In his upcoming State of the Union speech, President Barack Obama is expected to prioritize what is emerging as his legacy issue: combatting America's growing wealth inequality. Expect him to promote policies to create new middle-class jobs, especially in manufacturing, and counter the erosion of wages now undermining workers economy-wide.
But in the speech, Obama is also expected to highlight several major trade initiatives, including his priority Trans-Pacific Partnership (TPP) deal, a massive pact with 11 Asian and Latin American nations that Obama hopes to sign quickly. The business lobby is at full tilt pushing Obama to use the SOTU to call on Congress to pass Fast Track trade authority for the TPP.
The thing is that economists of all stripes agree that U.S. trade policy has been one of the major contributors to growing U.S. income inequality.
There really is no disagreement about that -- the only debate is about the degree of the effect. A study published by the Peterson Institute for International Economics -- an early supporter of the North American Free Trade Agreement (NAFTA) on which TPP is modeled -- estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Other studies have posited greater and lesser contributions.
The TPP would replicate and expand to additional countries the trade agreement model established in the NAFTA. Twenty years of evidence of NAFTA's contribution to U.S. income inequality has become a major problem for Obama's push to get Congress to provide Fast Track authority for the massive TPP deal, described as NAFTA on steroids.
Not a single House Democrat would sponsor the legislation submitted two weeks ago to establish Fast Track. Last week, 17 Senate Democrats made their feelings known in letters to Majority Leader Harry Reid (D-Nev.). And last November, 151 House Democrats signed a letter saying they oppose Fast Track, arguing that lawmakers have been cut out of negotiations.
Congressional opposition to more-of-the-same trade deals has intensified as Obama's past SOTU trade promises have fallen flat. In contrast to Obama's 2011 SOTU promise that his only major past trade deal, the U.S.-Korea Free Trade Agreement, would boost exports, in the agreement's first year, U.S. exports to Korea fell 10 percent, imports from Korea rose and the U.S. trade deficit with Korea exploded by 37 percent. This equates to a net loss of approximately 40,000 U.S. jobs.
The drop in exports to Korea added to last year's sluggish overall two percent U.S. export growth rate. Given current trends, the U.S. will not achieve the president's export-doubling plan until 2032 -- 18 years behind the 2014 deadline Obama set in his 2010 State of the Union speech.
This follows on the recent 20th anniversary of NAFTA, which fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. (The net job loss figure is derived from the U.S. government methodology employed to calculate the employment effects of trade flows.)
U.S. government data show that the average annual growth of our trade deficit has been 45 percent higher with Mexico and Canada than with countries that are not party to a NAFTA-style pact. U.S. manufacturing exports have grown at less than half the rate to Mexico and Canada since NAFTA than in the years before it. Before NAFTA, the U.S. had a small trade surplus with Mexico and a modest deficit with Canada.
While many focus on the number of U.S. jobs lost from NAFTA and similar pacts, the most significant effect has been a fundamental alteration in the composition of jobs available to the 63 percent of American workers without a college degree. And this has had a direct impact on income inequality.
Trade pact investment rules remove many of the risks otherwise associated with sending jobs offshore to where labor costs are drastically cheaper. The United States has lost millions of manufacturing jobs during the 20 years of NAFTA and decade-plus since Congress approved China's entry to the World Trade Organization. As a result, the wages most U.S. workers can earn have been severely degraded even as overall unemployment has been largely stable (excluding the Great Recession) as new low-paying service sector jobs have been created.
According to the U.S. Bureau of Labor Statistics, two of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them more than 20 percent. The list compiled by the Department of Labor's Trade Adjustment Assistance program of more than 845,000 specific American jobs lost to NAFTA and similar pacts reads like the funeral program for the middle class.
The implications for growing income inequality are broad. It is not only those American workers who lost a job to NAFTA or China trade who face downward wage pressure; as increasing numbers of workers displaced from manufacturing jobs joined the glut of workers competing for non-offshorable, low-skill jobs in sectors such as food service and retail, real wages have fallen in these growing sectors as well.
The U.S. government data is striking: The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average U.S. wage has grown less than one percent annually in real terms since NAFTA was enacted even as worker productivity has risen more than three times. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent's share has shot up by 58 percent.
Offshoring of American jobs is rapidly moving up the skills ladder, expanding the income inequality effect. Alan S. Blinder, a former Federal Reserve vice chair, Princeton economist and NAFTA supporter, says that one out of every four American jobs could be offshored in the foreseeable future. A study he co-authored found that the most offshorable industry is finance and insurance, not manufacturing. According to Binder's study, American workers with a four-year college degree and an annual salary above $75,000 are among those most vulnerable to having their jobs offshored.
The grandfather of modern free trade economics, Paul Samuelson, published a startling 2004 academic paper in the Journal of Economic Perspectives that shows mathematically how the offshoring of higher-paid jobs to low-wage countries can cause U.S. workers to lose more from reduced wages than they gain from cheaper imported goods. Trade theory states that while those specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade "liberalization" because we can buy cheaper imported goods. Except, as job offshoring has moved up the wage level, this is no longer necessarily true.
When the Center for Economic and Policy Research applied the actual data to the trade theory, they discovered that when one compares the lower prices of cheaper goods to the income lost from low-wage competition under our current policy, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper priced goods from trade. U.S. workers without college degrees (the vast majority) lost an amount equal to 12.2 percent of their wages, so for a worker earning $25,000 a year, the loss would be more than $3,000 per year.
The 20-year record of NAFTA shows that deals like the Trans-Pacific Partnership would contribute to income inequality as more middle-class jobs are lost. Either Obama can prioritize a battle against income inequality or he can push more NAFTA-style trade agreements and the trade authority to railroad them through Congress, but he cannot do both.
Link to original article from Huffington Post
More information is available at http://www.citizen.org/fast-track.
Virginia is now being mentioned as a crucial swing state. This Congressional race is certainly one to watch. Perhaps that was why I was so impressed to hear candidate Wayne Powell, (who is challenging incumbent Republican House Majority Leader Eric Cantor for the seat he has held in the 7th District of Virginia since 2001) speak boldly and openly about the environment showdown with Cantor.
Running against incumbent Republican House Majority Leader Eric Cantor in Virginia’s GOP-heavy 7th District is enough to give any Democrat the blues. So Bluegrass legend Dr. Ralph Stanley will headline a two-day campaign swing for Powell next week.
Dream on. But Democratic long shot Wayne Powell might put a few dents in the House majority leader's armor. That Powell and Zerban were in LA raising money for what seemed like increasingly less quixotic quests—Powell is the first challenger Cantor has agreed to debate in 10 years, and Zerban's internal polling in September put him within single digits of Ryan—could underscore America's waning infatuation with tea-party-style politics.
Perhaps you should give it a look, post-mortem. After all, this is the first debate Eric Cantor has agreed to in TEN YEARS.
A top aide to House Majority Leader Eric Cantor said the Republican will not accept a challenge from Chesterfield County’s Democratic Party to meet its own candidate, Wayne Powell, in a free public forum before the Nov. 6 elections.
Eric Cantor is not particularly popular in his Republican-leaning district. His personal popularity is 37% favorable, 31% unfavorable. Strongly unfavorable views outnumber strongly favorable ones, 25%- 21%. Cantor’s “re-elect” number is weak: 41% want to re-elect Cantor, while 43% want to replace him.
Democratic 7th District congressional candidate Wayne Powell is taking his campaign to unseat longterm incumbent Republican Eric Cantor right into the living rooms of central Virginia Republicans. The ad will run district-wide approximately once an hour on Fox News for the entire Convention. The ad buy is indicative of Powell’s strategy of reaching out to all voters regardless of their political affiliation.
A Richmond native and attorney like his opponent, Powell is otherwise very different from 49-year-old Cantor, Majority Leader in the U.S. House since 2011, and Culpeper County’s congressional representative since 2000.
Cantor’s name came up a lot during Thursday’s “Open Town Hall Meeting” hosted by Powell, who was articulate and well received by local constituents in attendance.
House Majority Leader Eric Cantor, R-7th, will debate Democratic challenger Wayne Powell on Friday, Sept. 28.
Cantor, who declined to debate Democratic challenger Rick Waugh in 2010, has not debated a Democrat in a general election since 2002, when he squared off with former Georgia congressman and "Dukes of Hazzard" star Ben L. "Cooter" Jones.
It takes courage to look at a roomful of Democrats and confess that you were a consultant on John Edwards’ presidential campaign.
But that is exactly what Dave “Mudcat” Saunders did at the June 6 Chesterfield Democratic Committee meeting. Saunders just put it right out there while telling members how he thinks Wayne Powell can beat 7th District Congressman Eric Cantor.
Wayne Powell, Veteran, Small Business Owner and Local Attorney Is the Democratic Nominee to Oppose Eric Cantor. Says Cantor is “epitome of what is wrong in Washington…a career political operator who is the poster child for Washington gridlock and dysfunction”
“We take care of our own.” That was the major theme of Wayne Powell’s speech Friday at the Raven’s Nest in Culpeper.
Powell is a Democratic candidate for the 7th District, the seat currently held by House Majority Leader Eric I. Cantor.
For Wayne Powell, Virginia’s 7th Congressional District “isn’t personal, it’s Cantor.”
Powell, 62, is challenging Republican incumbent Eric Cantor of Henrico County for his seat in the U.S. House of Representatives. Powell is one of the three candidates running for the spot on the Democratic ballot this fall.
Wayne Powell wants to be the Democratic Party nominee to challenge House Majority Leader Rep. Eric I. Cantor, R-Henrico, for the 7th District seat in the House of Representatives in November.
Earlier this evening I spoke with Wayne Powell, one of three 7th Congressional District Democrats seeking the Democratic Party's nomination to face off against Eric Cantor this November. Powell told me that when he heard what had happened at Virginia's Capitol Square, he hurried downtown to offer his legal services to the protesters that had been arrested.
E. Wayne Powell, candidate for the Democratic nomination against Eric cantor in the Seventh Congressional District, today released this statement about the incidents at the Capitol.
E. Wayne Powell, a candidate for the Democratic nomination to take on Eric Cantor in Virginia's 7th Congressional District, has had a really amazing week. It all started last Thursday when Powell received the endorsement of the Progressive Democrats of America's chapter in Virginia's 7th CD. Powell's education and experience—especially his service in the military—make him exceptionally well equipped to face Cantor.
On October 13th members of the PDA 7th District Chapter endorsed candidate E. Wayne Powell.
Occasionally I take a long weekend. It’s a chance to take a break from the profession, and the campaign. Last weekend I travelled to New York City. What started as a getaway ended in an exhilarating glimpse of democracy in action.
My name is Wayne Powell, and I'm a Democrat running for Congress in Virginia's 7th Congressional District to replace Eric Cantor. Americans need good jobs now. Let's face it, as a nation we tend to define ourselves by what we do. I am an attorney and a retired military officer. When you deny Americans an opportunity to do meaningful work and contribute to their community by providing services, you are attacking a key part of their individual identities.
MoveOn.org Petition - Congress Don't Renew Fast Track
Pulic Citizen Petition - Congress Must Reject Fast Track Authority
MoveOn.org Petition - Stop the Trans Pacific Partnership
CREDO Petition - Stop the Massive Corporate Power Grab
VA-07 E. Wayne Powellhttp://www.powellforva.com
If your Senator(s) and/or Representative is not currently opposed to Fast Track, they may not completely understand all the implications. Nothing sends a stronger message to a Congressional member than a personal visit to a district office by a voter with a written request. Phone calls and emails are incredibly important but nothing gets attention like a personal visit. Our Educate Congress page has information and a sample letter. Print the letter, sign it, deliver it.