"What a revolting development this

"What a revolting development this is!"

The Washington Post account

Apparently the steel tariffs have backfired politically on the administration - the political gains in West Virginia and Pennsylvania have been more than offset by losses elsewhere. The administration is looking for a face-saving way to back off. That's the thrust of a story in today's Washington Post by Mike Allen and Jonathan Weisman: "Steel Tariffs Appear to Have Backfired on Bush Move to Aid Mills and Gain Votes in 2 States Is Called Political and Economic Mistake " Allen and Weisman provide a fly-on-the-wall look at administration economic policy making:

"But among Bush's economic team, opposition to the tariffs has hardened substantially. Administration officials said Commerce Secretary Donald L. Evans, one of Bush's closest friends, thinks the tariffs should be lifted as a way of showing that the administration has heard the pain of manufacturers, who account for 2.5 million of the more than 2.7 million jobs lost during Bush's presidency. Treasury Secretary John W. Snow, chief economic adviser Stephen Friedman and N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, are said to agree.

"That marks a significant change from 18 months ago, when R. Glenn Hubbard, then chairman of Bush's Council of Economic Advisers, drafted detailed analyses against the tariffs, including state-by-state job losses that he forecast for manufacturing.

"But the economic team was fractured. Evans was torn between the steel industries and the steel users. He ultimately decided against the tariffs, but with caveats that the White House political team took as a sign of weakness, former administration economic officials say. Likewise, then-Treasury Secretary Paul H. O'Neill expressed philosophical opposition to tariffs, but he was more interested in opening talks with allies on limiting steel production capacity abroad.

"At a crucial meeting of the economic team, tariff opponents said they were abandoned. O'Neill sent his undersecretary for international affairs, John Taylor. Then-Budget Director Mitchell E. Daniels Jr. told Hubbard, who also has since left the administration, that he would back him, but left the meeting before Hubbard's presentation. And Lawrence Lindsey, the famously opinionated chairman of the White House National Economic Council, decided his role was to facilitate the discussion, not express an opinion.

"Perhaps most importantly, former Bush economic advisers said, Robert B. Zoellick, the U.S. trade representative, supported the tariffs, figuring that backing them would win congressional votes to give Bush "fast track" trade negotiation powers. Indeed, Congress did hand the president that win. Zoellick also calculated that the lucrative subsidies backed by Bush that year in the massive farm bill would help the cause of free trade, by giving the United States a chip to bargain with at the World Trade Organization's upcoming round of talks to eliminate farm subsidies."

Karl Rove is missing from this quote, but he appears elsewhere in the article as a proponent of tariffs for political purposes.

Brad Delong critiqued the Allen and Weisman account, here: "The "He Said, She Said" Disease" ("...So why do Allen and Weisman turn what appears under their byline into a platform for White House officials to say things they know are lies? Why do they confuse their readers by pretending that there is a debate over the economic effects of the steel tariff?...")

The New York Times account

Elizabeth Becker paints the picture a little differently in Friday's New York Times, here:"Bush Weighs Fate of Steel Tariffs". In Becker's article, job losses in steel using businesses don't appear as large as the tend to be in the Post article. Becker cites to two International Trade Commission (ITC) studies:

"It will take trade and industry experts days to analyze the data, but the findings offered a counterpoint to growing complaints from small- and medium-size American manufacturing companies that use steel. They say the tariffs, or safeguards, have raised their costs, cut their profits and forced them to delay expansion and lay off employees.

"One report, however, concluded that many companies "had difficulty distinguishing between the effects of the safeguard measures and other changes in market conditions."

"While overall employment of steel-consuming industries generally fell or remained flat in the year after the tariffs were imposed, compared with the two previous years, according to the report, "in many cases employment fell by a greater amount (and percentage) in the year before the safeguard measures were implemented than in the first year after they were implemented."

"As for maintaining the tariffs, "a majority of steel-consuming firms indicated that neither continuation or termination of the safeguard measures would change employment, international competitiveness, or capital investment," the report said.

"The report noted that results varied by industry and that companies in the the auto parts and steel fabrication businesses reported a greater effect from the measures..."

euphemism: In Becker, the ITC and administration sources refer to the steel tariffs as, "the safeguard measures" while a Gephardt representative refers to "the steel industry relief program." In Becker, politics will likely drive the President's decision, but the issue isn't as clear cut.

The International Trade Commission reports

Access the ITC reports, here: "ITC Steel reports page"

DeLong critiques these reports, here: "The International Trade Commission Should Be Ashamed" ("...Do you think that the unfavorable macroeconomic conditions--the "recession," it is called--in the year before the tariffs had something to do with steel-user job losses in that year? If so, you're a lot smarter (or at least a lot more honest) than the hacks who write reports for the International Trade Commission...")