TPP, TPA And Obama
Washington loves its acronyms. On one hand we have the TPP, otherwise known as the Trans Pacific Partnership and on the other the TPA, otherwise known as Trade Promotion Authority, i.e. “fast track.” And somewhere in the middle, getting squeezed by both parties, is President Obama. Most Democrats and Republicans agree that TPA is essential for expanding global trade because it allows the president to negotiate international agreements that Congress can approve or disapprove but cannot amend or filibuster.
The problem is, they just don’t trust this president’s negotiating skills. Let’s see … Bergdahl in exchange for five known terrorists? A nuclear pact with Iran in the same week they confiscate a ship? Can you blame members of Congress for their doubts? Even Harry Reid, ostensibly the second most powerful Democrat in the nation, has told Obama forget it. And the president will most likely need TPP to get the TPA approved. … Did you follow that? The TPP is quickly becoming “Obamacare Part 2” in that the Administration is asking Congress to pass it so that members can find out what’s in it. Ahhh … once burned, twice sorry. As Art Buchwald famously once said, “and then I told the president” if you want TPA, then offer Congress—in advance—total transparency on what you’re trying to include in the TPP.
German Chancellor Angela Merkel is a pistol. I love how she told Putin at the 70th anniversary of Victory in Europe Day that “the end of World War II did not bring democracy and freedom for all in Europe”—a reference to the Soviet occupation of East Germany, but with total disregard that it was Germany that invaded Russia. Those two make for great political theater and we all know Putin loves the world stage.
“I solve my problems and I see the light, we gotta plug and think, we gotta feed it right …” And that’s about where the comparison between Grease and Greece begins and ends. Unlike the song, Greece does not have groove or meaning whether it stays or exits the Eurozone. It’s gross domestic product is only about $240 billion, not much larger than that of Orange County, Calif. Pundits love to speculate about what it would all mean if Greece were to fail—or fail worse than it already has. And while the scenarios can be interesting, so was last night’s score of the Angels vs. Mariners game. With apologies to Socrates, we’ve over thought this one.
Question: When does free trade become fair trade?
Answer: certainly not in the near term. You have to have an incredibly strong, diverse and gigantic economy to champion free trade, if for no other reason than to have jobs-in-waiting for displaced workers to engage in other industries. Take the auto industry for example. If Korean imports undercut Detroit’s pricing and forces Ford to lay off workers due to lagging sales, then the broader American consumer benefits from more affordable cars and Korea benefits from increased market share—but auto workers and Ford take the hits. This would be more palatable if Korea kept its “import fees” at bay, enabling U.S. industries to competitively price their exports to Korea so that the displaced auto workers could find jobs in growth industries. But really, how often does that play out? Is an auto worker going to pick up his or her family, take the kids out of high school and move across country to a new town, a new home, a new life and a new job? Still, the arguments for free trade are compelling: It encourages innovation, increases efficiency and keeps inflation in check through competitive consumer pricing. But when you factor in the $400 million we spend annually on the Trade Adjustment Assistance program—which is another term for unemployment benefits for up to two years for displaced workers—what have we really gained? Don’t stop reading here lest you think I am not for free trade. Of course I am. I am for free trade properly managed.
What does Walmart know that Target doesn’t? The former is going to acquire Target’s money-losing Canadian stores north of the border. I would have liked to have been the broker on this deal. … Walmart is reportedly going to spend $136 million to take over 12 store leases and one owned property that will add about 1.6 million square feet of retail space. And to service the acquisition, they plan to add a 1.4-million-square-foot distribution center to the mix, on top of another $153 million in renovations. Makes you wonder if this deal was put together before the price of oil dropped, eh?
Relax. China Isn’t Taking Over!