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.