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Guest Host: Tom Gjelten
If there was one take-away from the outcome of the Michigan primary this week it was that trade policy, and the feeling among many that these agreements are costing Americans jobs, is driving voters to the polls and influencing their pick for president. Bernie Sanders and Donald Trump have made attacking deals like Nafta and the Trans-Pacific Partnership central campaign issues. In doing so, they are challenging their party’s thinking on the issue and forcing their opponents to shift their economic message. Guest host Tom Gjelten and his panel discuss why attacks on U.S. trade policies are resonating with voters.
- Jim Tankersley economic policy correspondent, The Washington Post; editor of the "Storyline" policy blog.
- Michael Hirsh national editor, Politico; author of “Capital Offense: How Washington’s Wise Men Turned America’s Future over to Wall Street"
- Douglas Irwin professor of economics, Dartmouth College; author of "Free Trade Under Fire"
- Jessica Wehrman Washington correspondent, The Columbus Dispatch
MR. TOM GJELTENThanks for joining us. I'm Tom Gjelten of NPR sitting in for Diane Rehm. Bernie Sanders says free trade deals have been disastrous for Americans and he's criticizing Hillary Clinton for having supported them. Donald Trump says he'd send a cease and desist order to some of America's biggest trade partners. We're going to discuss trade policy and the presidential race today.
MR. TOM GJELTENI'm joined here in the studio by Jim Tankersley of The Washington Post, Jessica Wehrman of the Columbus Dispatch and Michael Hirsh of Politico. Also, from the studios of Vermont Public Radio in Norwich, Vermont, we have Douglas Irwin of Dartmouth College. Thank you all for being here.
MR. JIM TANKERSLEYThanks for having us.
MS. JESSICA WEHRMANThanks.
GJELTENWe're talking here about what Americans think about free trade and you can help us. Call us with your thoughts and questions, 1-800-433-8850 is our number. Our email address is firstname.lastname@example.org. Of course, you can join us also via Facebook or Twitter. Jim, how do you see this trade issue being framed, both by Bernie Sanders and Donald Trump in the context of the campaign right now?
TANKERSLEYWell, it's being framed very effectively by both of them, I think, in their campaigns to win their respective nominations. And maybe a little more surprisingly by Trump 'cause we haven't seen it like this in a Republican presidential race to this extent before. What they're both saying is that trade has been a bad deal for American workers, that the promise that it would create jobs through exports and boost incomes just hasn't paid off for particularly white working class people who have -- many of them who didn't go to college.
TANKERSLEYSo what Trump's arguing -- they frame it a little bit differently, the two of them. Trump says, you've been screwed by bad trade deals and America's leaders have done a bad job negotiating those deals and so that's hurt American workers. Sander says American corporations have pulled the wool over the rest of us by cutting deals that work well for them, but not for you. It's the same end result, but the villain is a little bit different.
TANKERSLEYBernie's villain is big business. Trump's villain is feckless politicians and the Chinese. But in both cases, they're promising, and winning a lot of votes by promising, to renegotiate the terms of trade for America.
GJELTENAnd Michael Hirsh, if we didn't think this was a big issue, we certainly found out to the contrary with this Michigan primary and then the debate leading into it and then the outcome, right?
MR. MICHAEL HIRSHAbsolutely. You know, all polls, that I saw anyway, showed Hillary Clinton leading going into Michigan, many by double digit numbers. Bernie Sanders comes out on top. Exit polling showed that he had a huge margin among those voters who thought that trade was a big issue. Now, we're going into Tuesday. You've got, you know, three other rust belt states, Illinois, Ohio, Missouri, where these same issues, particularly the issue of trade, I think are going to be foremost on voters' minds.
MR. MICHAEL HIRSHAnd, you know, you have to wonder what is going on inside the Hillary Clinton campaign right now in terms of being able to effectively counter this. It didn't come up at last night's debate in Miami, which mainly focused on immigration, but you can be sure, over the next several days, that this is going to be, you know, Hillary's going to have to really ratchet up her message.
GJELTENDouglas Irwin, let's get our terminology straight here 'cause one of the things that I've heard, I certainly heard it from Bernie Sanders people and I think we've heard it from Donald Trump's people and Donald Trump himself as well is that trade itself is not bad, but it sounds like they're distinguishing between trade, free trade, trade deals. Where do these candidates -- where do these arguments sort of differentiate in terms of what's good and what's bad?
MR. DOUGLAS IRWINWell, it's hard to say because they aren't very specific about how they would renegotiate NAFTA, how they would change the accord. Most of these agreements, at least in terms of trade and goods, are just letting -- putting tariffs at zero on both sides. And what's interesting about the critique is we're already a pretty open market. Our tariffs are very low on imports, but the barriers that we face in foreign markets tend to be much higher.
MR. DOUGLAS IRWINThey were higher in Mexico, certainly higher in China and these trade agreements are bringing those down to zero so it's sort of a tax cut on American exports more than us opening up our market in a big way for imports.
GJELTENWell, is it disingenuous for a candidate to say that he or she is in favor of trade, but just not against -- but not in favor of trade agreements?
IRWINWell, I think what's interesting about Bernie Sanders is he's railed on against trade agreements for some time, but he's never really offered a solution. I don't think he's really said are we going to withdraw from NAFTA or just renegotiate it? And we going to impose much higher tariffs against China or just complain about the jobs that are being lost? So identifying the problem is one thing, but what is the solution? What are they offering? It's not clear at all.
GJELTENJessica, you work for the Columbus Dispatch so, obviously, you cover Ohio politics. We just talked about Michigan. How do you expect this issue to play out in Ohio?
WEHRMANYou know, this has been an issue in Ohio for years. Trade has been an issue for years and what's interesting this year is it's, I think getting folded more into some of the other rhetoric, the populist rhetoric about the economy, about unfairness. This sort of speaks to the question of are we being treated unfairly in the market. I think there are kind of two different ways of looking at trade in Ohio and actually, they're really very well encapsulated by our two senators.
WEHRMANOne of our senators, Sherrod Brown, wrote a book called "The Myths of Free Trade." He is very, very much, you know, very worried about the trade deals that we negotiate. He is inclined -- he voted against NAFTA, that sort of thing. The other senator is Rob Portman who was a former U.S. trade ambassador. So I feel like they sort of encapsulate the issue in Ohio. You've got sort of a Chamber of Commerce Republicans who say, you know, we really rely on trade. We've, you know, especially with agriculture.
WEHRMANOur soy bean, I think, we've got a high amount of soy bean experts in the -- exports in the world. And then, you've got folks who were manufacturers who lost their jobs, who say their jobs move overseas. So it's sort of a complicated issue, but what was interesting to me this year -- and I know we're talking presidential, but I mean, I think the Senate race reflects it as well, recently Senator Rob Portman came out against the Transpacific Partnership as it was -- as it's written currently.
WEHRMANSo that kind of speaks to the level of concern, I think, that Ohio voters have this year with the issue.
GJELTENJim, how have the politics shifted on this? I mean, this is interesting, the example that Jessica just gave from Columbia where you have a sort of establishment Republican generally favoring trade and a Democrat who's been close to the labor movement opposing free trade deals. How is that changing? How is sort of the political -- the party alignment changing on trade issues as you see it?
TANKERSLEYIt's fascinating. Jessica and I covered Sherrod Brown's first election at the same time in 2006 when I was at Toledo Blade and she was in Dayton and I still can hear in my sleep sometimes a gravelly voice talking about job-killing trade agreements. But the Republicans -- what's changed is the Republicans have really picked that up and in a way, you know, that Mitt Romney was never -- he railed against Chinese currency manipulation, but he wasn't a very effective populist.
TANKERSLEYJohn McCain was not a populist. George W. Bush urged Congress to pass the permanent trade relations with China in 2000. Donald Trump is the first really authentic populist vehicle on trade and on other issues that the Republicans have had in a long time. And when you talk to people who fought against the free trade deals back the last couple of decades, they remember Trump speaking out against NAFTA.
TANKERSLEYThey remember him speaking out against other thing as bad deals so he brings this sort of deep fluency with it in the same way that Sanders does. He's been fighting trade deals his whole career. So I think what's different is on both sides, you have someone who is really a believer in this argument and that makes things hard, for example, for Hillary Clinton on the Democratic side because Bill Clinton was a free trader.
TANKERSLEYHe opened up -- he did NAFTA. He opened up China. And even though she has, in both this campaign and in the 2008 campaign, tried to very much distance herself from that position and been more skeptical on trade, there is just not that level of trust with her among voters who are skeptical of these trade deals.
GJELTENMichael, I'm wondering if this trade is one of these issues where candidates are tempted to say one thing on the campaign trail and then do something else perhaps, allegedly, more responsible once they're in office. I mean, I remember in 2008, Barack Obama ran against NAFTA and criticized Hillary Clinton on NAFTA and then, you know, he gets into office and asks for fast track authority and...
GJELTEN...and the TPP.
HIRSHVery similar, you know, with Bill Clinton. I mean, you had, basically, in both parties over a period of at least a couple of decades, an embrace of an economic paradigm free trade that real -- and the suppression of dissent and, you know, Republicans first, then Democrats. And what you're seeing now is just this giant rebellion on the left in the person of Sanders and his supporters and on the right, as Jim was just saying, where you have in Donald Trump, a Republican who's saying the kinds of things that, you know, we haven't heard anyone -- and the whole idea that someone like Rob Portman, a former U.S. trade representative, would be defecting on this issue is an indication of just how much the Republicans are moving.
HIRSHAnd they have truly been the champions of free trade. So get back to your question, yes, you know, this is really becoming a voting issue and will it make a difference? It hasn't so far, as you say. When you get in office, you tend to behave a little differently, but you have to think with Donald Trump saying the kinds of things that he's been saying -- and he has been saying this since, like, the late 1980s. I mean, you know, he's still going on about Japan and its currency manipulation, the kind of thing we heard about 30 years ago.
HIRSHSo it's, you know, the practical alternatives are not that great. Is he going to withdraw from the World Trade Organization? And he can do it, technically. Give six months notice and withdraw. But will he do it? You know, it's a very big question mark hanging over his campaign, but you have to think that if either Trump or Sanders were actually elected, they would actually, you know, make some changes. There would be, you know, probably an attempt to renegotiate entirely the TPP. NAFTA, you know, is almost irrelevant, actually, you know, if you look at the TPP, it kind of displaces it.
HIRSHBut, you know, I think that there would be serious action.
GJELTENSo we may be in for a new era as far as the formulation of trade policy is concerned. We're gonna pick up that discussion after we take a short break. Our guests are Jim Tankersley, economic policy correspondent for The Washington Post, Michael Hirsh, national editor at Politico, Jessica Wehrman, Washington correspondent for the Columbus Dispatch and from Dartmouth College, Douglas Irwin, where he's a professor of economics and he's the author of "Free Trade Under Fire," and we're going to go to you, Doug, after we take this short break.
GJELTENI'm Tom Gjelten. Stay tuned.
GJELTENHello again. I'm Tom Gjelten from NPR. I'm sitting in this week for Diane Rehm. And today we're talking about trade and how it's emerged as a big issue in this 2016 campaign. My guests here in the studio are: Jim Tankersley, economic policy correspondent for The Washington Post. Michael Hirsh from Politico magazine. He's the author of "Capital Offense: How Washington's Wise Men Turned America's future over to Wall Street." But I expect you to be objective on this one. Jessica Wehrman, Washington correspondent for The Columbus Dispatch. And from Dartmouth College in -- actually he's at the studios of Vermont Public Radio in Norwich, Vt. -- Douglas Irwin, professor of economics at Dartmouth College.
GJELTENAnd, Doug, here's the question for the entire hour. In your judgment, and you've written a lot about this, what's the deal? What's the bottom line? Do trade deals cost American jobs or not?
IRWINWell, let's step back from just thinking about trade agreements because we're in an era of globalization. So whether we like it or not, whether we reach these trade agreements or not, trade has been expanding and it's going to be a bigger part of the U.S. economy than it's been in the past. So the problem is there's two sides to the story, as with most things. Trade does destroy jobs and import competing sectors. And this is why this message particularly resonates in Ohio and Michigan because the industrial heartland has been particularly hard hit with a lot of job losses. Now, a lot of that has to do with manufacturing jobs moving to the south or being automated out of existence. So trade is by far from being the whole story.
IRWINBut trade also creates jobs in export sectors. It helps consumers in terms of lower prices. And it's, you know, those that happen in other parts of the country, so other regions which benefit, we may see a different story in terms of how this message plays.
GJELTENSo there are jobs in the import sector that are going to be lost. There are jobs in the export sectors that are going to be won, gained. How do those two phenomena stack up against each other in terms of the wage levels in each case, in terms of the number of workers involved in each case, perhaps even in terms of which regions of the country are winners or losers.
IRWINWell, we can't really get into false precision about counting particular numbers. But here's the particular problem that -- and why this issue has resonated with the public, is the current unemployment rate for college grads is 2.5 percent. And the current unemployment rate for those who don't have a high school diploma is almost 9 percent. So when we lose jobs, these tend to be in, say, apparel, textiles. There are not a lot of other opportunities for these workers. So it's really a broader issue about how we deal with a whole group in society that may not have the skills to deal with a 21st century economy.
GJELTENWell, Jessica, let's talk about this in a little bit more precise way, sort of a state by state -- in a state-by-state approach because that's the way the primary season unfolds. It unfolds on a state-by-state basis. What is the situation in Ohio?
WEHRMANOhio is -- it has a changing economy. For a very long time, it was a huge manufacturing center. And it's still, I mean, it still builds things. That is what the state does. However, it's an evolving economy. For example, shale gas has been really a boon to Ohio's economy.
WEHRMANIt's really helped out in terms of the recovery. In Dayton -- one of the cities that I cover is Dayton, Ohio -- for a long time it was a manufacturing, just a strict manufacturing town. Now, because of Wright Patterson Air Force Base in Dayton, it's more of a technical town. It's -- I jokingly call it the nerd economy because it's all around research and development and sort of moving things forward -- still manufacturing, but sort of at a higher level. Youngstown, another manufacturing town, is also seeing sort of an evolution in terms of kind of a higher grade, smarter manufacturing. So it's still there but it's an evolving economy.
WEHRMANBut there are still a lot of bitterness about these lost jobs. I don't know if it was you who wrote this story, Jim, or who wrote the story, but there was a story about when the Huffy plant left. And on the day that they left, do you remember this?
TANKERSLEYThat was my story.
WEHRMANThey left -- yeah, that was probably yours. They left all these shoes. Every -- one by one, the workers left their shoes as they left because it was moving to Mexico. And so that's kind of a nice, telling -- not nice, but it's a telling anecdote about the level of loss that happened at that time.
GJELTENWell, the -- so you say that in areas like around Dayton and even in places like Youngstown itself, there's sort of a mixed picture, where some new jobs have been created...
GJELTEN...and some have been lost. So aren't -- do you -- to the extent that you are able to get around Ohio, do you see voters sort of making these kind of nuanced judgments that there actually is a mixed picture here?
WEHRMANYou know, there's -- so much of voting is wrapped up in emotion and rhetoric and that sort of thing and sort of fundamental and core beliefs. And I think that that kind of goes into this issue. If you're angry -- if you're an angry voter, then this will be -- this would be an issue to be angry about. If you're angry about the fact that you send your kids to school and then you have a ton of student debt afterward and your kid doesn't have a job. I mean, these -- I see these sort of as -- I see this as sort of a piece of a larger pie, in terms of Americans feeling that there's an implicit promise that has not been given to them. This implicit promise that the next generation is going to be doing better than the generation that came before them.
WEHRMANAnd I think that kind of bitterness gets -- I hate to use the word bitter -- but that frustration and that anger kind of carries over into the voting booth.
GJELTENWell, Michael, your piece, which was very good, in Politico, sort of put this in a broader context. It put it in the context of concerns about inequality, which, regardless of how you feel about trade, inequality is an understandable and deep concern for Americans of all varieties.
HIRSHUnquestionably. And, you know, at least in the minds of the voting public and certainly in the rhetoric of these populace candidates we're talking about, Trump and Sanders, the two are intimately linked. Trump doesn't make as much of a big deal about inequality as Bernie Sanders has done. You know, Bernie Sanders, that's his sort of leitmotif and has been for his many, many years on Capitol Hill. And the numbers are disturbing.
HIRSHYou know, Thomas Piketty, the French economist, basically wrote a book that came out a year or so ago concluding that, you know, inequality was at as bad a level now in the United States as it's been since like the 1920s and it was, in fact, the worst in the developed world in terms of the level of inequality. And the numbers tend to bear that out. Now the link that that has to the loss of jobs at the lower end, the lower-skilled end, as we've been discussing, is not necessarily that clear. But in the minds of the voters, you know, immigration and the loss of jobs to countries like China is linked to globalization, to free trade and, you know, the results are in. We have become a more unequal society.
HIRSHSo the economists can debate the causes, as they do, but at least in the rhetoric of these campaigns, we are seeing a clear link made again and again and again, from the left with Bernie, you know, from the right with Trump. And it's obviously resonating.
GJELTENWell, I'm going to read a line from your article, Michael. You say that the building magnate on the right and the wild-haired socialist on the left have met up at the same intersection, bounded by the four corners of anti-globalization, anti-free trade, anti-immigration and anti-Wall Street sentiment. But, Jim, that's, I think, a, you know, a really interesting observation on Michael's part. And yet we haven't seen Bernie Sanders, for example, picking up on all four of these issues. I mean, immigration is the one that jumps to my mind. He has not sort of gone for that -- gone toward that -- any anger that working-class Americans feel about immigrants coming in, yet. Right?
TANKERSLEYWell, he has in the past. They, in fact, in last night's debate, they showed a clip of him talking about, in 2007, with the comprehensive immigration bill, him talking about, why would we bring in more workers to compete with people who haven't had a raise in a long time? But he's running in the Democratic primary now. And that, you know, the Democrats are -- that's not their position on immigration right now. Their position is that he and Hillary Clinton are both talking about how to do comprehensive reform, how to give a path to citizenship for immigrants.
TANKERSLEYIt's just -- I think that's just a difference in which primary you're running in. In the same way that Trump is not running around beating up as much on big business and Wall Street as the villains, as Bernie is. But Mike is right. They basically are occupying the same general intellectual space here and definitely the same emotional space.
TANKERSLEYWhich is -- it's the very, very visceral sense that the economy's not working for people like me. It's working for somebody else.
TANKERSLEYAnd that's not fair. And whether it's Trump saying, it's working for the Chinese and the immigrants and the Mexicans and, or it's Bernie saying, it's working for the hedge-fund managers, what that does is it distills your concerns, gives you a villain to place them at, and then gives you some redress to that. You know, Bernie's going to break up the banks. Trump's going to deport all the immigrants. They're both going to renegotiate the terms of trade. Those are powerful arguments at a time when really the backdrop of all of this is the wage stagnation we've seen for the middle class that's -- for going on a decade and a half now.
GJELTENDoug Irwin, one of the issues in analyzing these trade deals, one of the complaints that people often raise is that, you know, they are the product of lobbying in Washington. And as the details -- and of course these trade deals are very complicated and hundreds of pages long in some cases -- one of the complaints is that lobbyists get certain favors for certain companies, big companies, big interests, and so they're not really, in a sense, free-trade deals. They often reflect sort of deals with cronies. Is that a fair criticism? Have you looked enough at these deals to see, you know, how accurate is that criticism?
IRWINWell, there's a lot of carve-outs in them, where we'll sort of still protect certain sectors from foreign competition. So the lobbying goes both ways. Some companies want certain sectors in other countries to open up for our exports because they'll benefit from that. But also, certain export competing sectors don't want to be exposed to foreign competition. You know, the sugar industry is an example, where we continue, even though we have free-trade agreements with Australia and other countries and Mexico, we don't allow in a lot of their sugar because of the sugar barons in Florida and Louisiana don't want to face low-priced competition.
IRWINSo there are these carve-outs and there are always special, you know, arrangements in these deals. But by and large, to the extent they're just cutting tariffs, they try to do so across the board.
GJELTENWell, Doug, the course -- the big thing that Donald Trump says is that these are bad deals. I mean he doesn't -- he's certainly not against deals in general. He just thinks these have been badly negotiated. They're bad deals. He says -- I think he said about TPP, only a moron would support it.
IRWINWell, he also says our trade negotiators are stupid. If you don't have stupid people negotiating these things, the outcome would be much better.
GJELTENRight. So how much, you know, in practical terms, how much leeway is there in the negotiation of a trade deal? And, you know, can we on the outside, assume that these are the best deals that could be negotiated? Or, you know, is there in fact a lot of give and take and, you know, can the negotiation itself be criticized?
IRWINThere's tons of give and take. And, once again, Mr. Trump never goes to the next step and says, well here's what a better agreement would look like or here's what I would actually reach. Because if you look, there's a ton of opposition in other countries to these trade agreements as well. The U.S.-Korea agreement opened up their market to U.S. beef and the beef farmers protested in downtown Seoul. You know, some committed suicide. This is a very serious issue in other countries as well. They don't want to open up their market. So it's not just the U.S.
GJELTENDouglas Irwin is professor of economics at Dartmouth College. And he is the author of "Free Trade Under Fire." And that is exactly what we are discussing here. I'm Tom Gjelten. This is "The Diane Rehm Show." Okay, Michael, let's look ahead a little bit. How do you expect -- and we were talking about, we touched on this before -- how do you expect Hillary Clinton is going to deal with trade from here on? Now, you know, the race is going to get out of the industrial belt at some point. At some point, we're going to go to the general election. She may end up being president.
GJELTENYou know, how do you anticipate that her positions on trade deals will evolve in the coming months?
HIRSHWell, it will be very interesting to see, if she does ultimately get nominated and get elected, whether she reverts back, for example, to her former embrace of the TPP, the Trans-Pacific Partnership, as it was being negotiated, which I believe she called the, you know, the gold standard...
HIRSH...when she was still serving as secretary of state. And then, when she began running for president, she decided she didn't like it for reasons she really didn't specify. She just decided that it wasn't good for the American worker. But of course, you know, the perception was that she was doing it entirely because Bernie Sanders was coming on strong. So it's really, you know, getting back to the earlier question of how you, you know, the difference between, you know, running for office and governing, it is a very big difference and has been traditionally, you know, on trade.
HIRSHI think the hope of the left here, on the Democratic side, the populist, progressive side, is that this Sanders insurgency will, you know, have enough impact on her that she will take a tougher stance. I mean, for example, one of the big issues about the TPP is the issue of currency manipulation -- other countries, like China, devaluating their currency so their products sell better compared to American products. Now, for the first time, as I understand it, in a major trade agreement, this was actually made part of the language. It made it into the agreement. But there's no enforcement mechanism.
HIRSHSo this is the kind of thing that a Donald Trump is going to say, all right, you know, if it -- if we don't have an enforcement mechanism and forcing countries to pay a penalty if they are deemed to have manipulated their currency, I'm going to walk away from the table. I'm not going to sign this deal. That's the sort of thing Trump is implying he would do, without specifying. So I mean, the question becomes, does a President Hillary Clinton, at some point, decide to try and renegotiate along those lines, toughen up her stance on currency manipulation, which is a big issue. Again, that's the kind of thing we're going to have to wait and see, until some of these people get into office.
GJELTENAnd, of course, I mean, we can't rule out Bernie Sanders being president as well, can we, Jessica? In which case, I would expect that we would really see a different position. I mean, he is one guy who has stuck to his guns over the years, isn't he?
WEHRMANHe is. He is. And then it really will be interesting to see on, you know, next week, March 15, in Ohio, how he does. He's -- Hillary Clinton has led in polls. She won in 2008. This should be Hillary country. So it will be fascinating to see whether or not that -- what he started in Michigan, he continues in Ohio.
GJELTENWe have an email here from Christine who wonders, does the president alone make trade agreements? How would Sanders or Trump get their anti-trade ideology through a Republican, pro-business Congress? And this is an opportunity, Jim, to bring up the issue of fast-track negotiating authority, which, in fact, does give presidents a lot of authority in how they negotiate trade agreements. Why don't you give us a very quick primer on that?
TANKERSLEYWell, the first -- the primer on that is that the president now has the ability to basically go out, negotiate deals and then submit them to Congress once they've been negotiated for an up and down vote. And Congress can't change anything in the deal. They can say yes. They can say no. But they've got to take the deal as presented to them. What's interesting though about this Republican Congress is that it is not exactly a free-trade Congress anymore.
TANKERSLEYThe big change in the TPP vote count right now is that Republicans are defecting en masse. Now, that may be because Republicans are just anti-Obama. Or it may be because Republicans now occupy a lot of the seats in areas like Ohio or especially in the South, where anti-trade Democrats used to, where the populace used to. And so it's a natural evolution with them to fit the needs of their voters. And it may be that the Republican Party is just moving to a more protectionist place. Especially if they nominate Trump, that -- it's sort of the logical conclusion. But it's -- I don't think it's a given that this is a free-trade Republican Congress that the next president is going to face.
GJELTENWell, in fact, fast-track authority, which President Obama got for the negotiation of the TPP passed by a pretty narrow margin, only 219 to 211. He did reply on -- did depend on Republican votes there, didn't he?
TANKERSLEYYeah, but there was nowhere near as many Republican...
TANKERSLEY...votes as had been there in the past. And I think that that was a really big change.
HIRSHAnd I suspect that that vote would be very different if it were held today. Because, as, you know, Jim is saying, this has really, really changed for the GOP. I think it's been almost entirely Donald Trump. He's, you know, he's legitimized these kinds of discussions. It's not just bad free-trade deals, as he calls them. It's the issue of corporate inversions, where corporations move their headquarters abroad so they can get a lower tax rate, which even Hillary has taken up as an issue. You know, say what you will about him, Trump has changed the conversation, particularly for Republicans, on this issue.
GJELTENAnd speaking of Congress, of course, the Trade -- the Trans-Pacific Partnership, the so-called TPP, has not yet been approved. So that is still out there. Okay. We're going to take a short break. My guests, remember, are Jim Tankersley from The Washington Post, Michael Hirsh from Politico, Jessica Wehrman from The Columbus Dispatch, and Douglas Irwin from Dartmouth College. I'm Tom Gjelten. Stay with us. We'll be right back.
GJELTENWelcome back. I'm Tom Gjelten. I'm sitting in for Diane Rehm today, and we're talking about trade as an issue in the 2016 campaign and how strongly voters clearly feel about it. And those of you who have been trying to call and have had trouble getting through, it's because our lines are all stacked up with people who want to share their thoughts on this issue. So, let's go to some of the callers now. Marilyn is on the line first. I think, Marilyn, you're calling from Miami, Florida, right?
GJELTENAnd you're going to have a big election there next week. Tell us your thoughts.
MARILYNIt could be. My thoughts or questions or comment, whatever you want to call it, concerns H. Ross Perot's presidential campaign, which was not that long ago.
GJELTEN1992. It's a while ago.
MARILYNOkay. Well, I'm sure your panelists remember it. But I'm wondering why he isn't recognized for his insight into matters when he said, you know what, that giant sucking sound is jobs leaving the United States. And then...
GJELTENHe was talking specifically about NAFTA, wasn't he?
GJELTENJobs going to Mexico.
MARILYNBut -- same idea. Anyway, but then, secondly, I wonder why he hasn't entered this discussion.
GJELTENWell, I don't know how old Ross Perot is. He's getting up there, isn't he?
WEHRMANYeah, I don't know that he would weigh in, but you know what? He actually speaks to me -- in a lot of ways, he reminds me of Trump, that sort of populist rhetoric, that sort of I'm reaching out to you -- to the Americans who have economic insecurities. There are so many parallels to be drawn. And that's a very, very good comparison to make, I think.
GJELTENWell, Doug Irwin...
IRWINLet's not forget that -- let us not forget that Pat Buchanan in 1992 was raising exactly the same issues on the Republican side and tapping into exactly the same fears. And that was quite some time ago.
GJELTENOkay, Doug. So, 20, what is it? 24 years have passed since then. So, what is the bottom line? I mean, the issue then was NAFTA. What is the -- sort of the bottom line, as far as jobs lost or gained as a result of NAFTA?
IRWINWell, let's remember, you know, when we're talking about Michigan, Michael Moore in 1989 did his documentary, "Roger and Me" on the shutdown of the GM Plant in Flint, Michigan. That was years before NAFTA, that was years before China was a big part of US trade. So, once again, the upper Midwest has suffered for some time, in terms of the rust belt and jobs moving, once again, not just overseas, but to the South. And it's interesting that the discussion about Ohio.
IRWINSouth Carolina's sort of in the same situation. There's been a lot of foreign investment in auto production there. But they also have a lot of laid off textile workers. So, the state like Ohio's sort of bifurcated. Some parts are doing well, and other parts are really not. And that's the division that I think we're seeing play out more generally.
GJELTENThat's a really interesting issue, that when you talk about jobs moving, they're not -- it's not just a question of jobs moving from one country to another, it's also jobs moving from one part of the United States to another part of the United States. And yet, that doesn't seem to be, certainly from a union organizing point of view, that's a big issue, because a lot of those jobs are not union jobs in the South. But that doesn't seem to be quite as much of a concern for voters as jobs being lost to another country. Right, Doug?
IRWINWell, certainly when a plant closes down in Ohio or Illinois or Indiana, it doesn't really matter where the jobs are going.
IRWINThe people in those work -- that factory are hurt. And they're going to suffer for some time. Also, the jobs that are being created in the South are at least -- increase in automobile investment in the South. They're employing a lot fewer workers, because the industry's become so technologically sophisticated that we can increase production in many manufacturing industries without hiring more workers. And that's why, in some sense, protectionism or other policies, a lot of these manufacturing jobs are not going to come back.
IRWINIf you compare an auto factory floor 20 years ago with today, so many fewer workers are there. They're monitoring equipment and computers and they're engineers monitoring things rather than actually doing the physical production.
GJELTENLet's go now to Steve, who's on the line from Alabama. Hello, Steve.
STEVEHey, how are you doing today?
STEVEI wanted to say that I do think that we need better trade agreements, but I don't think Donald is the right person to do it. I mean, at first, you look at him and you say, well, he's a businessman, he's successful. But the President isn't a businessman. I mean, the first time someone tells Donald no, he wants to wash his hands of them. He loves everybody as long as you love him. I mean, is he going to wash his hands of Taiwan? Is he going to wash his hands of China? Is he going to be able to work with the Congress and Senators?
STEVEI mean, the President has to be a diplomat, a facilitator, a moderator. Donald Trump is neither of those. And I feel like with him in office, you would almost make the United States almost isolated. And when we lose all jobs, we -- nobody prospers.
GJELTENWell, that’s an interesting -- that's an interesting point, Steve. Michael, how about that? I mean, maybe, you know, Donald Trump keeps talking about what a great negotiator he is, but Steve's point is that being a great negotiator in the business world and being President are two different things.
HIRSHIt's a very good point. Take China. You know, we have an enormously complex relationship with China. It's not just about trade and currency manipulation. Huge country, huge economy. Huge geopolitical weight in Asia. And we require China's cooperation on the UN Security Council, for example, in dealing with Iran. We needed their vote on the Iran Nuclear Deal. So, you can't simply walk away from the table as Donald Trump, perhaps, did a couple of times when he was trying to avoid personal bankruptcy.
HIRSHYou know, back in 1992. It's not the same things when you're President. And so the caller's point is very well taken. I mean, does he have that kind of practical experience and temperament to behave in a way that one would expect a President to behave? You simply cannot walk away from these long standing relationships.
GJELTENLet's hear what Brian has to say. He's calling from Pueblo, Colorado. Hello, Brian. You're on the Diane Rehm Show.
BRIANHi. Thanks for taking my call. Growing up here in the manufacturing center in southern Colorado, we lived through what we called the Reagan Depression locally. You know, when the steel industry really took a beating in the early 80s. This, you know, the jury's in for us. You know, we watched, you know, individual incomes, not the family incomes, which remained stable a little bit longer because of the ever increasing numbers of two income families, but individual incomes, which have been stagnant or decreasing since the early 80s.
BRIANYou know, this is a direct response to these trade and tax policies. And it's not just the trade deals. We've been tearing down these barriers that used to say, if you're going to build in sweatshops or if you're going to build in plants that degrade the environment, you can't do business in the United States. We've been tearing those barriers down for some time. We can debate whether the effect is a net positive or a net negative, but here on the ground, you know, taking those manufacturing jobs, which were stable, which were highly unionized, which brought a good wages and benefits.
BRIANAnd replacing them with the jobs that have come since then, which are more transient, easier to move, which move, you know, as your guests have said, not just in and out of the country, but around the country here. They, the effect on the local community, the consumers. The consumers that, you know, used to have these really stable jobs have really taken a beating and that affects everybody. Not just, as was stated earlier, white working class, non-college educated people. But those, you know, highly unionized good paying jobs used to have an upward effect on people with college degrees.
BRIANPeople in middle-management and management. And that pressure's no longer there and it's affected everybody in the economy. We've seen a large, large amount of wealth created in the last three decades. It's not -- it doesn't take a PhD to figure out where that money went.
GJELTENOkay. Brian, I got a question for you. You know, one of the positive benefits of these trade deals have been lower prices for American consumers. We've seen Wal-Mart, you know, stores go up all over the country. And what percentage of Wal-Mart products are actually made in China? Do you think people there in Colorado recognize that they are benefitting in the form of lower prices for a lot of the products that they buy?
BRIANI think that's pretty clear that some of these products have become cheaper, but as your wages, you know, when you're looking at three decades of wage stagnation, it's hard to squeeze enough money out of the widgets that we're buying at the store to make that really help your personal bottom line. People, you know, speaking as someone who grew up in a manufacturing family, I'm an electrician by trade. I've been fortunate enough to be in the building trades for the better part of 30 years. My disposable income now is not what it was 20 years ago.
GJELTENWow. Okay, all right. Brian, thanks so much for that call. Doug, I also want -- you can respond to Brian's call, but I also want you to respond to an email from Reed that sort of follows in the same line. He actually says he's a supporter of Secretary Clinton and has for years promoted trade agreements, but what he's wondering is whether these trade agreements can be negotiated in such a way that, you know, more attention can be paid to the wage issue, both overseas and in the United States. So that provisions could be put in there that would not allow companies to benefit from super low wages in other countries.
GJELTENAnd you know, these labor protections and wage protections have been a big issue in these -- in the negotiations of these trade deals. Do you see that more could be done in that regard to sort of protect wages of American workers?
HIRSHI don't. Because the US has actually been taking a leadership position, trying to push labor standards onto these trade agreements, certainly in the previous Clinton administration and I presume the Obama Administration, as well. The problem is developing countries absolutely resist it, because they see this as sort of an excuse for the US and other countries to potentially deny them access to our markets if they don't adhere to certain standards. So, you might remember the Battle of Seattle in 1999, when the WTO meeting in Seattle, Washington sort of blew up because of riots.
HIRSHWhat really settled the negotiations there was the US insistence that labor standards would be put into these trade agreements. Developing countries absolutely resisted that and didn't want them at all. And I should also note that, you know, we always talk about low wages abroad as being a driving factor in trade. You know, we import cars from Japan, Canada, Germany. These are not low wage countries. There's just been a generalized increase in global competition and a lot of it has to with being productive, not necessarily just lower wages.
HIRSHBut I also want to get back to Brian's point from Colorado. Because he talked about the Reagan Recession or Depression in the early 1980s. And that's absolutely right that we lost about two and a half million jobs from 1979, in manufacturing, two and a half million, between '79 and '82. We also lost about two and a half million in 2007 to 2009. Both of those were major recessions, one due to the financial crisis and housing bubble burst, and the other due to the Reagan -- pardon me, the Volcker Disinflation and the federal reserve monetary policies.
HIRSHSo we lose jobs for a lot of macroeconomic reasons that have little to do with trade, but still, it's easier to, you know, talk about how foreign competition is the driving force.
GJELTENJim, let's go back to Congress. We need to tie up one kind of loose end here in this discussion. And that is the TPP has been negotiated and we were talking about before, the Trans Pacific Partnership, and there's a lot at stake in that trade deal. It has not yet been approved. What do you see? We were talking earlier about the sort of, the changing -- how maybe, I think you said that you and Michael agreed that maybe the fast track negotiating authority wouldn't get the same margin of support now that it did when it passed. What is the outlook for the TPP being approved in Congress?
TANKERSLEYWell, you could look at Congress and say, you have a House Speaker and a Senate Majority Leader who both are free traders, who both support this deal. And a President who supports it and that should be enough to get it through. But that's not the world we live in anymore. We live in a world where it's very unlikely that big bipartisan things get done in an election year, and this would be a big bipartisan thing and meanwhile, where both parties, as we've been talking about, are just being absolutely ransacked by forces of populism right now.
TANKERSLEYSo, I think it's very unlikely that we see it this year, that Congress approves it. It's the sort of thing that maybe you see it after the election, as sort of an end of the President's term push to do it. But it's hard to see where that vote comes from. Speaker Ryan has said that he's not sure there's the votes. I just don't, I just don't know who is the driving force, Congressional Democrats, Congressional Republicans. Neither of them seem to have an incentive right now to push this deal through.
GJELTENJessica Wehrman, you're nodding your head.
WEHRMANNo, I mean, that's exactly what I see. It's just a -- well, it's more difficult dynamic to get anything done, but particularly this year, because of the election, because of this sort of moving sentiment on trade.
GJELTENJessica Wehrman is correspondent here in Washington for the Columbus Dispatch. I'm Tom Gjelten. This is the Diane Rehm Show. And you would say that, Jessica, on the basis of your reporting from Ohio, for example.
WEHRMANYeah, no, well, not just Ohio. But I would say that from my reporting on the basis of covering Congress.
WEHRMANCovering my Congressional delegation. Being a Capitol Hill reporter for years. It's always harder during an election year to get anything done, but I think that the dynamic is moving so much on this issue that it's -- the dynamic is moving so much, the sentiment is moving so much that it's just all the more difficult to get it through.
GJELTENMichael, how much, you know, are we going to look back at this discussion a year from now or two years from now and just see it as something that came up during the election campaign? Or, again, this is the issue we've come back to several times. You know, has the situation really changed?
HIRSHI think that it has. I don't think this is just campaign rhetoric. There's some academic work that's come out recently that has really second guessed this long standing paradigm free trade's good. And some people are going to lose out, but overall, it's good. So let's just let it happen. I think getting back to what was said before, yes, it's true that it's very difficult to put worker and wage protections into these trade agreements, but at the same time, we have not done a good job on, for example, re-training programs.
HIRSHI mean, we spend a scant 15 billion dollars or so a year on job re-training. So, this section of the population that is expressing itself so vociferously right now, these lower skilled, lesser educated people expressing, in particular, on the Republican side, but, you know, you also have college kids. I mean, there's one piece of data I saw that showed that college kids up to the age of 30, have something like a 12 percent unemployment rate right now. So, they're responding to Bernie Sanders' message. So, I do think that this is here to stay.
HIRSHI mean, there was recently a study out of MIT, David Autor, who's a well-known labor economist, just came out in February, that showed that in fact the China trade deal has had an enormous downward impact on manufacturing jobs. So, even though some of the data is mixed, NAFTA, for example, it's not really clear what ultimately that did, the Congressional Research Service suggested that the impact wasn't that great either way. There is some indication that some of these, you know, free trade agreements have hurt American workers in a very real way. So, I don't see this going away. I think it's a very substantial issue.
GJELTENLet's go now. We have time for one more call. Kurt is on the line from Indiana. Hello, Kurt. Thanks for calling The Diane Rehm Show.
KURTHey Tom. Thank you. Great show.
KURTAnd great topic in particular. I wanted to know if the panel could discuss the true cost of an imported item. From a layman's perspective, it just seems like there's a lot of cost shifting. Where a domestically produced product, the factory had to pay property taxes, there's supplemental services. Small diners to feed the employees. So that whole generation of income has disappeared and when you figure a product dollar for dollar with an imported item, it looks like the cost of the item that's imported is much cheaper, but in reality, the costs are much greater.
GJELTENWell, we have just one economist on our panel. And Doug Irwin, you get that. That's the last word from you. Why don't you fill us in very quickly on the cost of an imported item?
IRWINWell, that's a big question, but I'll illustrate, I guess, with the iPhone. And how these trade statistics sometimes exaggerates how much foreign content there is in what we're importing. So, the iPhone retails for three or four, 500 dollars. It's 150 dollar unit cost coming from China. It only has about 15 dollars of Chinese content. The iPhone is really, as it says on the back, designed in California, assembled in China. But it's really made in the world. Parts are coming from Germany, the United States, Japan, South Korea. Just because it's assembled in China and it comes in, it's labeled as 150 dollar import from China. But actually has very little Chinese content in it.
GJELTENThat's Douglas Irwin. He is the author of "Free Trade Under Fire," and he is one of the experts on how free trade is affecting the US economy. My other guests were Jessica Wehrman, Washington Correspondent for the Columbus Dispatch, Michael Hirsh, National Editor at Politico. And he is the author of "How Washington's Wise Men Turned America's Future Over to Wall Street." And Jim Tankersley from the Washington Post where he's the Economic Policy Correspondent. Thanks all, folks.
GJELTENAnd thanks to our listeners. Thanks for calling in. I'm Tom Gjelten. This is "The Diane Rehm Show."
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