Obama packages displaced worker aid with trade pacts

McClatchy NewspapersJune 29, 2011 

WASHINGTON — Sidney Ege hasn't had to lay off any employees even though his company has been losing business as his clients close and move offshore.

His company, S E Moulding, manufactures custom plastic parts for everything from golf carts to medical devices.

Despite his eroding client list, Ege found a way to stay profitable. The company in Mt. Holly Springs, Pa., obtained funds through the Trade Adjustment Assistance for firms program, and started up a new product, the Grey Beard pump.

The small pump can be used to change oil in a car or a boat. It started selling in February with a new website and online payment processing.

"What we were looking for was a way to not lose anybody, so the obvious idea was to grow (the business) up," Ege said. "It's no cure for cancer, but it's a good little pump, does exactly what we say it does, and we continue to see growth in sales from it."

Trade Adjustment Assistance for firms is one of four federal programs under the Trade Act that help American businesses hurt by foreign competition. Its larger and more controversial sister, TAA for workers, is a $3 billion a year program that gives financial assistance and job training to workers whose jobs went overseas.

TAA's future was threatened when Republicans pulled renewal of certain benefits from the House of Representatives floor in February and debated the program's value. Financial assistance, job training resources and health care tax credits lapsed. Advocates of TAA for firms thought the smaller program might be cut.

"We were worried (TAA for firms) would just fall off a cliff," said Bill Bujalos of the Mid-Atlantic Trade Adjustment Assistance Center.

But White House officials said they're confident that a deal brokered this week with congressional leaders will lead to reauthorization of TAA, and extend most of the benefits to laid-off workers until 2014, when TAA would expire.

The White House countered the Republican hold on TAA last month by refusing to advance free-trade agreements with South Korea, Colombia and Panama. Under the deal, moving them forward will include TAA as well.

However, Senate Republican leader Mitch McConnell said TAA and the free-trade agreements should be considered separately.

"Today's action puts at risk what should be a bipartisan job-creation exercise," McConnell said of the deal. "The administration risks losing Republican support for something we have long been calling for."

The free trade agreements are expected to create tens of thousands of jobs. The agreement with South Korea would give the U.S. greater access to its auto markets, and alone could increase exports by $10 billion and create 70,000 jobs, the Obama administration projects.

More than 280,000 workers qualified for TAA benefits last year, and around 230,000 used them.

The TAA program has been around since the Kennedy administration, and has expanded several times, most recently with the stimulus act of 2009.

Many Republicans and conservative analysts consider TAA ineffective and redundant: Unemployment benefits already exist, so why should dislocated workers get special treatment compared to other unemployed workers? And although job training exists, Labor Department data say that retrained workers typically earn only about $29,000 a year.

The Club for Growth, a small-government advocacy group, called TAA a giveaway to Democrats' union allies. Barney Keller, a spokesman, said the program and the free trade agreements should rise or fall separately on their own merits.

"In a time when the country's facing multimillion dollar deficits, the fact that anyone would want to extend expanded benefits on top of unemployment just boggles the mind," Keller said. "Why do we have to package something that's so good with something that's so bad?"

Barry Bosworth, an economist at the Brookings Institution, a center-left research group, said that, in principle, trade adjustment is a good idea, because there are winners and losers from trade, although most economic analyses say there are far more winners than losers. He called TAA a bribe for critics of trade liberalization, but added that there's no reason why assistance shouldn't be given to those left behind.

Howard Rosen, an expert on TAA and an advocate for dislocated workers, has said that while the benefits of trade tend to be large — as much as $1 trillion for the U.S. economy — and widely distributed, the costs of trade are smaller but more concentrated. He said the special program is justified because TAA-eligible workers face a "higher adjustment burden." They are often older, less educated and more highly paid before being laid off than other unemployed workers.

Department of Labor statistics show that the average TAA participant is 46 and has a high school education. States that have used TAA the most recently are Michigan, North Carolina and California.

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