After Barack Obama was re-elected in 2012 there was much discussion about issues on which a Democratic President and a Republican Congress could cooperate. What the establishment put at the top of the list was trade policy; meaning more "free trade" agreements to advance the interests of transnational corporations. The bi-partisan alignment would once again be a "globalist" Democratic president who had broken with most of his party and a large majority of GOP legislators in thrall to Big Business. This was how NAFTA and the World Trade Organization were implemented under President Bill Clinton. The plan seemed to be working when the House voted 218-208 to give Trade Promotion Authority (TPA) to Obama; a measure that restricted Congressional power in favor of the executive in trade negotiations. Only 28 Democratic members voted for TPA. The bill was carried by the Republicans. In the Senate, TPA passed 60-38, with only 13 Democrats in favor. Rep. Paul Ryan (R-WI) and Sen. Ted Cruz (R-TX) even co-authored an op-ed in the Wall Street Journal advocating the TPA grant to Obama.
President Obama had been negotiating the 12-nation Trans-Pacific Partnership (TPP) since entering office. TPA was needed to "fast track" its passage. The talks had been a hard slog without producing many benefits. When the U.S. International Trade Commission issued its required report on the TPP, it found that while annual U.S. exports to the world would increase by $27.2 billion, imports would increase by even more, $48.9 billion, further expanding the trade deficit as other pacts had done. Though agriculture and financial services would gain, manufacturing would continue to decline to the benefit of overseas rivals.
Yet, the ITC still claimed TPP would boost average American incomes. But even if accepted at face value (and the ITC has a poor record), the gain over a 30 year period is less than the gain from even a slow month in the domestic economy. Also, according to the ITC, by 2032 there would be 128,000 more full time jobs in the U.S. economy due to TPP, and 174,000 by 2047. Again, about the same as one month of domestic growth. The Peterson Institute, a corporate-funded private group with a pro-trade bias has found even less incentive to adopt TPP. It has predicted that it would raise GDP by only one-half of one-percent over a 30 year period! A completely meaningless number. If advocates of TPP can't cook the books for better results than this, the real impact will likely be negative again as in past deals.
If the goal of economic policy is to create good jobs for Americans, it seems apparent that concentrating on domestic growth is a far better policy that pursuing more "free trade" agreements that have cost the U.S. economy millions of jobs in industry and related sectors. Such deals have put downward pressure on wages as Americans have had to compete with "cheap" foreign labor backed by foreign subsidies and other "unfair" policies. The result has been to transfer not just jobs but technology and capital from the U.S. to nations overseas, some of whom (like China) are strategic rivals.
The TPP allows overseas "partners" to continue to use a variety of measures to continue the damaging trend of past agreements. Its preamble states that the TPP will
RECOGNISE their inherent right to regulate and resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals;
Economic nationalism is still be alive and well (as it should be) for those governments committed to putting the interests of their productive citizens ahead of the profits of transnational firms who have abandoned any sense of national allegiance. This is, of course, the priority of President-elect Donald Trump. During the campaign he said he would not implement the TPP, a decision that will fashion a new bi-partisan coalition between most Democratic congressmen and a growing number of Republican critics of "free trade." Indeed, after meeting with Trump after the election, Speaker Ryan informed President Obama that the House would not take up TPP during the "lame duck" session as Big Business lobbyists had been urging. Such a move would have been a clear affront to the voters. Thus, when Obama attends the TPP summit in Peru at the end of November, it will be to convey his failure to get the agreement approved by Congress or the American people.
With a shift of emphasis to domestic growth, bi-partisan cooperation can be mobilized for much needed infrastructure programs. The sections devoted to what the Founding Fathers called "internal improvements" in the stump speeches of both Trump and Hillary Clinton could have been written by the person, so similar were they. There are still some libertarian critics of government spending even on such a core responsibility. They claim that Obama's efforts to use "shovel ready" projects to stimulate the sluggish recovery failed. Obama, however, devoted only a small fraction of his huge spending spree to infrastructure. His emphasis was on welfare benefits and subsidies to state and local governments, the wrong end of the economy to generate growth.
Trump's campaign website promised to "Pursue an 'America's Infrastructure First' policy that supports investments in transportation, clean water, a modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs." As part of this plan, and consistent with his desire to bring (and keep) jobs in America, any such program needs to include strong "Buy America" provisions for the equipment and materials to be used in construction. Trump has already made this explicit in regard to steel. There should be broad support on both sides of the aisle in Congress for such a program, as there is among the general public.
A nationalist economic agenda, both at home and abroad, can help narrow the terrible divisions that have been tearing apart American society. All great powers in history have disintegrated internally before they succumbed to foreign aggression.
National security should follow unity on other issues; and tying Trump's plans to rebuild the military to the infrastructure program makes sense. In 1936-37, the economy took another tumble, losing much of the gains made from the depth of the Great Depression. The economy needed a new stimulus and the United States needed to rebuild its strength as the world headed into more perilous times. The Naval Act of 1938 authorized a 20% increase in the size of the fleet. This act was called The Second Vinson Act after Rep. Carl Vinson (D-GA) chairman of the House Naval Affairs Committee. This is why today the Navy has an aircraft carrier named for Vinson.
Trump has also called for a roughly 20% increase in the Navy, expanding the fleet to 350 ships. The industrial supply chain spreads across the country, though two blue states (Virginia and Connecticut) would get a major boost. I recently had the opportunity to ask D.R. Wyatt, Corporate Vice President of Huntington Ingalls Industries, whether the nation's shipbuilders could respond quickly to Trump's plan. Huntington Ingalls builds 80% of the Navy's ships. He assured me it could; indeed, warship construction could be nearly doubled almost immediately. There is no impediment except the will to act, and a renewed commitment to American "greatness" should provide that across the two major parties. A truly national agenda is the best way to reanimate the noble sentiments that first drew officials and activists to a life in public service.
William R. Hawkins is a consultant specializing in international economic and national security issues. He is a former economics professor and Republican Congressional staff member.
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