March 1, 2024

Ultimatum Holding Up Trade Deals

President Obama has made the three deals a focus of his foreign and economic policy, but the Monday ultimatum reflects the political difficulty of advancing the deals in the face of high unemployment and opposition from parts of the Democratic base.

“This administration believes that just as we should be excited about the prospect of selling more of what we make around the world, we have to be equally firm about keeping faith with America’s workers,” said Ron Kirk, the United States trade representative.

The announcement puts the White House in line with Congressional Democrats who have made expanded benefits a condition of their support for the trade deals, and at loggerheads with Republicans who say the government cannot afford the cost.

Senator Orrin Hatch, the ranking Republican on the finance committee, said in a statement that the decision was “hugely disappointing.”

“It makes no sense to shut the door on increasing U.S. exports by over $10 billion in order to fund a costly program,” said Mr. Hatch, who is from Utah.

The federal government has provided supplemental assistance to workers whose jobs were shipped overseas since the 1960s, but the scale of those benefits has waxed and waned. The current benefits include training programs, money to cover the cost of searching for a job or relocating to a new city, and tax credits for health insurance.

In 2009, Congress expanded eligibility for the program significantly as part of broader economic stimulus legislation. The Labor Department estimates that the program provided benefits to about 280,000 workers last year at a cost of about $1.3 billion. But the expanded eligibility lapsed in February after House Republicans opposed its renewal.

Gene Sperling, director of the National Economic Council, said Monday that the White House was confident it could persuade Republicans to reverse that decision.

The administration started informal talks with the Senate about the three trade deals early this month, a step that seemed to reflect confidence on both sides that a deal can be done.

“We can work on Congressional leadership to get that accomplished,” Mr. Sperling said.

Conservative groups like the Cato Institute in Washington say there is little evidence that the program helps workers find new jobs, and that the government cannot afford the expense. They also question why the government should provide special help to the relatively small portion of unemployed workers who lose jobs to overseas competition.

“Furthermore, the existence of the program reinforces a false impression that international trade is a negative factor for the economy,” Sallie James, a trade policy analyst at Cato, wrote in a recent policy note arguing against continued financing.

But a range of business groups have sided with the White House, supporting the expansion as a necessary step alongside passage of the trade deals.

In a letter sent to Congressional leaders this month, the groups, including the United States Chamber of Commerce, wrote that the program was “an essential part” of the nation’s trade policy that had enjoyed bipartisan support for most of the last 50 years.

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