As Congress brought its year of work to an end with an enormous continuing resolution, there was much attention to the many items that did pass Congress. But in the closing push there was a critical but little noticed piece of legislation that did not pass Congress. In its final hours, the U.S. Senate did not pass legislation to extend the Trade Adjustment Assistance (TAA) program. As a result, at the end of 2007 this program, which provides benefits to workers that lose their jobs as a result of international trade, expired.
TAA was created under the Kennedy Administration with the central concept that — although freer trade had great net benefits for the country — certain industries and workers would lose in the face of increased foreign competition and deserved assistance from the federal government in finding new jobs. Although occasionally criticized by free-market zealots, this basic concept has wide support in the Congress and in the country as a whole. This support has kept the TAA program with some amendments in place since 1962. The current program provides funds for training displaced workers for up to two years to develop new skills and potentially even complete college degrees. While in TAA, the displaced worker and his or her family can get income support and subsidized access to health insurance.
The program is far from perfect and both Houses of Congress are considering legislation to extend and improve TAA in a number of ways. Despite its weaknesses, however, TAA is the only federal program designed to provide for the needs of workers, firms, and farmers that lose as a result of international trade and globalization. At any given time, TAA is providing benefits to approximately 60,000 displaced workers and their families, as well as hundreds of farmers and firms. Several times that many workers are certified to obtain TAA benefits, but choose not to do so because they find other jobs or — troublingly — do not know about the potential benefits available to them.
TAA was expanded in 2002 to provide health insurance and provide benefits to new groups of workers, such as those that lose their jobs because the factories they work in move to foreign countries. Still, total spending on TAA is only around $1 billion per year — that is less than 5 percent of what is spent on the U.S. farm program. According to figures provided by the Organization for Economic Cooperation and Development (OECD), this is much less compared to the total size of the economy than other developed countries spend. And many groups of workers — such as virtually all workers in the service industry, which is the bulk of the U.S. economy — are not currently eligible for TAA benefits.
Unfortunately for those that do receive or might soon need those benefits, the Senate — apparently in a dispute involving unrelated legislation — chose not to take up a last-minute extension of TAA passed by the House of Representatives before adjourning for the year. As a result, TAA expired on New Year’s Eve.
The immediate impact of the expiration is unclear. The Department of Labor (DOL), which administers TAA, quickly wrote a letter to Congress to deflect claims from Democrats that Republican Senators were responsible for the deadlock saying that the agency planned to use funds appropriated for TAA even if the underlying statute that created the program was allowed to expire.
That is somewhat reassuring, but the Bush administration has been no friend of TAA. In the five years since the Congress updated TAA, the DOL has not even bothered to issue new regulations to support the new legislation. There have been literally dozens of cases in which workers who are denied benefits under TAA by the Department of Labor have been forced to sue the government to obtain benefits. The Court of International Trade, which hears these appeals, has excoriated DOL’s handling of the program as riddled with “flaws and dysfunctions.” With the underlying legislation lapsed, what standard will the courts now have to even evaluate DOL?
It may well be that upon returning for business in 2008 the Congress will get around to extending TAA. Unfortunately for TAA beneficiaries, the forces of globalization and international competition did not expire on Dec. 31, 2007. Given this, it is not surprising that working people who face international competition in concrete terms are increasingly skeptical about the benefits of free trade and the commitment of the U.S. government to addressing their needs.
Mastel is a cofounder of the nonprofit Trade Adjustment Assistance Coalition and a senior adviser at Akin Gump Strauss Hauer & Feld, a Washington law firm.