David Brooks’ article today in The New York Times belittles the cost of regulation to American businesses and the U.S. economy and praises the Obama administration for its “rigorous cost-benefit analyses” of proposed regulations. While he does note that “the Obama administration has significantly increased the regulatory costs imposed on the economy,” Brooks also says that it’s not clear that those regulations “have had a huge effect on the economy” or indeed on small businesses.
So more and more onerous regulations at higher and higher costs and greater economic uncertainty among businesses don’t have a dampening effect on hiring more workers or on capital investment? As CEI’s Clyde Wayne Crews and Ryan Young noted in a recent article:
There are more than 4,200 new rules at various stages of the federal regulatory pipeline right now. Companies, especially the ones too small to afford a Washington office, don’t know what’s coming next. No wonder they are skittish about making long-term investments, whether in employees or capital.
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At long last both the House and the Senate are scheduled to vote on the three free trade agreements (FTAs) that have languished for more than four years. Votes on the trade pacts are scheduled for next Wednesday and will be linked to votes on Trade Adjustment Assistance — a condition that President Obama and Democratic leaders had demanded.
Although there appears to be bipartisan support, the AFL-CIO is still opposed to all of the pending FTAs and brought hundreds of union members to Capitol Hill to tell their congressional cohorts to vote against all three pacts. Their particular focus is on the U.S.-Colombia FTA, even though they demanded — and got — an Action Plan for Colombia to take specific and onerous steps to ostensibly protect union workers in that country.
As CEI has written, trade unions have been largely responsible for holding up the trade pacts, even though the agreements are expected to create many thousands of new jobs. Obviously, appeasing unions by giving in to their demands hasn’t worked.
One can only hope that they won’t have the clout to influence enough Democrats to vote against the pacts.
Now that reauthorization of Trade Adjustment Assistance (TAA) is all but a done deal — a quid pro quo from Republican leadership to President Obama and his union allies to get him to submit three pending trade agreements — it’s useful to look at who the recipients were over the past year to get an idea about how the new monies, to the tune of $1.17 billion per year, will be spent. Remember that TAA provides unemployment payments, retraining, relocation expenses, and other payments to workers who ostensibly lost their jobs because of foreign competition.
First the workers’ group has to be certified by the U.S. Department of Labor that they meet three criteria for eligibility to apply for TAA assistance. DOL has a searchable website with their determinations, and the following random examples are taken from their listings from January 1, 2010, through December 30, 2010.
Here’s one example of a certification for payment eligibility by the U.S. Department of Labor to workers at All American Sports Group Corporation. These workers refurbished football helmets and claimed that they were harmed by the company shifting “the supply of like or directly competitive services to a foreign country.”
Not only were all regular workers certified but also temporary workers from Manpower Staffing Services and Kelly Services. Plus, if one reads closely, even workers “threatened with total or partial separation from employment” are eligible to apply for assistance. And that’s not an uncommon example. Take Solo Cup Operating Corporation, which makes single service cups. Pretty much the same determination was made that regular and leased workers were eligible for TAA. It must be a failing on my part — I thought that temporary workers were, well, temporary.
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Senate Republican Leader Mitch McConnell (R-Ky.) made a gutsy statement on the Senate floor today, saying that he was introducing an amendment to give the president Trade Promotion Authority (TPA). This was said while the Senate was considering a bill to extend trade preferences to less developed countries and about to deal with Trade Adjustment Assistance legislation, which the administration has said is essential before three pending trade agreements are sent to the Senate.
McConnell noted that TPA, also known as “fast track” authority, gives the president the ability to negotiate trade agreements and have them considered by Congress without amendments. He said that TPA, however, expired in 2007, and the administration has made no efforts to revive it. He called out trade unions for obstructing that process:
“TPA has long had bipartisan support, and led to numerous trade agreements with 17 new countries during the Bush administration, including the three we hope to consider shortly. Unfortunately, Democrats and their union allies allowed TPA to expire in 2007. And this President has made no effort to revive it. But without TPA, the U.S. will likely never agree to another deal again. The unions will make sure of it. And we’ve seen what happens then.
After the North American Free Trade Agreement passed in 1993, TPA expired. In the eight years that followed, the U.S. did nothing while other countries moved ahead, integrating themselves in the global economy. We can’t let that happen again. We can’t miss more opportunities to compete in foreign markets with U.S.-made products just because unions don’t want to.”
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The Summer of 2011 will likely be remembered as a season that overregulation came to a boiling point — at all levels of the U.S. government.
At the federal level, businesses big and small were spending countless hours and resources dealing with the first mandates from from Dodd-Frank and Obamacare and planning for the next ones to be issued.
A visible moment of regulatory overkill was the armed raid on August 24 of the Gibson Guitar factory in Memphis, because of an alleged technical violation in importing non-endangered Indian wood. As September opened, the Obama administration relented on a costly new rule further restricting emissions of ground-level ozone — just four years after a previous limit had been issued — but promised the regulation would be back in 2013.
The laboratories of democracy at the state and local level didn’t fare much better in their treatment of entrepreneurs, especially of those who are literally the smallest business people. All over the country, overzealous authorities shut down children who had the temerity to practice the time-honored tradition of setting up a lemonade stand.
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It is perhaps a little ironic that the most vocal opponents of online poker will soon be the only people in the USA who can legally play online poker. The District of Columbia is moving forward with its plans to run the pilot program, which will allow 20 to 30 places around D.C. to offer online poker within the next week or so, despite the claims of corruption during the initial phases when the plans were pushed through the legislative process. If all goes well, the virtual poker rooms will open their doors to anyone (of age) in the District by the end of the year.
The planned system in D.C. has a lot of problems from a free market standpoint. For one, a monopoly system of government run poker room eliminates competition and the benefits that come from that. In the pre-UIGEA, pre-Black Friday era of online poker, players would quickly realize if a poker website had unfair odds, shady practices, or something as simple as bad customer service and they could and did move on to other poker rooms on the Internet. There would not be such an option for D.C. online gamblers.
Even with its problems, the D.C. online poker system would set the District on a path toward legalized online gambling. Unfortunately for poker players in the rest of the United States, they are left with a choice of either driving to the brick-and-mortar casino or moving to another country.
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In yesterday’s New York Times, trade economist Jagdish Bhagwati takes the Obama administration and Congress to task for letting the World Trade Organization’s Doha Round languish. Bhagwati points out that with all the attention focused on bilateral agreements, special interests can have a hey-day and exercise their clout. Witness what trade unions have increasingly demanded with the pending Free Trade Agreements, cloaking their protectionist demands with talk of worker rights.
When the United States negotiates bilateral deals with other countries, the unbalanced nature of the one-on-one negotiations also opens the way for all manner of lobbies to ram their self-serving demands into the agreements.
Bhagwati noted that in a multilateral trading system, special interest lobbies are often stymied by emerging developing nations that clearly see the anti-competitive protectionist slant.
American labor unions have learned these same tricks, urging Democratic legislators and administrations to block bilateral trade deals unless their demands for labor protections are met, as they did with the three long-delayed agreements now pending.
But larger countries with more clout, like India and Brazil, will allow no such provisions. They correctly see these labor provisions as a form of anticompetitive protectionism. And they point out that it takes chutzpah for the United States to argue for labor rights abroad that often exceed those at home.
Bhagwati calls for President Obama to bring Democrats and Republicans together to add the Doha round to the packages of pending trade deals:
The president should ask Democrats and Republicans to immediately add the Doha round, as it has been negotiated over 10 years, into the same all-or-nothing package as the three bilateral deals. Such a bold gesture has a precedent. After sitting on the fence his first year in office, President Bill Clinton embraced the cause of trade, despite the political costs, and fought fiercely, and against great odds, for the Uruguay round. Mr. Obama should do no less.
Amen to that.
As summer heats up, so does Congress as it looks at legislation that should be considered before the August recess. The three pending Free Trade Agreements (FTAs) — with South Korea, Panama, and Colombia — are a case in point. Each of those agreements has to have implementing legislation submitted to and then voted on by Congress. But there are still some thorny issues that divide the Republicans and the Democrats, especially in the House.
The Obama administration, after coming around to reluctant support of the FTAs that have been languishing for almost five years, just last month said that the trade pacts couldn’t be considered unless Congress also passed Trade Adjustment Assistance (TAA) — legislation that would give hefty monetary and other benefits to workers ostensibly losing their jobs because of foreign competition. Some Republicans couldn’t believe the about-face — “you mean that these three trade agreements will create hundreds of thousands of jobs, and at the same time we have to bail out people losing their jobs because of trade agreements?” paraphrases their reaction.
But just today, the chairman of the Senate Finance Committee, Sen. Max Baucus (D-Mont.), a supporter of TAA, announced that the committee will hold a “mock mark-up” on June 30 of draft implementing legislation that includes reauthorization of TAA. (The three trade pacts were originally negotiated under fast-track authority, which means that no amendments are allowed on the final bills. In such cases, the “mock mark-ups” on drafts allow changes that are then submitted to the President who accepts or rejects them and submits final implementing bills to Congress.) Sen. Baucus also said he had reached agreement with House Ways and Means Chairman Dave Camp (R-Mich.) and the White House.
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In noticing the upcoming debate tonight featuring Republican contenders, I wondered to myself under which candidate would the federal government actually be smaller after four years, should any of them win?
Maybe Ron Paul, in working with some imaginary 114th Congress; but of course Trump told the CPAC crowd that Paul could never win. But he’s fun to watch.
Tonight’s candidates will make the general case to to cut spending and debt. But sometimes it seems that “Big Government Conservative,” which detractors called Trump, is a redundancy. The largest spending and regulatory programs have and do enjoy their support. There’s more Tea Partly than Tea Party in my view.
Thus even slashing record spending and debt is no longer enough — even if the budget were balanced at, say, half its current level. The regulatory state has surged such that the U.S. is an increasingly hostile environment for anyone inclined to create a business (and employ others).
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