September 20,2011

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In Speech, Hatch Outline Opposition to Trade Adjustment Assistance Legislation

Utah Senator Explains that Program So Generous that Even Bankrupt Solyndra Applying for TAA Benefits

WASHINGTON – In a speech on the Senator floor today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, outlined his opposition to the Trade Adjustment Assistance (TAA) amendment to the Generalize System of Preferences (GSP) legislation that is currently being considered by the Senate. Hatch criticized the Obama Administration for holding up the three pending trade agreements with Colombia, Panama, and South Korea that would create jobs and economic growth and further explained how this program is so generous that the now bankrupt solar energy company, Solyndra, could be eligible for TAA benefits.

“Much has been said about TAA, and that it is the price for free trade agreements.  But we are paving new and dangerous ground by holding three trade agreements hostage to expanded TAA,” said Hatch.  “Each time we have tried to move these agreements a new roadblock has been erected.  And while we dilly and dally, our trade competitors take more of our market share around the world, and American businesses and farms lose more money and more jobs.”

“According to President Obama and Vice-President Biden, green jobs, like those found at Solyndra, were supposed to be the jobs of the new economy.  Now that new economy venture failed, those very same workers are going to be retrained, at taxpayer expense, for other jobs in the new economy,” said Hatch. “Government, under the President’s green agenda, picks winners and losers and then pays off the losers when it makes the wrong picks.  Pardon the American taxpayer for jumping to the conclusion that this does not make sense”

Below is the text of Hatch’s full speech delivered on the Senate floor today: Mr. President, I strongly oppose the TAA amendment offered by my good friend and colleague from Montana, Chairman Baucus.  But, before I get into specifics, I think it is important to put this debate in context.  For years, I have been working to ensure that our pending trade agreements with Colombia, Panama and South Korea receive fair consideration in the United States Congress. 

Unfortunately, while I worked to get these agreements approved, others placed obstacles in the way.  As a result, days, weeks, and months passed.  Eventually those months turned into years.  Now, four years later we are taking up the sixth renewal of Trade Adjustment Assistance in the time that these job creating trade agreements have languished.  To me, it is highly ironic that we not only passed, but expanded, legislation to help workers who are allegedly harmed by trade agreements five times over the last four years, while we have yet to actually pass a single trade agreement. 

This March, President Obama made himself perfectly clear: unless Congress agreed to spend more money for this pet trade priority, he would never send the trade agreements to Congress and U.S. workers would never benefit from these agreements. Basically, the President held U.S. exporters hostage while he squeezed more spending out of Congress.

Despite my deep disappointment in the President’s failure to make these agreements a priority, I am pleased that we are having this debate today.  Earlier this summer the Administration tried to jam this domestic spending program into the Korea Free Trade Agreement implementing bill.  I strongly opposed this move.  I believe it violated long-standing trade rules and seriously jeopardized approval of the South Korea agreement. 

I strongly encouraged the White House to reconsider so we could have a robust debate with TAA considered solely on its merits.  After all, if there is such strong bipartisan support for the program it should not be shielded from a debate and vote in an open forum.  It appears the Administration realized their position was untenable in the face of unequivocal Republican opposition.  Thankfully they chose to heed my advice and today we have an opportunity to consider and fully debate TAA. 

If TAA passes the Senate, it should remove what we hope is the last obstacle that the President and his party placed in front of consideration of the FTAs.  We will see.  To date, there is little evidence that the President is ready to finally step up to the plate. 

And it has not been for lack of effort on our part. 

House leadership made it clear that TAA will be considered in tandem with the FTAs — as the President requested.  Chairman Camp worked with Senator Baucus to develop a substantive deal on TAA — as the President requested. 

Despite my deep reservations about the program, a number of my Republican Senate colleagues stepped up in support of the TAA compromise negotiated by Chairman Baucus and Chairman Camp and even put their assurance in writing to support TAA.  Before the August work period, Senators McConnell and Reid articulated a process for consideration of TAA and the FTAs —as the President requested.

Still the Administration refuses to provide any real assurance that it will actually send the pending free trade agreements to Congress for a vote.  I am very disappointed that we still have not heard definitively from the White House that they will send up the three FTAs. 

As for the Trade Adjustment Assistance Amendment before us today, I would like to summarize for my colleagues my concerns with the proposed expanded program, and my objections to additional domestic spending for this program at a time of immense budget difficulties. 
First, there is little evidence that the TAA programs actually work.  In fact, the opposite is true. Recent studies by professors at American University have found that the TAA program “has no discernible impact on the employment outcomes of the participants.”  If that is the case, I can’t understand why we would expand this ineffective program.

This summer I was surprised to learn, through an article in The Wall Street Journal, that the Department of Labor is four years late on producing a report to Congress intended to demonstrate that the numerous Trade Adjustment Assistance programs actually improve the employment outcome for TAA participants.  Yet today we are considering an amendment to not only reauthorize the program for three years, but to make many of the benefits retroactive.
Before we authorize a billion dollars more in taxpayer spending, shouldn’t we know if the program actually improves the job prospects for TAA beneficiaries?  My friend and colleague from Oklahoma, Dr. Coburn, has made it a priority to identify and eliminate wasteful government programs.  In its first report on the subject, the Government Accountability Office identified dozens of programs without any identifiable metrics on whether they actually succeeded in their mission.

At a time of crushing budget deficits and increasing debt, Congress could easily start by eliminating those programs that have no proven track record of success.  And in my opinion, we would have to put TAA at the top of that list.  Consider that we are still waiting on the report from the Department of Labor on TAA’s efficacy.  I suspect that if the facts and the data clearly demonstrated benefits to workers participating in the TAA programs, the report would have been issued years ago.  I am sure this report will be issued, but only after TAA has been passed.  I cannot support increasing funding for a program without any real evidence that it works.
Some will argue that more people are using the program; therefore it must be working.  I strongly reject this argument.  Spending more money and certifying more workers does not mean a program is succeeding.  It simply means the program is expanding.

And that is my second concern.  Like many federal government programs, this domestic spending program continues to grow and grow.  TAA money now goes to farmers, firms, community colleges, and service workers.  Even more troubling, the critical nexus between job loss caused by trade agreements and TAA eligibility has been jettisoned.  Today, all workers who lose their jobs allegedly due to “Globalization” could be eligible.  As the global economy and global supply chains become more integrated, I suspect the potential number of beneficiaries, and the costs to the U.S. taxpayer, will grow enormously.

Third, at a time when we need to severely constrain federal spending, this program increases it.  In 2009 TAA was significantly expanded as part of the President’s failed stimulus bill.  Most of those increased costs are included in the TAA amendment before us today.  But there may be additional hidden costs.  Because the income support and the Health Coverage Tax Credit are entitlements, there is no cap on future spending.  And although the Health Coverage Tax Credits are set to expire when Obamacare goes into full effect, I have serious doubts that they actually will.  History shows again and again that it is much easier to create an entitlement than to end one.

As I said, I suspect that this program, like most federal programs, will cost more than expected, especially after unemployment insurance returns to its traditional 26 week level which will consequently increase the use of Trade Reallocation Allowances and increase the TAA program’s costs.

Fourth, the program is fundamentally unfair.  Suppose that one of our fellow Americans loses their job because their factory burns down, another loses their job because his or her company couldn’t compete with a domestic competitor, and a third loses his or her job because of foreign competition.  How can we tell two of our fellow Americans tough luck — you only can use the general job training and unemployment insurance programs — while providing the third worker with a host of more generous training, income support, and health care benefits. 

This doesn’t seem right to me.  Why are we picking winners and losers amongst the over 14 million Americans looking for work?  I am also troubled that although union workers are less than 7 percent of the private sector workforce, union workers receive over a third of TAA certifications.  I don’t see why we should support this vicious cycle: unions drive industry after industry into bankruptcy by insisting on restrictive work rules and overly generous compensation and benefits plans, and the taxpayer gets to come in and clean up the mess by providing the now unemployed workers with a new set of benefits far more generous than those received by others.

Unfortunately, encouraging vicious cycles appears to be an objective of this Administration when it comes to TAA.

Let me share with you another one. 

By now, most of you have heard of a company called Solyndra.  Solyndra was held up by the President and his administration as an example of the wonders of the stimulus and its ability to transform taxpayer dollars into green jobs. 

Here’s how President Obama described it: “And we can see the positive impacts right here at Solyndra.  Less than a year ago, we were standing on what was an empty lot.  But through the Recovery Act, this company received a loan to expand its operations.  This new factory is the result of those loans.”

Well, the President was right about that.  The new factory was a result of the taxpayer loans.  And, according to the Wall Street Journal,those very same taxpayer loan guarantees also were a prime cause of Solyndra’s bankruptcy.   

The “taxpayer dollars to green jobs” alchemy worked about as well as medieval attempts to turn lead to gold. 

But that’s not the end of the story. 

To ensure the circle of taxpayer losses remains unbroken, the former Solyndra employees have now applied for TAA.  

That’s right.  As reported first by Americans for Limited Government, and then confirmed by Investor’s Business Daily, Solyndra employees have applied to the Department of Labor for TAA.
So, to recap: the Administration provides loan guarantees to a failing company and in the process saddles the American taxpayer with over half a billion dollars in potential liability; these same loan guarantees precipitate the demise of said company; and this, in turn, justifies the receipt of new taxpayer-funded benefits for the now-unemployed workers — benefits that go far beyond, and cost far more than, those that other unemployed people receive.  

The Administration likes to talk about the multiplier effect of new federal spending, but I don’t think this is what they had in mind — for each initial wasted taxpayer dollar, the government multiplies the losses and manages to waste another quarter.  Solyndra tried to make solar panels, but ran up their costs far higher than even domestic competitors.  Ultimately, with costs above the competition, the company failed.  Of course, the failure was blamed on China, but if you cannot even outcompete U.S. companies, it wasn’t foreign competition that ruined your business, it was simply a failed business model.

During our hearing on the South Korea Trade Agreement, Deputy U.S. Trade Representative Marantis testified that the purpose of the TAA program is to help workers manage the transition to globalization and help workers train to be able to take advantage of the opportunities presented in the new economy.

Well, according to President Obama and Vice-President Biden, green jobs, like those found at Solyndra, were supposed to be the jobs of the new economy.  Now that new economy venture failed, those very same workers are going to be retrained, at taxpayer expense, for other jobs in the new economy.  Government, under the President’s green agenda, picks winners and losers and then pays off the losers when it makes the wrong picks. 

Pardon the American taxpayer for jumping to the conclusion that this does not make sense.
Let’s not forget that a handful of states receive the lion’s share of TAA money.  Again, this is unfair on its face, and represents a distorted allocation of federal resources.

President Reagan did not graduate from an Ivy League college, and he was not the editor of any law review, but the man understood how the economy grows and what types of programs waste precious government resources.  This was his assessment of TAA.  “The purpose [of TAA] is to help these workers find jobs in growing sectors of our economy. There's nothing wrong with that, but because these benefits are paid out on top of normal unemployment benefits, we wind up paying greater benefits to those who lose their jobs because of foreign competition than we do to their friends and neighbors who are laid off due to domestic competition.  Anyone must agree that this is unfair.” 

I certainly do, as do most of my constituents, who think the last thing this economy needs is another big spending program. 

Another important point is that TAA fuels the fire of the virulent anti-trade propagandists.  TAA supporters say the program keeps faith with American workers and helps build support for trade. I think just the opposite is true.  Unions and other anti-trade zealots gleefully use TAA data to make the case that trade causes outsourcing and job loss.  After all, the number of trade dislocated workers is certified by the government.

As the program is expanded to include more and more people and entities, including community colleges, firms, farmers, and fisherman, the myth that trade is bad for the American worker finds ready fodder and continues to build.  Instead of helping build the case for trade, TAA certifications are used to show that trade is bad.  In the end TAA really is just a government subsidy for anti-trade propaganda. 

Many of those dedicated to fighting a market-opening trade liberalization agenda, and who are hostile to a thoughtful and ambitious trade policy cite each TAA certification and each TAA benefit conferred as further evidence that trade and trade agreements are bad for America.  These same groups use TAA certifications and TAA workers to attack the companies who laid those workers off as outsourcers, even attempting to name and shame the CEOs of these companies.  For goodness sake, why should we expand a program that arms the harshest trade critics with more fodder for their ill-informed and relentless attack on trade?  

Finally, TAA should move with TPA.  Despite what many of my colleagues and many so-called trade experts say, TAA does not move with trade agreements.  In fact, historically significant expansions and reforms to TAA have moved with omnibus trade legislation that included grants of trade negotiating authority to the President.

There is a myth that TAA has always received strong bipartisan support.  Again, the historical record does not bear this out.  A simple review of a very helpful history of TAA provided by CRS this August shows just how controversial TAA has always been and continues to be, and confirms that TAA reforms traditionally move with TPA.

Inexplicably this President doesn’t want TPA, and the White House is actually encouraging Leader Reid and Democrat Senators to vote down a TPA amendment Leader McConnell will offer.  Leader Reid, Chairman Baucus, and the White House have also, apparently, asked the business community to oppose an amendment on TPA as well — despite the fact that the business community has uniformly supported the granting of trade negotiating authority to every President, regardless of party. 

Well this is all baffling to me.  But I agree with Leader McConnell that the President needs TPA as soon as possible.  As I suspect the Democrats will vote down granting their President trade negotiating authority, I must also be inclined to vote against this TAA amendment.
Much has been said about TAA, and that it is the price for free trade agreements.  But we are paving new and dangerous ground by holding three trade agreements hostage to expanded TAA.  Each time we have tried to move these agreements a new roadblock has been erected.  And while we dilly and dally, our trade competitors take more of our market share around the world, and American businesses and farms lose more money and more jobs.

Mr. President, there must be a better way.  I urge you to reconsider your trade priorities. Instead of expending your political capital on expanding federal government, liberate the U.S. worker by accepting our offer to provide you with the authority to open new markets to U.S. exports.  Our economy is in dire straits, unemployment is sky high, and federal spending is out of control.  We need your leadership – and we need it now.