Trade Promotion Authority in the Senate: Do-It-Yourself Economics
The U.S. Senate yesterday continued discussion on Trade Promotion Authority (TPA), also called the “fast-track” trade authority, which would give the President power to negotiate trade deals based around certain principles and then present any deal to Congress for a vote with no amendments. The bill failed to progress in the Senate last week by 52-45, with only one Democratic senator – Sen. Thomas Carper (Del.) – voting “yes” on the legislation.
The Senate is currently working on possible amendments to this bill, with most of the negotiations taking place behind the scenes. Senate majority leader Mitch McConnell filed a cloture motion to stop debate and limit amendments, which will be voted on today.
In his remarks Sen. McConnell (R-KY) once again emphasized the benefits of trade to entrepreneurs that were described at a recent press conference (hosted with Sen. Warner (D-VA) and Sen. Ernst (R-IA)) with small business owners. These American entrepreneurs highlighted opportunities that knocking down trade barriers overseas could bring to their businesses. While the U.S. does not have many trade barriers, the same cannot be said about the foreign trade partners. Passing TPA is a way to address the situation that damages American exports and workers within those industries. Senator McConnell said:
“So I’m going to keep working to get votes on amendments, both Republican and Democrat amendments. There have been objections from the other side of the aisle, and I would remind our colleagues that even with my strong support, the Senate can’t have a robust amendment process if every single amendment offered by Democrats or Republicans is objected to by our friends on the other side… The Senate can’t vote on amendments that are being prevented.”
In addition, Sen. Orrin Hatch (R-UT), while recognizing the concerns over exchange rate policies of some countries, took the opportunity to address the shortcomings of the Portman amendment that would include currency manipulation provisions. Sen. Hatch presented four valid points why the proposed amendment would not solve the currency manipulation problem, and would simply “kill” the entire TPA bill. As an alternative he introduced the Hatch-Wyden amendment – a more reasonable tool to tackle the issue:
“The Hatch-Wyden amendment on the other hand would strengthen our hand by providing a workable set of tools to counteract manipulation in a way that would protect our interests and achieve real results. And most importantly, it will preserve our ability to enact TPA so that we can negotiate strong trade agreements that will help grow our economy and create jobs.”
Unfortunately, not everyone understands the benefits of free trade. For example, Sen. Harry Reid (D-NV) not only opposes TPA, but also fails to see how trade agreements could benefit American working class. The Nevada Senator blamed the Republican Party for stopping “everything” that could help American middle class, including minimum wage and student debts. Instead of allowing Americans to engage in their chosen business activities through reducing trade barriers overseas, Sen. Reid would prefer to create American jobs through investments in infrastructure and restoration of the Export-Import Bank.
“Repair our nation’s roads and bridges through long-term investments could provide shows and thousands of jobs for Americans. If the Republican leader truly has interest in the middle class at heart, he should be leading the charge for these investments, but he’s leading the charge against them.”
“Mr. President, the Export-Import Bank is weeks away from expiring. If it expires, financing for billions of dollars of U.S. exports would disappear and thousands of American jobs would be in jeopardy. And how much does that cost? Nothing, zero. It’s an ideological mind-set that the Republicans have that they don’t like government programs.”
My CEI colleague Ryan Young has authored a great study on why renewing the bank would not be the miracle cure Sen. Reid claims it is.
Sen. Reid’s fellow Democrat Sen. Jeff Merkley (D-OR) supported his colleague’s argument that freer trade is harmful for American wages and jobs. Instead of encouraging job-boosting exports, Sen. Merkley wants to “save” American consumers from cheaper foreign imports by “making things in America”:
“My aspiration is that we create trade that creates living-wage jobs in America, that puts people to work making things in America. If we don’t make things in America, we will not have a middle class in America.”
Senator Merkley could do with reading this article on the benefits of free trade or chapters 11 and 12 of Henry Hazlitt’s Economics in One Lesson. Free trade routinely benefits and enriches the middle class, while autarky keeps them in serfdom, diverting resources that could be used to do other things while condemning them to produce things we could get more affordably elsewhere.
Put simply, this debate has been between those who understand the science of economics and those (on both right and left) who practice what the British economist Sir David Henderson called do-it-yourself economics. Today we’ll see whether the Senate remains the great deliberative body it claims to be or whether it has collapsed into unthinking populism.