The Custom-House

Where are these numbers coming from?

On the 24th, at National Gypsum Company in Ohio, Obama said (Remarks for Senator Barack Obama: National Gypsum in Lorain, Ohio),

One million jobs have been lost because of NAFTA, including nearly 50,000 jobs here in Ohio.

Where did these numbers come from, and how significant are they as a proportion of jobs in Ohio?

Obama's Economic Advisors

Noam Scheiber reports on Obama's domestic and foreign policy advisors in the New Republic: The Audacity of Data (March 12). 

The economists are described as first-rate academic economists, experts, non-ideological, pragmatic, inductive, fact-driven, incremental rather than radical, modest, heavily influenced by behavioral economics, and as having ambitious plans for the nation. 

We're talking about:

... [Austin] Goolsbee, one of the profession's most respected tax experts. A Harvard economist named Jeff Liebman has been influential in helping Obama think through budget and retirement issues; another, David Cutler, helped shape his views on health care. Goolsbee, in particular, is an almost unprecedented figure in Democratic politics: an academic economist with a top campaign position and the candidate's ear.

The economists in this list are described as tax, budget, health care, and retirement experts.  This article doesn't address Obama's macroeconomic or international economic advisors.

H/T to Greg Mankiw: Will the real Obamanomics please stand up? (Feb 26)

Minor edit (2004 BLS jobs est. not preliminary) Fed 29; addition of text from Hufbauer and Schott on March 1.

There are more posts on the 2008 election here: Election 2008 or over here at the International Economic Law and Policy Blog.

NAFTA in Last Night's Debate

Clinton and Obama spent quite a bit of time on NAFTA in last night's (Tuesday's) Democratic debate.  Some of the things that lept out at me:

• Under pressure from questions posed by Tim Russert, both candidates said they plan to threaten to opt out of the agreement in order to pressure Mexico and Canada to agree to renegotiation.
• In addition to new labor and environmental components, I wonder if Obama is introducing a parallel request for new safety provisions ("I intend to make certain that every agreement that we sign has the labor standards, the environmental standards and the safety standards..." ).  He doesn't actually talk about new safety standards here, but he is using the term in parallel with labor and environment.  He has voted against implementation of certain NAFTA provisions with respect to Mexican truck access to U.S. highways. 
• Clinton took a somewhat nuanced approach to to the agreement, saying that it had had differential effects in the economy, hurting some regions but actually helping others.
• Russert challenged Obama on his assertion that NAFTA had been bad for Ohio.  Obama didn't argue with him, simply asserted that it had been bad, invented a new point for Russert ("you are making a very legitimate point, which is..." that trade was only part of Obama's agenda).  Obama then used this transitional sentance to bring up use other talking points.  Nice footwork.
• Lots of arguing about who might have said nice things about NAFTA in the past.  Clearly Clinton has said nice things in the past (the Obama campaign provides a compendium of her statements here). Russert wondered if Obama might have said something nice about NAFTA to farmers in 2004.

Here are key excerpts from the transcript (Transcript. The Democratic Debate in Cleveland , New York Times, Feb 26):

"The dangerous protectionism of Barack Obama"

Willem Buiter and Anne Sibert explain the problems with the Brown-Obama-Durbin Patriot Employers Act: The dangerous protectionism of Barack Obama (Vox, Feb 26).

H/T to Jonathan Dingel at Trade Diversion.  See also Trade Diversion's Crook: "Are we even intended to take this seriously?" (Feb 25).

Simon Lester at the International Economic Law and Policy Blog, on a quick initial review, doesn't see the Act falling foul of WTO or GATT rules (except - possibly - the Agriculture Agreement): The Patriot Employers Act under WTO Rules (Feb 26).  The post includes the text of the Act.

There are more posts on the 2008 election here: Election 2008 or over here at the International Economic Law and Policy Blog.

Sherrod Brown Likes What He's Hearing

The recipe for a win in Ohio?  Ohio Senator Sherrod Brown thinks it's a populist economic message (Sherrod Brown on How to Win in Ohio, Editor's Cut, Feb 11).  Brown, a strong critic of trade policy, was elected in 2006:

I won by well into double-digits, in a slightly Republican state, against an incumbent with this [a populist - Ben] message. Granted, it was a good year, and the Republican Party's in trouble, but that was big part of the reason. My numbers compared to Kerry [in his 2004 campaign - Ben] were not a whole lot better in the big Metropolitan counties… but in the small counties I ran ahead of him by 10-15 points. Just looking at that, there has to be a reason, and the reason was a populist economic message.

That message will win the Ohio primary and, in November, the country:

Obama Explains How Much He Doesn't Like NAFTA

Obama's spoke about NAFTA Saturday at the National Gypsum wallboard plant in Ohio: Remarks for Senator Barack Obama: National Gypsum in Lorain, Ohio (campaign web site, Feb 24): 

Key points: (a) NAFTA was bad for America; (b) NAFTA put special interests over workers' interests; (c)  1,000,000 jobs have been lost because of NAFTA, including 50,000 in Ohio; (d) ties Clinton to NAFTA; (e) will not sign new trade agreements that do not include unspecified environmental and labor protections (and would presumably thus sign new trade agreements); (f) will pass the Patriot Employer Act.

According to the Obama campaign, the Patriot Employer Act "would eliminate tax breaks for corporations that ship jobs overseas and provide incentives for corporations to invest in their U.S. workforce."  Here's the Library of Congress summary.

Patriot Employers Act - Amends the Internal Revenue Code to allow a taxpayer certified as a Patriot employer by the Secretary of the Treasury a tax credit for one percent of such employer's taxable income. Defines a "Patriot employer" as any taxpayer who: (1) maintains its headquarters in the United States; (2) pays at least 60% of the health care premiums of its employees; (3) observes a policy requiring neutrality in employee organizing drives; (4) maintains or increases the number of its full-time workers in the United States relative to its full-time workers outside of the United States; (5) provides full differential salary and insurance benefits for all National Guard and Reserve employees called to active duty; and (6) provides its employees with a certain level of compensation and retirement benefits.

Obama is a co-sponsor of this along with Ohio's Sherrod Brown.

Amy Chozick and Nick Timiraos report on the Ohio race for the Wall Street Journal: Democratic Rivals Hear Ohio's Ills, Set Out Plans for Mortgages, Jobs (Feb 25).

Here's the key text from the speech:

"So what happens after Inauguration Day? "

David Wessel looks at the trade stances of the main Presidential candidates: Decoding Candidates on Trade (Wall Street Journal, Feb 21). 

Worthwhile Congressional Initiatives

The Progressive Policy Institute points out that: The United States Collects More Tariff Money from Cambodia than from Britain (Trade Fact of the Week, February 20):

Some of our highest tariff rates are imposed on goods from some of the poorer countries.  "...countries which make cheap and simple clothes, shoes, and luggage face a far more restrictive American trade regime than the rest of the world."  So we end up taxing goods from less developed Cambodia an average 17% of their value, while goods from the affluent U.K. are only taxed 0.7% of their value.

Here are some congressmen and women who want to do something to adjust the tariffs on goods from some poorer countries:

• Rep. Jim McDermott seeks to exempt Cambodia, Bangladesh, Afghanistan, and other least-developed countries not covered by tariff exemptions like the African Growth and Opportunity Act: http://www.house.gov/mcdermott/pr071018.shtml
• In the Affordable Footwear Initiative, Reps. Joe Crowley (D-NY), Kevin Brady (R-TX), and Nancy Boyda (D-KS) seek to scrap tariffs on low-priced sneakers and shoes not made in the United States. National Public Radio reports: http://www.npr.org/templates/story/story.php?storyId=10991519

U.S. tariffs are regressive - since they tend to be highest on "cheap and simple consumer goods" the poor in the U.S. end up paying a larger proportion of their income than the rich.  They're regressive, and not much of a job-preserver:

...the tariff system today is more often defended as a job-protector. But employment in high-tariff industries is declining rather than growing. The International Trade Commission's 2007 computer-model analysis, Economic Effects of Significant Import Restraints, suggests that the system protects almost no jobs. Simply scrapping it, along with farm quota programs, would shift 60,000 jobs over five years -- not even half the routine 140,000 jobs that turn over every day in the United States. Structural forces cutting the costs of goods and services trade -- larger and faster container ships, better ports, air cargo, the Internet and global telecommunications generally -- seem to be amplifying the power of comparative advantage so strongly as to make the system ineffective. The ITC explains:http://hotdocs.usitc.gov/docs/pubs/332/pub3906.pdf

As I recall, the same ITC report also indicated that the overall welfare impact of eliminating the remaining U.S. tariffs would be pretty small.

Where Do They Stand on Immigration?

Audrey Singer and Jeffrey Brown of the Brookings Institution have prepared a review of the candidates' positions on immigration: Candidate Issue Index: Immigration (February 11). 

Singer and Brown have ferreted out votes and statements on border security, temporary worker programs, legalization and amnesty, worksite enforcement, English language requirements, admissions criteria, for Clinton, Obama, Huckabee, and McCain - everything organized in a nifty table to facilitate comparisons.

Space Science, Exports, and National Security

Exports with military uses are subject to either Department of Commerce Export Administration Regulations (EAR - for products with civilian or military uses) or Department of State International Traffic in Arms Regulations (ITAR - for products that only have military uses).  ITAR rules are more demanding than EAR rules.  Space satellites are covered by the more rigorous ITAR. 

The National Academies Press reports on a recent workshop on the problems that have been created by the application of ITAR to space satellites:  Space Science and the International Traffic in Arms Regulations:Summary of a Workshop (2008).

Here are some extracts: