Trade Promotion Authority TPA & TAA

June 12, 2015 Numbers USA House 
Blocks Advance of TPA Legislation https://www.numbersusa.com/news/house-blocks-advance-trade-promotion-authority-legislation

June 13, 2015 From Heritage Action for America

Trade Adjustment Assistance (TAA) is a welfare program used to pay off Democrats so that they’ll support free trade.  Allowing Democrats to demand a billion-dollar welfare program that doesn’t work as the cost of any trade agreement is bad policy-making.  The above link will take you to a Sentinel Brief explaining the serious issues with TAA as well as why it should not be included in any trade deal or bill.

HERITAGE ACTION SENTINEL BRIEF:

Trade Adjustment Assistance: An Unneeded Welfare Program

Status: Trade Adjustment Assistance (TAA) is a welfare program intended for American workers whose jobs are lost as result of removing trade barriers.  Legislation under consideration in Congress would reauthorize and expand TAA.  Heritage Action opposes any attempt to expand or reauthorize this wasteful and unneeded policy.

Background: TAA is a government welfare program intended to help workers whose jobs are displaced because of trade agreements.  According to the Heritage Foundation, “Under TAA, workers who lose their jobs due to foreign trade are eligible for job training, relocation allowances, and income maintenance while they attempt to shift into new occupations.”  These benefits are often equivalent to an extra set of unemployment benefits, minus state unemployment benefits.  Job training can continue for up to two years.  The program is intended to be a comprehensive rehabilitation of workers who must transition into a new sector of employment.

Structural Problems:  TAA costs the taxpayers roughly $1 billion dollars a year.  It’s supposed to be targeted at workers unemployed because of trade, but in practice, political connections have determined who gets TAA.  After Solyndra, the heavily-subsidized solar panel company with deep connections to the Democratic Party, failed, its laid-off workers received trade adjustment assistance, even though their job losses were entirely due to Solyndra’s unsustainable business model, not trade.  The administration is the sole determinant of who gets benefits, according to loosely-defined criteria.  While the program does have some constraints, they are so lax that it amounts to a slush fund for the executive branch.

TAA Doesn’t Work: When a worker loses his job, he has a number of options.  He can seek retraining, or he can look for another job.  TAA subsidizes retraining, and as a result, makes workers more likely to seek retraining—a difficult and uncertain process.  Even if retraining successfully imparts new job skills, there are still costs in terms of the earnings workers give up while they’re out of the workforce learning new skills.  According to the Heritage Foundation, “Participants’ reduced tax bills and higher benefits from [unemployment insurance] and TAA were not enough to compensate for the additional earnings and fringe benefits they would have received had their paid employment been similar to that of the comparison group.”  This cost amounts to $53,802 for each participant in TAA, with the worker and the federal government each paying half.

TAA is not only costly, it is ineffective.  

TAA is not Needed: Considerable federal aid already goes to the unemployed.  Unemployed workers receive up to 26 weeks of unemployment insurance benefits.  The Department of Labor provides placement and career counseling as well.  This is in addition to state-level agencies whose efforts are more extensive.

Linking TPA to TAA: Indications are that Congress will attempt to link TAA with Trade Promotion Authority (TPA), also known as “fast track authority.”  Each proposal should be allowed to stand on its own merit, or lack thereof.

Call to Action: TAA is an unneeded welfare program that doesn’t work.  Sentinels are urged to contact their member of Congress to oppose TAA.

----------------------

“NO” on the Trade Act of 2015 (H.R. 1314)

 
June 10, 2015

On Friday, the House plans to vote on Trade Act of 2015 (H.R. 1314).

Last month, Heritage Action said it was “incumbent upon House conservatives to use their leverage on TPA to extract ironclad public commitments” from Republican leaders in the House and Senate that the Export-Import Bank would not be reauthorized.  Instead of working to kill the bank, one Republican lawmaker said House Speaker John Boehner (R-OH) has “given assurances to outside groups that he’s in support of it and that we’ll see a vote.”

Absent ironclad public commitments from Boehner and Sen. Mitch McConnell (R-KY) 67% that the Export-Import Bank will not be reauthorized, Heritage Action will key vote against H.R. 1314.  The bill combines President Obama’s request for fast track authority or Trade Promotion Authority (TPA) with a stimulus-level extension of the Trade Adjustment Assistance (TAA) program and, as mentioned above, has become inextricably linked to the passage of the Export-Import Bank.

Free trade benefits the economy and all Americans.  Congress should not shy away from promoting free trade at every opportunity.  However, The Heritage Foundation’s Ambassador Terry Miller says this particular “TPA has gotten bogged down in the politics of protectionism and welfare spending.” 

Traditionally, TPA has been instituted at the front end of trade negotiations so that Congress can engage in and steer those negotiations. Also, TPA has traditionally been useful for pro-free trade Presidents to push free trade agreements (FTAs) through protectionist Congresses. Neither of these are facts in the current environment, limiting the utility of this TPA.

Current and previous Heritage presidents Jim DeMint and Ed Feulner, respectively, explained last month:

Trade Promotion Authority should be considered on its own merits, and good conservatives can disagree on whether the current draft of TPA is appropriate. However, all conservatives should agree that it should not be tied to Trade Adjustment Assistance, an expensive and ineffective program.

Now that it’s done, Trade Promotion Authority in its current form doesn’t deserve passage. A free trade deal worth making can and should be passed on its own, without throwing a bone to those who would waste our tax dollars.

Heritage’s David B. Muhlhausen, Ph.D. and James Sherk explain TAA is an ineffective and wasteful program funded by gimmicks:

Ineffective. Mathematica concluded that TAA financially hurt both its participants and society overall. A cost-benefit analysis found that the net benefit to society of TAA was a negative $53,802 per participant. 

Wasteful. Companies qualify for TAA by showing that they have laid off workers while imports of a “like” product have increased. Foreign trade need not be the primary reason that the company laid off workers—only an “important” contribution to it.

Gimmicks. Aside from budget gimmicks, these bills also lack any fiscal responsibility. They demonstrate the typical spend-now-pay-later Washington status quo.

Heritage Action has always been a free trade organization, but free-market conservatives are understandably split on this president’s request for fast track authority.  Including an egregiously ineffective welfare program in a bill intended to promote trade and promising a clear path forward on the Export-Import Bank, which is the antithesis of free trade, only exacerbates those concerns.  The Trade Act of 2015 (H.R. 1314) is no longer a bill intended to advance free trade — it has become a special interest boondoggle that deserves defeat.

Heritage Action opposes H.R. 1314 and will include it as a key vote on our legislative scorecard.