Opinion pieces and speeches by EPI staff and associates.
THIS PIECE ORIGINALLY APPEARED IN COLUMBIA DAILY TRIBUNE ON MARCH 4, 2003.
Bush’s sleight of hand distracts us from vanishing jobs
Inaction by Congress on extending unemployment benefits could leave the nation’s eight million jobless in danger
by Adam Hersh
Some politicians are a lot like magicians. Their true feat is getting us to focus on the distraction in their right hand so we won’t see the real trick happening in their left hand.
Last month in Beijing, Robert Zoellick, President George W. Bush’s international trade ambassador, had nothing but praise for China’s growing trade surplus. Meanwhile in St. Louis in January, the president stumped for more tax cuts, standing before a facade of boxes with the words “Made in China” covered over in tape.
Why the illusion?
What the politicians didn’t want us to notice is the flip-side of China’s surplus— the U.S. trade deficit with China—which surged 24% last year to a record $103 billion.
The trade deficit is a telling reminder of the ongoing crisis in U.S. manufacturing and America’s growing manufacturing dependence. In 2002, the overall U.S. trade deficit—the amount we buy from the rest of the world in excess of what we sell—reached an all-time high of $435 billion. Ninety-nine percent of this deficit is explained by the goods we must increasingly buy from overseas because we no longer make them at home.
The crisis in manufacturing isn’t exactly a secret. While the economy boomed in the late 1990s, the manufacturing sector plunged into recession, losing more than 2.4 million manufacturing jobs since 1998. This was the first time since before World War II that we lost manufacturing jobs during a period of growth.
As the “Box-gate” incident betrays, the Bush Administration is well aware of the manufacturing crisis. But it is loath to admit such a crisis exists. After all, it would mean acknowledging the failure of the economic policies the president champions that actually encourage big companies not to produce in the United States.
The current tax code gives billions of taxpayer dollars in subsidies to companies that export factories, outsource production, and then hide in offshore tax shelters. The president’s continued cheerleading for the “strong dollar” is pricing small domestic producers out of international markets while creating windfalls for companies that can move overseas to produce goods for sale in the United States.
And his relentless effort to exclude worker and environmental rights from negotiations on the proposed Free Trade Agreement of the Americas and the current “Doha Round” at the World Trade Organization is creating competitive advantages for companies that shirk social protections.
While millions of Americans are tossed out of work, a small number of multinational corporations are profiting splendidly from this deal. No wonder the Bush Administration is working its vanishing act in hopes that the manufacturing crisis will disappear from public view.
Bush needs to understand that as manufacturing dries up, so too do the economic fundamentals that promote balanced growth and widely shared prosperity during this current jobless recovery and for our longer-term economic health.
After all, manufacturing industries are the most important engine of productivity growth in our economy as well as the source of high-wage, high-benefit jobs that are a ladder to middle-class life. Even a hint of U.S. deindustrialization should be sounding alarms all across the West Wing.
Real economic leadership would require closing, not expanding, the outrageous corporate tax loopholes and working with other countries’ monetary authorities to ease the value of the dollar, as President Ronald Reagan did in 1985.
Before signing us onto any new trade agreements, Bush should first deal with the problem of the mushrooming manufacturing-driven trade deficit before it drives us too far in debt, thus sparking a financial crisis.
Then, once the trade deficit is under control, he should ensure that trade will improve, rather than undermine, living standards of working families around the world. But rather than face up to the challenge, Bush is banking on sleight of hand to keep the manufacturing crisis under wraps.
Last Christmas Eve, the Bush Administration quietly axed a Department of Labor program that documents mass layoffs of workers when factories close and move overseas.
As good manufacturing jobs continue to disappear, the president would be wise not to be taken in by his own tricks. Voters, too, can make things vanish into thin air.
Adam Hersh researches manufacturing and international trade at the Economic Policy Institute.
[ POSTED TO VIEWPOINTS ON MARCH 4, 2003 ]