Obama facing dilemma over protectionism in bill

[Turborama]

Source: AP

By DESMOND BUTLER, Associated Press Writer – 1 hr 30 mins ago

WASHINGTON – Less than two weeks into office, President Barack Obama faces a dilemma over protectionist provisions in a massive economic stimulus bill: Backing the measures could set off a trade war, while opposing them could trigger a backlash from his supporters.

The choice involves "buy American" provisions attached to White House-backed stimulus legislation moving through Congress. They would require major public works projects to favor U.S. steel, iron and manufacturing over imports.

Some Democratic lawmakers and interest groups allied to the president support the measures, but international allies and trading partners are warning that favoring U.S. companies would breach U.S. trade commitments and could set off tit-for-tat countermeasures around the world.

The two largest U.S. trading partners already have spoken out against the measures. On Thursday, Canadian Prime Minister Stephen Harper expressed concern and the European Union warned that it would not "stand idly by" if such measures were passed. On Friday, Brazil's president Luiz Inacio Lula da Silva also criticized the measures.

Read more: http://news.yahoo.com/s/ap/20090131/ap_on_go_pr_wh/us_obama_trade

[Lasher]

1. Good, a trade war would be fine.

Might limit some of this 'free' trade bullshit.

If the protectionist measures are not in the bill we should forget about it. It makes no sense to borrow money from China to stimulate the Chinese economy.

[mwb970]

2. I blame "free trade" and globalization for many of our problems.

Now we have reached the point where "buy American" is considered treasonous, I guess. My God. What have the Republicans done to us?

[OhioChick]

14. Agreed. Bring it on! n/t

[TrogL]

35. Why declare economic warfare on Canada?

China's your problem.

[Rebellious Republican]

3. Trade War, and this bad? Seems to me that if we start a trade war

then that would mean we would have to start manufacturing our own stuff again. Which in turn would create even more jobs, which in turn would stimulate the economy, thereby putting more money into our hands to spend on more products increasing output and production which generate more profits for CEO's and stock holders.

So tell me again, where is the bad side in all of this?

:shrug:

[Psephos]

18. Hmmm, maybe in the destruction of US export markets?

The US is the world's number one industrial economy, despite what passes for economic knowledge around here.

But it wouldn't be for long if we were foolish enough to try another round of Smoot-Hawley.

http://www.buyandhold.com/bh/en/education/history/2002/smoot_hawley.html

The current annual value of US exports is about $2 trillion. In rough numbers, that's worth about 15% - 20% of all US employment. And that's not static. Lose those jobs, and the ripple effects would destroy another 20%.

http://www.census.gov/foreign-trade/statistics/historical/gandsexp.txt

[customerserviceguy]

22. We might not be able to sell as many cars

but we have an enormous capacity to grow food that most countries in the world cannot do anything but envy. Also, we will always be able to export entertainment products.

[Rebellious Republican]

50. So you saying we should stay the course, business as usual?

Employment Situation Summary
Technical information:
Household data: [phone] USDL 09-0004
http://www.bls.gov/cps/

Establishment data: [phone] Transmission of material in this release
http://www.bls.gov/ces/ is embargoed until 8:30 A.M. (EST),
Media contact: [phone] Friday, January 9, 2009.


THE EMPLOYMENT SITUATION: DECEMBER 2008


Nonfarm payroll employment declined sharply in December, and the unemployment
rate rose from 6.8 to 7.2 percent, the Bureau of Labor Statistics of the U.S.
Department of Labor reported today. Payroll employment fell by 524,000 over the
month and by 1.9 million over the last 4 months of 2008. In December, job losses
were large and widespread across most major industry sectors.

http://www.bls.gov/news.release/empsit.nr0.htm


Worst year for jobs since '45
Annual loss biggest since end of World War II. Unemployment rate rises to 7.2%
http://money.cnn.com/2009/01/09/news/economy/jobs_december/index.htm?eref=edition

"SANTA CLARA, Calif. – Banks collecting billions of dollars in federal bailout money sought government permission to bring thousands of foreign workers to the U.S. for high-paying jobs, according to an Associated Press review of visa applications.

The dozen banks receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.

The figures are significant because they show that the bailed-out banks, being kept afloat with U.S. taxpayer money, actively sought to hire foreign workers instead of American workers. As the economic collapse worsened last year — with huge numbers of bank employees laid off — the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in fiscal 2007 to 4,163 in fiscal 2008."
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3717478

So these above statistics look fine to you?

I am just saying something needs to change drastically, we can not keep doing the same thing over and expecting different results.

[Psephos]

54. No, not at all. What I am saying is don't start a trade war, and don't wreck US exports n/t

[pampango]

48. Hey, if a trade war would be good, imagine what a real war would do for jobs and

the economy. (WWII was great for employment and the economy.) Plus there's the long term advantage that, if we win the war, we destroy the economic infrastructure of Europe and Canada (like Germany and Japan in WWII). We would have less economic competition for decades after the war.

Sure a real war would involve a lot of "collateral damage" in terms of death and destruction, but most of them would be "foreigners", assuming that the fighting would mostly be in Canada and Europe. It would seem that to many the welfare of foreigners matters little compared to that of Americans, so perhaps some foreign "collateral damage" might be justified to benefit ourselves, no?

Even a trade war would cause "collateral damage" as our exporting industries (the US is the third largest exporting country in the world) collapsed and tried to convert to only serving the domestic economy. (Perhaps you don't work for an exporting company, so why should you care?) There would be plenty of pain as we adjusted to life without the 60% of our oil that is imported. You can imagine the price of gasoline, heating oil, and natural gas. (Perhaps you live in a warm climate and have an electric car.) Let's at least hold off on the trade war idea until after the winter heating season, OK?

I, too, wonder how war (trade or real) got such a bad rap. It is great for jobs and the economy (well, unless you lose). The benefit of solving problems through negotiation and agreement is way overrated right? If our military AND economy are each bigger than other countries', we have every right to use them to our advantage?

:shrug:

[Rebellious Republican]

49. One flaw with your real war theory, there is no real manufacturing

left in this country to benefit from a real war! No more jobs and is a drain on the economy, unless you consider creating more soldiers to put in the field as more jobs. The profits only help inflate some other nations economy and make few wealthy people wealthier.

Lose 60% of our imported oil a bad thing, unimaginable gas prices, have we not already had a taste of things to come? Maybe then we would be forced to come up with green alternative renewable sources of energy, instead of just talking about it. Just imagine to be free of all oil importing nations strangle hold on us, "to be free at last".

If you have a good suggestion as to how to avoid a trade war and stimulate the economy other than printing more cash, please feel free to let us in on how it can be done.

I am all for negotiating, as long as the negotiating will benefit the US, but we need to be firm in our resolve to handle the crisis in this country first. Because if we do not, there will be no country left to help the rest of the world pull out of this mess that Dubya's Neocon admin the world in.

I liken it to any first responders motto "you have to protect and save your self first in order to be able to help those in need".

Do you feel better now after your little rant?

[pampango]

55. There wasn't any manufacturing left after 10 years of depression in the 1930's, but

we managed to pull it back together quiet well back then. We still have enough industry to be the third largest exporter in the world and any war, trade or real, will kill those jobs and perhaps spiral a recession into another depression.

If you are arguing for a "tough love" approach to energy independence, by getting by on our domestic oil alone that, to me, is something worth discussing. Most seem reluctant to go through the "you have to get through the pain to achieve the gain" type of policy, but getting rid of oil imports would force us to take immediate action on alternative renewable sources of energy.

For us to tell the rest of the world that we are putting up the walls to keep them out, so that we can better help them later, might be kind of a tough sell.

Oh, thanks for your concern about my welfare. I generally feel fine before and after my posts (rants, of course, being posts that one doesn't agree with).

[fasttense]

4. This is a lot of hot air.

There were Buy American requirements on all government contracts back in the 1980s and many of the Buy American requirements didn't go away until the bushes stole the White House. I know because I use to handel federal government contracts up until 2002. There were no trade wars then.

This is just some hot air the "free" trade idiots are promoting through their favorite mouth piece the AP.

[Waiting For Everyman]

41. Exactly right.

And those 'Buy American' laws are still on the books, no conflict with trade agreements. "Hot air" is a nice way of putting it, it's also boldfaced intentional lies.

[Double T]

5. Time to adopt buy American.

Charity must begin at home.

[Wizard777]

6. International cut throat labor practices has the world in a race to the bottom of a bottomless pit.

We need to put a floor in the international labor market. We need an international minimum wage. Americans can not compete with a labor force in another country that is willing to live in a shanty and be paid in bags of rice. The lack of an international minimum wage has manufacturers playing cut throat with Labor. That downward spiraling trend in cheap and cheaper labor is taking the global economy down the toilet with it. So we need to form alliances with organizations like EU and countries like China, Russia, and India. To form an international minimum wage. A Country must accept and enforce the international minimum wage to gain market access. If you do not accept IMW provisions. You cannot market your goods in countries that do. Nor can countries that accept IMW sell good in your country. This will begin to form a more stable and upwardly mobile global economy. We must end this race back to the stone age to resume our race to the space age.

I think IMW would be a suitable substitute for Protectionism. But without either one of these measures. Our bailout money will be sent over seas to cheaper labor markets. We will stimulating foreign economies. The stimulus will not manifest in America until the bailout money returns to America in the form of goods. Lets not forget good ole Henry Ford here. It doesn't matter how cheap you can make it if the people here can't afford those goods. Not only did Henry Ford hire a huge work force. He paid that work force well enough to ensure they could afford to buy the cars they were manufacturing. So If Americans don't have jobs to be able to afford those cheaper good when they arrive here in America. The entire stimulus becomes a moot point. You beginning is not meeting you end. You're not completing the circuit. Your not perpetuating the circular nature of an economy. Companies and industries will continue to find themselves at the bottom of their very linear ropes. It's really that simple.

[D-Lee]

7. Good comment on wages, Wizard 777

This subject is very tangled in my mind. While I like "Buy American," things here won't get better if the rest of the world goes down the tubes.

And no attention has yet been paid to the subject of American debt held by other countries and I suspect we need to analyze the probable impact of different levels of protectionism on other countries calling our debt, either because of need or for vengeance.

I think I would favor something more like a veteran's credit in civil service employment systems -- a preference, but not a ban. Consideration should also be paid to the environmental cost of shipping (energy use) as well as to the situation of workers involved in transpiration.

As I said, seems pretty tangled but should be examined closely.

[Wizard777]

9. We've been here before. Except now the depression is at the global level.

We need to take the New Deal to the world. It's worked for us and it could work for the world too. I think the a Global New Deal is a much better way to spread Democracy to the world than a New World Order.......where everyone is flat broke from maintaining heightened militarily and their conflicts.

[Waiting For Everyman]

42. They can 'call' our debt but that doesn't mean it would get paid.

It's an exercise in futility. It would be just like a credit card demanding a payment from a person who doesn't have what's demanded. At some point, reality trumps attitude, and even for that matter. What isn't possible, isn't possible, no matter how much pouting or huffing and puffing goes down.

I think most people are tired of being threatened and blackmailed - both personally and nationally.

[Waiting For Everyman]

53. (typo)

Above should read:

At some point, reality trumps attitude, and even law for that matter.

(Sorry, slow keyboard and spellcheck doesn't catch that.)

[NM Independent]

11. I couldn't agree more.

What you have described is essentially what would be considered "fair trade." Obama talked a lot about that during the campaign. Let's see if he meant it.

I will be extremely disappointed if this provision is removed. I honestly don't see why he would fold on this as it was one of his provisions in the stimulus (unless I am mistaken).

[dcindian]

8. Whether or not something is right is directly proportional to the loaded language the media uses to

Describe it. The corporate media chooses to call it protectionism for a reason. They want to set the tone of the discussion in reality it is common sense and free trade is tantamount to placid support of all that is wrong with corporate interest in using slave and child labor.

Just say no to the rape of the worlds population by corporate greed and lack of corporate responsibility. Just because it is not your kid or spouse does not make free trade any more right.

[robcon]

10. The closing of international trade was the biggest reason for the Depression

It turned a downturn into a disaster with 25% unemployment.

It's a HUGE mistake to act as if "Buy American" is a boost to the American economy.

Read Ricardo, or something about the Theory of Comparative Advantage. The net: there is only a disadvantage to close off trade.

[tritsofme]

12. Yes, lets impliment protectionist policies and ignore our treaty obligations, that is what Bush

would do.

Oh wait, and he actually did do just that.

[anonymous171]

13. Protectionism is only bad when America does it. nt

[cottonseed]

15. What trade war? We don't export anything but scrap metal.

All we do is import.

[Psephos]

19. The US exports approximately $2 trillion worth of goods and services annually

http://www.census.gov/foreign-trade/statistics/historical/gandsexp.txt

Don't settle for the myths.

[w4rma]

25. We import a lot more than that. They'll lose any trade war, not us. (nt)

[Psephos]

29. We import about 25% more than we export. Subtract oil and the balance swings strongly in our favor.

Meanwhile, what would you do about tens of millions of people suddenly out of a job? Transitioning to a Fortress America economy would take many years and many trillions of dollars.

And it would thoroughly fuck over uncounted millions of people in other countries. Unless that doesn't matter.

[w4rma]

30. Fuck over sweat shop owners? I don't think it'll screw anyone over. (nt)

[Psephos]

33. Guess there's no point to further discussion if that's what you think.

Not putting you down, but I can't go there.

[Waiting For Everyman]

44. FDR created jobs a lot faster than that.

[Waiting For Everyman]

43. Interestingly, there's no breakdown as to industry there. I'm going to take a wild guess

that a lot of that is banking. It definitely isn't tangible products, that for sure.

[Psephos]

58. You guessed wrong

The US industrial economy is the world's largest. US industrial output alone is slightly larger than China's entire economy. US industry accounts for about a quarter of the total US GDP.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

I know this controverts the conventional wisdom...but the facts are there in black and white. I think most people think of Chinese manufacturing in terms of consumer goods in big-box stores. They never see the far larger B2B industrial goods economy.

[glinda]

23. We give them our forests. I think we should go back to growing food.

[Oregone]

16. Im mixed on this thing

Firstly, there is an exception for IT work. That makes no fucking sense. The IT industry has been bleeding slowly since 2000. Those jobs are needed. That provision makes this thing hypocritical bullshit.

Secondly, we need to see if trading can be mutually beneficial with countries on an equal playing field (Canada for example). Yes, fuck China, et al, but our main trading partner with a pretty similar standard of living and environmental standards? It makes no sense to do anything to initiate a tradewar with them. Last time that happen, the Great Depression began overnight.

[OhioChick]

20. "The IT industry has been bleeding slowly since 2000. Those jobs are needed. "

Yes, we sure have and those jobs are needed. :(

[ozu]

21. Seriously

I'm not even for these protectionist policies being a part of this bill, but if they're going to include them anyways, why carve out IT?

Technology as a commodity is being outsourced overseas as quickly as any other industry I can think of, so exempting IT from protection is knowingly contributing to its demise in the US.

[w4rma]

24. Why the hell is there any exception for IT? There should be no exception for

information technology. Those jobs are being sent overseas just for the purpose of lower wages, only. With that kind of exception the stimulus will not help the U.S. computer industry one bit.

[ChromeFoundry]

27. You are right...

There should be no exception for IT work. The more personal data shipped overseas turns us into hostages. Enough is enough.

[undeterred]

28. An exception for IT is outrageous

There is nothing Obama could do to piss me off more than that.

[w4rma]

31. Yup. This is an issue I'll go after Obama with everything over. And, I'm sure I'm not alone. (nt)

[TrogL]

36. Whatever happened to NAFTA?

[Oregone]

37. This is projects funded with state monies...

Im not sure NAFTA would apply. They can stipulate where the materials are sourced if they wish. Isn't NAFTA more about abolishing tariffs on foreign goods? If no oversea goods are going to be bought, then its totally out of the realm of NAFTA.

[CHIMO]

39. Nope

NAFTA is for the corporations. Countries can not discriminate on location. The three countries are as one when it comes to purchases.

The Canadian government has been sued and lost on this issue to corporations.

Of course NAFTA doesn't matter one whit. Just look at softwood. So in effect NAFTA doesn't exist if the biggest player doesn't want to play.

[Oregone]

45. Well maybe this is the start of the slow death of NAFTA

And I say good riddance. Let's just hope they tread softly and carefully with this reactionism.

[IndianaGreen]

17. Let's rescue American workers, not foreign workers!

It is our tax money that is being used.

[Oregone]

38. This is more complicated

Every government is stimulating their economies at once (and those funds will be used to buy our exports if we have any). This just ensures that other governments add their own provisions in. If that happens, big trouble comes and no one gets rescued (example: http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act)

Honestly, I don't have a good answer about it all. Im up in Canada right now and people are pretty nervous about this on my end. I understand about rescuing Americans, but at the cost of fucking their biggest trade partner in history, the consequences could be drastic (for America).

BTW...where is the fuel going to come from that they need for all this? Canada (Number 1 US fuel supplier)? No? Going to drill it out of ANWAR? Send billions so Saudi Arabia? Its a good question...some US funds will have to buy foreign oil, which makes this bill problematic.

[undeterred]

26. If it comes down to a choice between our allies and the American people

I hope Obama has his priorities straight.

[ConcernedCanuk]

32. USAmerica is a dependant nation - it needs more than it produces, well, except weapons

.
.
.

Canada has surpluses of water, oil, gas, lumber, metals, etcetera that the USA desperately needs

They fucked us over for over 5 years and STILL cheated us out of a Billion dollars on our lumber,

locked us into deals for gas and oil for decades

OH - remember the Canadian airplane the Avro - Arrow that one of our previous Prime Ministers scrapped??

ANYONE KNOW WHY?

Because it was faster and more maneuverable than anything the USA had at the time

faster and more maneuverable than anything the USA had at the time


and our chicken-shit PM didn't wanna upset the USA's image as the bestest in everything - - -

I'd take a drop down in lifestyle to keep our resources here, sell them to Russia and China - whatever

I'm getting tired of hearing that WE "need" the USA . . .

It's been handy for making some of our millionaires - -

and cross-border shopping for a bit

but with all that paranoiac border-shit going on -

they might as well build a fence up here too . .

We'll survive

[Waiting For Everyman]

52. If we're so 'dependent' why are you blocking the door as we go?

You should be GLAD if the U.S. is protectionist, then. Where's your beef? And build the dang jet then, go ahead.

[CHIMO]

57. That

Dang jet is at the bottom of the great lakes. That dang jet had multitudes of 1950's tech leaders move to the US for jobs.

I am against NAFTA.

If the US removes Canadian imported oil from the balance sheet, then Canada imports more from the US than it exports.

What NAFTA has done in Canada is shift production to natural resource exports and reduce the value added component.

Anyway one cuts it up, it has resulted in value added being moved out to others.

Everyone is getting stuck on country boundaries. In the meantime the corporations are the ones who benefit. They will benefit in either case. The question is only how much in each case.

Until everyone realizes, and requires, that corporations exist for the common good, they will keep on ruling.

[TrogL]

34. He's practically declared economic warfare on Canada

He's not going to have enough steel to do all his infrastructure without giving the Hamilton steel works some business.

[Waiting For Everyman]

40. Buy American is already Federal law, and is not in conflict with existing trade agreements.

This is just Gordie and the Canadians trying to get in the Stimulus package, much like the big banks in the TARP. Let them do their OWN stimulus package, nobody is stopping them.

PIGS AT THE TROUGH. That's what put us here. This is about putting unemployed AMERICANS to work. That is the purpose of spending the money. If Americans aren't hired to make the steel and the concrete for this infrastructure, why the hell bother spending American taxpayers' money at all?????

There is nothing to decide here. 1) It's already the law, albeit unenforced during Bush; and 2) We either hire Americans or we don't spend the money.

I'm sickened that in this emergency, foreigners think they should get in this stimulus which is paid with our tax dollars. Learn when enough is enough. Give it a rest.

[Hansel]

47. Gordie & the Canadians supplement their corps by paying for health care.

Then use it as a sales pitch to "steal" US jobs that only exist in the 1st place because of a massive infusion of US tax dollars to pay for the infrastructure these companies relied on and took advantage of to create and grow their businesses. All while getting enormous tax breaks supposedly because they were creating jobs for U.S. workers.

Is Canada they going to stop paying for universal health care or at least pay us back for the infrastructure costs we paid to support those business because that isn't fair to the U.S.A.? Yeah, right.

BTW, isn't it a height of hypocrisy for these corporations to accept tax breaks for creating U.S. jobs? Isn't that protectionism? I've never heard any of these gluttons argue how unfair that is and how they would be ashamed of getting such special treatment. Protectionism only seems to work in one direction. When it's to the piggies' advantage.

[Waiting For Everyman]

51. Yeah, my fave is the "why are we afraid to compete?" meme.

[pampango]

56. The worst thing about Canadians is not that they have national health care, but that

they apparently prevent us from having it. Are you really expecting Canada to suspend national health care so that their trade with us will be more fair? Personally, I would prefer that fairness in that area be achieved by us coming up with a national health care system, not just for trade purposes either.

It used to be that people were just opposed to "free trade". It sounds to me like you don't support any trade at all with Canada (and I assume the rest of the world if Canada doesn't qualify), because it can never be fair, because their society is not identical to ours. (If we did adopt national health care, could we then trade with Canada and Europe or would there be another reason to keep those sneaky Canadians and Europeans out?)

[Hansel]

46. Oh goodie! Bring it on hypocrites.

European and Canadian governments are paying for health insurance so its companies don't have to, while American companies are not given this advantage. The US should insist that they stop enacting that "protectionist" policy. China is manipulating it's currency, using slave labor and ignoring world-wide pollution standards so they can produce cheap products. They should stop that. Japan limits American auto imports. Make it stop.

They can cry me a river. If American does not get it's economy back on track they can all hang it up. Because if we collapse they are all done. So they need to cut the hypocritical crap. This is the last gasp of the "corporatists" to hold on to paying the cheapest wages possible while they reap gluttonous profits. The market is global and so is the corporate propaganda machine.

I'm sure Obama will point this out to them.

[ohio2007]

59. President Obama to water down 'Buy American' plan after EU trade war threat

The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.

The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.


snip

http://www.timesonline.co.uk/tol/news/world/europe/article5655115.ece

[Waiting For Everyman]

60. Failure to save this economy is already "plunging the world into depression".

World-class nitwits. And the result of blackmail is always so productive, I think, don't you? (What was that old-fashioned concept in contracts - oh yeah, I remember now, it was called "duress". Very legal, carry on, mustn't interfere with the pillaging.)