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Are the Dems Being Sucker-Punched on Trade?

06/21/2015 08:00 pm ET | Updated Jun 21, 2016
JIM WATSON via Getty Images

Thanks to a last-minute deal last Thursday between President Obama and the Republican leadership in Congress, the fast-track bill is still alive. Its passage depends on whether a handful of Senate Democrats can be persuaded to go along.

Quick recap: The trade negotiating authority that Obama needs to complete his cherished Trans-Pacific Partnership has been linked to passage of Trade Adjustment Assistance (TAA). The House at first voted down assistance in order to kill the whole deal, but then Republicans promised a separate vote on adjustment assistance; and so the House on Thursday narrowly approved fast track, 218-208, with 28 Democrats in support.

Now the Senate has to concur. Back in May, when the Senate voted for the package that was rejected by the House, 14 Democrats supported it. But that package included trade adjustment assistance. The one that will come before the Senate Tuesday includes only a promise to approve adjustment assistance later.

There are enough Democrats in the Senate to block passage with a filibuster, if they hang together. But a few key Democratic senators are on the fence -- and being pushed hard by Obama.

In the coverage of this drama, Trade Adjustment Assistance (TAA) has been portrayed as the deal-clincher. Yes, the Pacific trade deal will cost some jobs, but if TAA is included in the package then Democrats will get something in return that protects workers; and so they will be obliged to vote for fast-track.

But hold on. TAA is pretty weak tea. And it doesn't begin to offset most of the objectionable features of the proposed Pacific trade deal. Let's take a minute to review what TAA is.

The idea dates to the trade agreements of the 1960s and 1970s, an era when American had a stronger labor movement, a high-wage manufacturing sector, and a better social contract across the board. Workers had a broad range of safeguards of their living standards.

Under President Kennedy, the US negotiated tariff cuts in exchange for reciprocal cuts by trading partners. The concept was that freer trade would lower import prices and eliminate some domestic jobs -- but if a worker could show that his or her job was lost as the result of a trade deal, then TAA provided a special pot of money for retraining and supplemental unemployment benefits. The program was launched in 1962, and expanded in 1974 -- and has been part of major trade deals since then.

Even back then, a lot of trade unionists were rightly skeptical. Some referred to TAA as "burial insurance." Studies showed that many workers never got re-employed at anything like their old wages and that TAA covered only a fraction of the loss.

In recent years, as Republicans have cut back benefits, and increased obstacles to coverage, TAA has benefitted only a tiny fraction of workers directly affected by trade. A Labor Department report to Congress in 2011 showed that only some 46,000 workers received wage support.

In the meantime, trade deals have become less about trade barriers and more about corporate wish-lists and the use of back-door trade provisions to dismantle a regulated form of capitalism. Workers have lost out not just from direct job displacement, but from the broad assault on an array of safeguards. The proposed Pacific trade deal would intensify the trend.

The current brand of trade adjustment assistance is even weaker than its counterparts a generation ago. And since it is targeted only at workers who can show direct displacement, it does nothing to offset the broader damage of the deal. Backers of the deal claim (somewhat implausibly) that it will produce hundreds of billions of dollars in economic benefits yet the TAA part of the deal would provide displaced workers with just $300 million. So even in its own terms, this is one lousy deal.

Republicans have tried to frame the legislative situation as a fair trade-off: if they can get their reluctant caucus to vote for adjustment assistance, Democrats are somehow honor-bound to support the whole package. (Republicans don't like TAA both because of its budget impact and their ideological belief that the free market will take care of displaced workers.)

But if Democrats fall for this ploy, they are dupes. For starters, the money in TAA is a pittance, compare to the direct damage that this deal will do to American workers. And it does nothing to protect consumers and citizens from the other elements of the deal that weaken regulatory standards.

Trade Adjustment Assistance is not really about doing much for workers. Mainly, it's about giving Democrats who are in bed with corporate elites some political cover. The cover is pretty threadbare.

If there is a grand bargain to be had on a trade deal, it should go something like this:
Globalization should be used to increase, not depress, labor and environmental standards. For starters, one key nation that fails to enforce the right of its workers to organize or join unions should be compelled to do so. That would be the United States of America.

And rather than trade deals giving special rights to corporations to do end-runs around national laws and regulations (through private and non-transparent dispute panels), trade deals should increase transparency. They should allow workers and unions to directly litigate unfair foreign trade practices instead of relying on governments and corporations.

Beyond those measures, we need a reversion to a social contract of shared prosperity more like the one that ordinary Americans enjoyed before the One Percent took over -- a system that does not put the financial industry in charge of the real economy, and that has some counterweights against corporations treating workers like disposable parts.

Before Democrats entertain any more corporate wish lists, let's see what corporate America is offering in return. Trade adjustment assistance doesn't do it.

A few Democrats may vote for the deal because they naively think TAA is a defensible trade-off. Most who hide behind this scanty fig leaf know exactly what they are doing.

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Robert Kuttner is co-editor of The American Prospect and a visiting professor at Brandeis University's Heller School. His latest book is Debtors' Prison: The Politics of Austerity Versus Possibility.

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