing the resources required for the U.S. to keep its competitive edge in the world, and asserted that our global trade needed to be based on four core principles:

1) First and foremost, America's trade agreements must provide clear and measurable benefits for American workers - and then they must be enforced. This means they must include prohibitions against illegal subsidies, currency manipulation and other trade abuses. It means they must protect U.S. national security-related manufacturing essential to our high-tech weaponry and defense.

2) America's trade policies must also lift up workers around the world, which is a combined moral, global economic and critical U.S. national security imperative. This means that our agreements must also provide strong protections for the global environment, and that we won't condone agreements with countries which ignore good governance, where there is violence against workers, or where workers are denied just wages and basic labor standards.

3) In negotiating trade agreements "one size does not fit all", and thus America's trade agreements must account for significant differences in form of government, the rule of law, the relative maturity of economies, and common trade and business practices. Emphasis should therefore be placed mostly on fair and balanced bilateral and regional trade agreements, and not on multilateral global agreements such as Doha.

4) Restoring fair and balanced trade with China in all aspects must be a particular priority. We will do business with China, but we will not be pushed around or talked to death while they take our markets.

Senator Barack Obama on Jobs and Trade

Five months later, on July 2, 2008, Barack Obama embraced all of these commitments in a zinger of a speech to the United Steel Workers that I had the privilege to help write. This speech quickly became Senator Obama's own manifesto.

After being introduced by Edwards, Senator Obama said:

"Change is a President who welcomes you into the White House; who's walked with you on that picket line; who doesn't choke on the word 'union'; who lets unions do what they do best and organize our workers; and who will finally make EFCA the law of the land.

"Change is knowing that for trade to work for America, it has to work for all Americans; that we have to stand up to countries that are manipulating their currency or flooding our markets with subsidized goods; that it's wrong to have a 'one-size fits all' trade policy that treats countries as different as China and Mexico as if they were the same; that when workers are mistreated in sweatshops and labor leaders are threatened or even murdered abroad, it not only offends our conscience, it hurts our workers too; and that our job ends not when a trade deal is signed, but when it's enforced.

"Change is ending tax breaks for companies that ship jobs overseas and giving them to companies that create good paying jobs here in America; it's putting people to work...making the materials we need to rebuild America; it's...creating millions of new jobs - jobs that we want to be good union jobs - and giving our workers the skills to do them."

SO, WHAT THE HECK HAPPENED FROM JULY 2, 2008 TO JULY 7, 2010?

With every good intention and with one of the most precise 'promise-full' agendas in the history of American electoral politics, Barack Obama sailed his new ship of state into the White House in January 2009. And then the "gang who couldn't (or didn't want to) steer the ship straight" almost immediately ran his jobs and trade promises aground.

His key economic advisors - Larry Summers, Tim Geithner, Cristina Romer and Rahm Emanuel - must have, in this order, told the new President something like the following, for how else to explain the fact that over the succeeding eighteen months the defining commitments he made during his campaign were either abandoned or largely went for naught:

1) "Pass the economic stimulus package we've designed, Mr. President, and the official unemployment rate won't get any higher than 8.5%. And because every earlier administration since 1947 did so, we're also going to keep ignoring the real unemployment figure even though for the first time since then there are as many uncounted unemployed Americans (15 million) as there are counted ones (15 million)."

2) "We know you emphatically promised workers that EFCA would be one of the first things your new administration would tackle, but we're not going to do so. It isn't as if the Republicans in Congress are going to take up this mantle."

3) "Larry is giving a speech today [June 19, 2009] to the Foresight Symposium which is going to largely define our job creation efforts on your behalf during your first term. He plans to say that essentially a job is a job and that America's loss of manufacturing exports and jobs can be made up with exports of 'software, movies, medicine, university degrees, and management consulting and law firm services', which of course defies reality and contradicts every speech you gave during the Campaign in proud towns like Dayton and Flint.

4) "Even though the issue of America having an industrial policy and trade policies that mirror the mercantilist practices of our major trading partners came up repeatedly during your campaign, we want you instead to repeatedly say that the combination of green energy technologies, exported services, and new free trade agreements or FTAs will sufficiently revitalize the American economy."

5) "Despite your even more explicit promise about immediate and complete reform of our trading with China, we want you to effectively ignore China's massive illegal subsidies and its abusive labor and environmental practices. Instead, let's wait 18 months, all the way until June 2010, and then get China to commit only to a meager 5% or so annual revaluation of the yuan and to nothing else. Of course, since the yuan is about 40% undervalued right now, it will take until 2018 for even this commitment to get the yuan to where it should be today."

6) "We know you promised workers that you would immediately end the massive 'tax breaks for companies that ship jobs overseas and give them to companies that create good paying jobs here in America'. However, the multinational corporation members of the Business Roundtable, Business Council and U.S. Chamber of Commerce really hate this idea, so we've decided to heed their objections instead."

7) "Even though you specifically said that 'one size doesn't fit all' when it comes to FTAs and that the three Bush-era FTAs pending with Korea, Panama and Columbia are the bad spawn of the much-discredited NAFTA agreement, we're going to adopt them anyway, with very few changes."

***********

If Obama's "gang" didn't say and do these things, then how else to explain the President's obviously well-intentioned but disheartening speech last Wednesday announcing his Export Council. In this speech he again asserted that doubling U.S. gross exports within five years and making a few extremely undersized investments "in upgrading our critical infrastructure from high-speed rail to high-speed internet" are sufficiently addressing the massive 22-million "jobs gap" we need to fill today in order for our workforce to be fully employed in real terms.

Yet in the President's own words, doubling gross exports will create at most 2 million jobs over five years. And as the United States Business and Industry Council (USBIC) has repeatedly identified, merely increasing U.S. gross exports will accomplish no economic good per se. Growth and employment can only result from increasing U.S. net exports, which the recent rise of America's trade deficit shows is not happening.

In his speech, the President also obviously ignored his prior words when he said that the "pending Korean Free Trade Agreement [is] an agreement that will create new jobs and opportunity for people in both our countries", while implying the same thing about the Panama and Colombia FTAs, all of which is untrue. And after completely ignoring China's myriad trade abuses, except for giving it the slightest slap on the hand for its 40% currency manipulation which Secretary Geithner just declared to be a "significant development", how could he then at the end of the speech laud China for "reopen[ing] their market to American pork and pork products"?

Have any of you ever seen the ecological disasters called 'hog farms', which we now get to robustly expand in our country while China, in its, gets to manufacture high-value Apple iPads and export them to the U.S?

Only net exports on the one hand and very large-scale imports substitution on the other matter, because only large-scale imports substitution can create millions of new jobs. The only goal now must be massive job creation of the sort that sustains economic prosperity, for which an exports strategy is but a single tool. And with China alone responsible for 75% of America's trade deficit in manufactured goods, the solution is absolutely not going to be found in our exporting more pork rinds to Beijing.

We're in the midst of a protracted jobless recovery, Mr. President, and we're facing an unprecedented "jobs gap" and the high likelihood of a what's called a "low growth/high unemployment trap". It's past time for you to declare a full-scale jobs emergency and to demand that Congress get on board.

And with respect, it's time for you to go back to the July 2008 version of your Jobs & Trade Manifesto and abandon this half-hearted July 2010 version which your advisors foisted on you.

Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.