Trade Adjustment Assistance: A Leftist Solution That’s No Solution At All
Costly and ineffective are two words that can be used to describe a countless number of government programs. The federal government’s Trade Adjustment Assistance (TAA) is no exception. TAA doesn’t work; it costs taxpayers a lot of money; and it contains within it special treatment for union workers. Unfortunately, President Obama’s 2009 failed stimulus expanded TAA.
Besides being costly and ineffective, the TAA is unnecessary and unjust. It is unnecessary because just 1 percent of jobs lost in mass layoffs is caused by overseas relocations or import competition.
Also, the Department of Labor’s Dislocated Workers Program already provides basic services to laid-off workers, and they are not nearly as extravagant as those provided to recipients of TAA. The government should not single out one group of unemployed people to receive better benefits than the rest of unemployed Americans.
It is unjust for workers who have lost their job due to foreign trade to receive better benefits than a worker who loses a job due to other factors. As Heritage’s James Sherk explains:
The government should not discriminate between workers who lose their jobs because of trade and workers who lose their jobs for other reasons. The worker who loses his job to a foreign competitor should receive the same treatment as the Blockbuster employee who lost his job to Netflix.
Bearing those realities in mind, it’s important to understand just how costly and ineffective TAA is.
The Department of Labor (DOL) will spend 500 million taxpayer dollars on TAA in 2013, according to the DOL FY 2013 budget request. Though DOL set out a number of lofty goals, these dollars are simply not translating into their desired result of better jobs for more Americans. In fact, taxpayers are required to support selected unemployed workers for up to two years, all the while providing them with job training, relocation allowances, and income maintenance.
The TAA also provides a special benefit to retired union workers. Unionized companies are disproportionately likely to offer Voluntary Employee Beneficiary Association (VEBA) benefits to their employees. If a company goes bankrupt for any reason, the employer’s remaining assets goes into the VEBA, which takes over responsibility for the retiree’s health coverage. With the stimulus, a healthcare tax credit was extended to such VEBAs, and this tax credit is indistinguishable from government spending. Thus, taxpayers are effectively funding 80 percent of retiree health benefits for union employees when a unionized company goes bankrupt.
Like many Leftist plans, this one sounds nice, and those who receive TAA benefits likely appreciate them. However, taxpayers should not be soaked for hundreds of millions of dollars to fund the TAA, which has been proven to be entirely ineffective in terms of helping Americans to get better jobs. Proponents of the TAA ignore the financial and fiscal problems our nation faces.
This program simply cannot be justified in light of our nation’s debt and deficits. It is government overspending that holds back the economy, which results in fewer jobs for Americans.