We, as a nation, depend on trade.  I know that there are groups in this country that chose to ignore that point, but it is a fact.  Our nation is the number one trading nation in the world.  More than any other factor, our economy relies on international commerce to sustain economic growth and employment.   Consider these facts:  one in every five manufacturing jobs is tied to overseas sales; one in every three rows of crops are planted to be exported; and one third of the growth of the U.S. economy over the past 20 years came through exports. 

But trade is not a one-way street and getting other nations to open their borders to our exports means that we will have to open our borders to their imports.  Put simply, trade creates winners and losers. 

Despite rhetoric and gut reactions, there are relatively few workers that lose their jobs because of trade.  According to the Council of Economic Advisors, fewer than three percent of layoffs between 1996 and 2004 could be attributed to import competition or overseas relocation.  All of us in Congress recognize that every layoff is traumatic, and as Federal government policies—namely free trade agreements—caused a small percentage of these layoffs, it is the government’s responsibility to provide those workers a way to productively reenter the economy.  

For this reason, the Trade Adjustment Assistance program, or TAA as it is known, is a vital Federal program.  TAA provides income support, training and other various benefits to manufacturing workers who have been adversely impacted by trade.  Obviously, this is an important mission, one that I support.  However, H.R. 3920, the Trade and Globalization Assistance Act of 2007, is bad policy that I cannot lend my name to.  Let me explain why. 

As usual, the Democrat’s answer involves tax increases.  Ironically, the tax increases that the Democrats have chosen to pay for the expansion of TAA will cause more layoffs and more unemployment, the very things which TAA was designed to protect against. 

First, the legislation delays the implementation of policies that address unfairness in current law.  These unfair policies subject U.S. companies that do business abroad to double taxation on their foreign income.  For the life of me, I cannot imagine a reason to punish those companies which are engaged in the global trade system with a double tax, but the Democrats have apparently set their sights on these businesses as easy targets for tax increases.     

Second, the legislation once again extends a “temporary” unemployment tax created in the 1970s.  This tax is completely unnecessary; the unemployment trust funds hold $35 billion and federal program expenses under current law run about $4 billion per year.  As such, collecting more revenue in this field will not benefit anyone.  It will, however, do great harm.  It would tax almost every new employee hired by a business, thereby providing a chilling effect on employers who want to expand their workforce. 

Moreover, H.R. 3920 spends this money where it is not needed.   The legislation triples the worker training budget.  Worker training is fundamental to TAA, in fact, it is the most important part of TAA, but currently, $300 million of the TAA training budget remains unspent.  There are simply not enough people to train to draw down this surplus.  Therefore, it does not make sense to triple a program that is not currently spending the money it has. 

Lastly, H.R. 3920 inexplicably expands TAA assistance to local, state, and federal employees who lose their jobs.  TAA has always been a program to assist private sector workers adversely affected by trade.  I can think of only limited circumstances where government employees would face layoffs because of trade and as such, I see no place for them in a program for employees displaced by trade.  Unfortunately, in this instance the Democrat majority apparently places pay-back to union campaign supporters (in this instance AFSCME, the American Federation of State, County and Municipal Employees) above common sense.

For these reasons I cannot support H.R. 3920 when it is voted on by the U.S. House today.  I will, however, support the alternative offered by Ways and Means Ranking Member Jim McCrery (R-LA). 

This alternative better integrates TAA with other Federal programs to more effectively equip workers disadvantaged by trade, globalization and other causes of job loss.  The program also makes TAA more nimble, allowing it—and the workers it helps—to quickly reenter the workforce in the fields where they are needed the most.  It is true, TAA needs reform and the McCrery substitute would take the TAA program from a predominantly income support program and make it into a job retraining program that improves access to education and training and continues to provide income support, health care, and other benefits.

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Here's the text of a letter I wrote to Governor Granholm of Michigan regarding the vetoed SCHIP bill.

The Honorable Jennifer M. Granholm

Governor, State of Michigan
P.O. Box 30013
Lansing, Michigan 48909

Dear Governor Granholm;

Given your recent statements regarding the S-CHIP [MI-CHILD in our home state], I need a clarification of your position on the following:

1.      According to the State of Michigan’s own budget projections as submitted to the Center for Medicare and Medicaid Services, in 2008 you will be spending 71.6f Michigan kids’ S-CHIP funding on childless adults.  Is this true?  (If so, it makes Michigan number one in the country.)

2.      According to the Congressional Research Service, in 2006 approximately 46f all Michigan S-CHIP enrollees were adults – not kids.  Is this true?  If so, will this percentage of adults increase under the proposed S-CHIP expansion?

3.      According to the Congressional Budget Office, the proposed S-CHIP bill’s new sin-tax on tobacco requires at least 22 million new smokers to fund its promised expansion.  How many new smokers do you believe Michigan is going to contribute to this number, and how are you going to encourage non-smoking Michiganders to “pick the habit?”  (For the record:  I, at least, am paying my fair share of tobacco taxes “for the kids.”)

4.      Speaking of sin taxes, if the recent S-CHIP proposal’s tobacco tax proves insufficient to fund an expanded program, do you support raising other federal and/or state taxes to fund it?  (I am, in fairness, not assuming that, because your Michigan tobacco tax preceded your recent state income tax hike on working families, you will necessarily support similar federal tax hikes on working families.)

5.      According to the Congressional Budget Office, the proposed S-CHIP expansion will allow illegal immigrants to enroll in the program and, by 2012, cost federal and state taxpayers $6.5 billion dollars.  Do you approve of federal and/or state taxpayers’ money being spent on illegal immigrants?  If yes, since states must put up a matching share under the current and the proposed S-CHIP program, how much of our recently hiked state income taxes are you going to give to adult illegal immigrants?

6.      Do you agree reasonable people acting in good faith differ over means and still support a common goal for the common good?

7.   Hey, will you reconsider your recent state income tax hike?  (It was worth a shot…)

As ever, I look forward to your input on this important issue, although it would admittedly be nicer through a phone call than press accounts; and, despite some people’s oratorical pyrotechnics launched from the partisan darkness, I remain dedicated to working with all stake-holders to ensure poor kids get medical care and all kids inherit the best health care system in the world.

Respectfully,

Thaddeus McCotter

U.S. Representative

Michigan’s Congressional 11th District

NOTE: While hosting a press conference in Detroit today asking Michigan Republicans who have voted against the expansion of S-CHIP to reconsider their vote, Governor Granholm singled out two Members of Congress, including U.S. Representative Thaddeus McCotter (MI-11). A vote to override the President's veto of the S-CHIP bill is scheduled for this week in the House of Representatives.

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In 1998, "President" Jiang Zemin enunciated communist China's operative foreign policy axiom in their "unrestricted warfare" against the Free World: "Intimidate with force, seduce with money."

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I returned to Washington last Monday night from a four day, congressional delegation trip to Iraq and Afghanistan. This was my fifth trip to the region, and it was an honor to once again visit with our brave soldiers who are committed to the cause of establishing a free society in the heart of the Middle East.

While in Iraq, we observed the use of military equipment that is playing a critical role in missions in Iraq, met with ranking military officials to discuss redeployment planning, and discussed the way forward to a peaceful Iraq. Amidst the recent vicious political debate in Washington, our brave war-fighters have been making tremendous progress in Iraq.

In Baghdad, we drove to a joint security station outside the International Zone to observe and discuss the joint work being done by the Iraqi security forces and elements of the First Cavalry Division from Fort Hood, Texas. We then flew to Ramadi in Al Anbar province. We drove with marines to a joint security station located on 17th Street. As we walked along 17th Street, I was told by one of the Marines that six months ago we would have been shot standing in that area of the street. It was gratifying to see young children playing in the street amongst the marines and our delegation.

The troop surge has paid immediate dividends in helping us regain the trust of the Iraqi people who have led the way to improve their own security situation and bring about a peaceful, democratic Iraq. Although there is still a long way to go, especially within the Iraqi government, the progress being made is unmistakable and I will continue to support our young men and women as they advance our efforts in Iraq.

In Afghanistan, the drug production and export business continues to worsen within certain areas of Afghanistan, damaging the country’s economic growth and strengthening its terrorist insurgency. We met with the Provincial Reconstruction Team (PRT) in Nangarhar province in Afghanistan, which shares a border with Pakistan. We discussed their efforts at economic development across the province to add strength to the drug interdiction fight in the area. We toured the Pakistan-Afghanistan border near the Khyber Pass by air.

The Afghanistan government must take appropriate steps to combat their narcotics problem. We visited the new facilities of the Narcotics Intervention Unit of the Afghan National Police. This unit is a specially trained narcotics intervention team that will serve as the Afghani frontline law enforcement efforts in the war on drugs in Afghanistan. We heard from the State Department officials and military officials that they are encouraging additional international support from countries in Europe to assist Afghanis with their economy.

We also had the opportunity to meet with injured soldiers who are temporarily hospitalized at Landstuhl Hospital in Germany while in transit to hospitals in the United States. I again saw the excellent treatment that our military personnel are receiving. Their spirits are high and it is reassuring to know that we have such quality individuals representing the United States in the fight against the Islamic Jihadists. The dedication and determination of our troops is incredible and I want to urge all of you to keep our men and women in uniform in our thoughts and prayers as they continue to fight for freedom and democracy around the world.

 www.conawayblog.com

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