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  • Don’t Link Ineffective, Wasteful TAA Program to Free Trade Agreements

    Congress is currently waiting for the Obama Administration to send it three pending free trade agreements (FTAs) with Colombia, South Korea, and Panama. While these FTAs would boost economic activity and strengthen ties between participating nations, the Administration and many in Congress want passage of the FTAs to be linked to the reauthorization of the Trade Adjustment Assistance (TAA) program.

    This ineffective and costly program provides job training, relocation allowances, and unemployment pay for workers who lost their jobs due to foreign trade while they attempt to shift into new occupations. Congress should not link the passage of FTAs to renewal of TAA.

    With out-of-control spending and surging public debt threatening our nation’s stability, renewing TAA makes little sense. TAA provides overly generous benefits for only a small fraction of laid-off workers. Worse, there is little empirical support for the notion that TAA boosts participants’ earnings. For example, an evaluation using a propensity score analysis by Professor Kara M. Reynolds of American University and a colleague found “little evidence that it helps displaced workers find new, well-paying employment opportunities.”

    In fact, TAA participants experienced a wage loss of 10 percent. The authors concluded that this negative impact “is obviously not the result one would expect from a program designed to help displaced workers.” This trend was confirmed by a Government Accountability Office report that concluded that TAA participants are more likely to earn less in their new employment.

    The TAA does nothing for the vast majority of unemployed Americans. Only a small minority of workers actually lose their jobs to trade. Mass layoffs and unemployment insurance receipt data both show that foreign competition accounts for only 1 percent of job losses. Domestic competitors, new technology, and changing consumer preferences cost far more jobs than foreign trade. Under TAA, the government taxes all Americans to provide especially generous benefits to a selected few.

    Linking the FTAs to passage of TAA is unwarranted. The clearly beneficial FTAs deserve to be considered on their own merits and not weighed down with the ineffective and wasteful TAA program. Congress should not agonize over the difference between a straight renewal of TAA at pre-stimulus levels and an even greater expansion. Instead, Congress can immediately send a clear message that it is getting serious about our nation’s dire fiscal straits by letting the entire TAA program expire in February 2012.

    Posted in Economics [slideshow_deploy]

    3 Responses to Don’t Link Ineffective, Wasteful TAA Program to Free Trade Agreements

    1. Sharon Erdely says:

      Well, all I can say is anything that has Obama’s signature to it is not for the benefit of the American people. He is such a two-face liar that I can’t stand to hear his voice. What we need is a record from the Senate and House to be made public on issues and how they voted.

    2. @relawson says:

      I guess you have a strange ally on this issue. I oppose free trade because every trade agreement (free or not) comes with a deficit. Long running deficits must be supported through debt, so that is a failed policy. Your group no doubt disagrees – not sure how you can reconcile your views with the massive trade imbalances, but ignore the facts at your own peril.

      What we do agree on is TAA. I don't like TAA because first, it doesn't work. I know ample people who have lost their jobs to free trade, offshoring to India, and otherwise. I don't know anyone who has benefited from TAA.

      TAA amounts to insurance for the conscience of free traders. You can justify destroying jobs and sleep at night because of the fallacy of "Don't worry about those people, TAA will help them out".

      I'm sure you folks at Heritage will manage to sleep after you take away TAA but hopefully people who have weighed the failings of free trade will lose a few winks.

    3. @COS_ROO says:

      I aggree on the TAA issue. We have enough non-working government handouts. The FTA agreements are a political control mechanism to force other countries to be civil. It doesn't work either (I.E. China). Trade with other countries will adjust itself, since the US workers that lose their jobs, won't be buying products. Affectily lowering our trade deficent, since we won't be participating in that part of the equation. That doesn't solve America's problem. When America produced the best products, that is what American's bought! "Made in Japan" was a joke. We could afford to pay for it, because we were paid to produce the best product at a reasonable price. American salaries aren't the only thing that goes into the cost of a product, and given our productivity over others we were a bargin for the companies. So what is really happening? There is more going on then a simple FTA.

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