The big labor program that some Republicans might support

Some Republicans in Congress may go along with re-authorizing the expansion of the so-called “Trade Adjustment Assistance” program, or TAA for short, next week, even though it amounts to another wasteful spending program that will further plunge our country into debt. TAA, a little-known program from the 1960s that is still alive today, offers workers who can claim that their jobs have been lost “to trade” additional benefits on top of already generous 99-week-long unemployment benefits.

A quick history lesson: President Obama, despite his history of opposing free-trade agreements as a Senator, has stated that he now favors passage of long-stalled free trade pacts with Colombia, Panama, and South Korea. Yet Congress can’t pass the measures until Obama submits them to Congress, and they are still languishing on his desk. That’s because the President has held the pro-growth agreements hostage unless Congress takes up TAA, and it’s likely he won’t submit them unless TAA is assured of passage.

To be clear, the Obama administration doesn’t just want to extend current TAA funding. They want to extend an expanded version of TAA that was passed into law as part of the President’s failed stimulus bill and that expired back in February reverting to its traditional levels which are in place currently. Today, TAA gives workers up to two years of support for job training, job search and relocation allowances, a refundable “health care tax credit” and a two-year wage insurance program that partly replaces workers’ earnings if they take a lower-paying job. Sound like a sweet deal? Remember that all you need to do to qualify for this bonanza - again, on top of your unemployment benefits - is prove that you have lost your job “to trade.”  

Under the stimulus, TAA benefits exploded: TAA covered workers whose employers shift production to any foreign country, not just those whose jobs were supposedly shifted to countries where the U.S. has an existing free trade agreement. The refundable tax credit for worker’s health insurance was expanded from 65 percent of the premium to 80 percent. And the spending cap on jobs training increased from $220 million to $575 million.

But, most importantly to President Obama, his union allies benefited handsomely from the expanded TAA. The stimulus allowed the refundable tax credit in TAA to be extended to the retiree health insurance plans of companies that went out of business (primarily companies with high labor costs) even if that company did not go out of business because of trade! Thus, American taxpayers wind up subsidizing union benefits under this program.  The stimulus also expanded TAA to cover the services industry.

Fundamentally, the fight over TAA exposes a simple difference in principles between President Obama and those of us who believe in the free market. Trade brings benefits to Americans in the form of lower prices, greater variety, and better quality goods and allows companies to benefit from competition, specialization, and most importantly, innovation. It is simply misguided to grant special breaks to workers who lose their jobs because of innovation. We shouldn’t subsidize horse and buggy manufacturers because the automobile was invented, we shouldn’t subsidize bank tellers because of the invention of the ATM, and we shouldn’t stifle economic growth in exchange for favors to President Obama’s union allies. It’s bad policy and just plain wrong.

Ideally, TAA should simply be allowed to expire. Fortunately, Congress will have influence over whether or not to continue TAA. Congress should resist having free trade agreements held hostage by President Obama’s desire to continue giveaways to his buddies in big labor.

Chris Chocola, a former Indiana Congressman, is the President of the Club for Growth.

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