Democratic policy packagers have put together a focus-group-tested list of talking points meant to prioritize certain issues and help members push a unified message. Branding their ideas as a “Better Deal,” Democrats hope to energize their base and attract voters by focusing on drug prices, antitrust initiatives, job training, and trade policy.
They’ve put out a special list of trade proposals that run the gamut from run-of-the-mill protectionism to disastrous protectionism. Here they are:
- An Independent Trade Prosecutor to Combat Trade Cheating: a new Independent Trade Prosecutor would begin rapidly challenging unfair trade practices by foreign countries, like China, that have been ignored for far too long, without relying on the years-long World Trade Organization process.
- The American Jobs Security Council: a new council comprised of independent economic experts would review a potential purchase by a foreign company of an American company and have the authority to stop the deal if it could have detrimental economic impacts, like U.S. job losses. The council would operate in public and have a robust input process for working people.
- Make NAFTA Work for Working People: a renegotiated NAFTA must support more American jobs and higher wages. This can be achieved by negotiating the agreement in the open with workers at the table, requiring strong and enforceable labor standards and ensuring greater market access for U.S. exports, especially agricultural exports.
- Penalties for Federal Contractors that Outsource Jobs: new rules to penalize federal contractors that outsource good-paying manufacturing and call center jobs by requiring federal agencies to consider a company’s record of outsourcing for three years prior to an application for a federal contract.
- Buy America Requirements for All Taxpayer-Funded Projects: new rules to require that taxpayer dollars be spent on U.S. companies and U.S. jobs for all federal public works and infrastructure projects, and current rules be revised to limit Buy America loopholes.
- Crack Down on Countries that Manipulate Their Currency: currency manipulation law that levels the playing field for U.S. manufacturers by penalizing countries that unfairly manipulate their currency.
- An Outsourcing Tax for Companies Leaving the U.S.: new rules in our tax laws so that companies are punished, and no longer rewarded, for shipping jobs and factories overseas, while creating tax incentives for companies that relocate foreign jobs back to the U.S.
TL;DR: Enforce, Penalize, Punish.
The proposals are so one-sidedly protectionist that many news reports have characterized the plan as an attempt to mimic the infamously anti-trade posture of Donald Trump. In truth, though, most of the plan is just a rehash of the policies Democrats have been pushing for decades. It’s more accurate to say that Trump was the one who borrowed Democrats’ trade policies when he needed details to flesh out the economic nationalism he blurted out during his campaign.
Let’s take a look at the proposals.
Frankly, the plans relating to Buy America, currency, and NAFTA labor standards are just too boring to write about. Democrats have cared about these things for a long time and apparently will continue to care about them until global warming kills us all.
The trade prosecutor proposal is potentially interesting. If the position is accompanied by changes in U.S. trade remedy laws or some other statutory authority to impose trade barriers in more circumstances than currently allowed, then the proposal is really just a plan to violate WTO rules and mire the United States in trade conflict. If it doesn’t include new statutory authority, then the proposal is a bureaucratic reshuffling of no consequence, and we should all ignore it.
The plan to “penalize federal contractors that outsource” is interesting. The Democrats seem to be envisioning a procurement process that not only privileges American companies that buy American-made materials, but also imposes an economic patriotism test. In practice, companies would have to be willing to accept a three-year ban on government business before investing abroad. (There might be an interesting opportunity here for an enterprising analyst willing to quantify how expensive that policy would be for different industries based on their relative commitments to foreign investment and government procurement markets.)
Apparently, the “shame list” would apply not only to contracts, but also to “certain federal grants and loans.” This would essentially condition the granting of subsidies on domestic investment in violation of WTO rules.
The most interesting aspect of the plan—and the most truly disastrous, irresponsible, and ridiculous—is the creation of an “American Jobs Security Council” that would subject inward direct investment to an “economic security” test. The only good thing I can say about this proposal is that it is politically dead on arrival. If the Democrats were in power and actually tried to implement this, there would an immediate and emphatic negative response from almost all sectors of the U.S. business community.
This might be a good time to note that the United States is the world’s #1 destination for global foreign investment, which, according to the U.S. government, supports millions of jobs and billions of dollars in economic activity in the United States. This is happening without a Soviet-style economic review board deciding whether that investment meets minimum standards of social benefit. Who’d have thought, right?