NCPA - National Center for Policy Analysis

Don't Link Free Trade Agreements to Ineffective Programs

May 24, 2011

The Obama administration and Congress recently began negotiations on three pending free trade agreements (FTAs) with Colombia, South Korea and Panama.  While these FTAs would boost economic activity and strengthen ties between participating nations, the administration and many in Congress want passage of the FTAs to be linked to the reauthorization of the Trade Adjustment Assistance (TAA) program, says David B. Muhlhausen, a research fellow, and James Sherk, and senior policy analyst, at the Heritage Foundation. 

  • TAA reauthorization has been linked in the media to passage of the FTAs because national business organizations, such as the Business Roundtable and U.S. Chamber of Commerce, support the program.
  • This ineffective and costly program provides job training, relocation allowances and unemployment pay for workers who lost their jobs due to foreign trade, while they attempt to shift into new occupations.
  • TAA provides overly generous benefits for only a small fraction of laid-off workers; worse, there is little empirical support for the notion that TAA boosts participants' earnings.
  • Support for TAA costs the business community little, but it saddles American taxpayers with the bill for an ineffective and costly program -- Congress is already borrowing 43 cents for every dollar it spends, and taxpayers cannot afford to pay for ineffective programs.

Congress should not link passage of the FTAs to TAA renewal.  Instead, Congress can immediately send a clear message that it is getting serious about our nation's dire fiscal straits by letting the entire TAA program expire on February 12, 2012, setting a much-needed precedent that ineffective programs should no longer receive funding, say Muhlhausen and Sherk.

Source: David B. Muhlhausen and James Sherk, "Trade Adjustment Assistance: Don't Link the Costly and Ineffective Program to Free Trade Agreements," Heritage Foundation, May 16, 2011.

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