* White House ties retraining program to trade deals
* Critics say TAA a duplicative, ineffective program
* Supporters says TAA fills need other programs don't
* Business groups say TAA remains 'vitally important'
By Doug Palmer
WASHINGTON (Reuters) - Does the United States,
faced with a huge budget deficit, really need a roughly $1
billion annual program to help retrain workers who have lost
their jobs because of foreign competition?
And if not, should Congress kill or pare back the nearly
50-year-old Trade Adjustment Assistance program even if that
means proposed free trade deals with South Korea, Panama and
Colombia could also die?
Those are two questions confronting Republicans as they
consider President Barack Obama's threat not to send the trade
pacts to Congress for approval until there is a deal to renew
the so-called TAA at or near levels approved in 2009.
For some on the right who support the trade agreements, the
answer to at least the first question is clear.
"We oppose the TAA program ... It's just a giant government
boondoggle," said Barney Keller, a spokesman for the pro-tax
cut group Club for Growth, whose opposition to the program has
helped create the current Republican quandary.
The three trade deals were originally negotiated during the
Republican administration of former President George W. Bush
and approval of the pacts has been a party priority.
Now, with that finally in sight, some Republicans are
balking at demands the deals be tied to TAA, especially after
last year's elections made cutting government spending the
party's No. 1 goal.
Congress created trade adjustment assistance in 1962. It
was traditionally aimed at helping factory workers who lost
their jobs as a result of free trade agreements, and bipartisan
deals in 2002 and 2009 expanded the program to cover the
service industry and government workers.
The revamped TAA program also covers workers whose jobs
have moved to countries such as India and China that do not
have a free trade pact with the United States.
When the expanded program expired at the end of 2010,
lawmakers approved a six-week extension to give themselves more
time to resolve issues blocking longer-terms renewals of two
trade programs for developing countries.
Since then, Republicans have taken control of the House
, and the Club for Growth has issued a "key vote
alert" calling on Congress to reject renewal of the expanded
"TAA is duplicative (and overly generous) because the
unemployed already have access to 99 weeks of unemployment
benefits thanks to the many extensions already passed by
Congress," the fiscally conservative lobby group said.
After the Club for Growth statement, House Republicans
pulled the TAA bill from the floor.
Senator Orrin Hatch, the top Republican on the Finance
Committee, also questions if the United States can afford the
program while calling for quick action on the three trade
"Why should we put up $7.2 billion over ten years (for TAA)
in a country that's currently broke?" said Hatch, who is up for
re-election next year.
The Heritage Foundation, a conservative think tank, has
fueled anti-TAA feeling with questions such as why a worker who
loses his job because of foreign competition should receive
more government help than a former Blockbuster employee whose
movie rental company could not compete with domestic rival
"Why should we single out one category of workers for these
gold-plated benefits," said James Sherk, a senior policy
analyst in labor economics at the Heritage.
Also, workers who receive retraining under TAA do not earn
any more than workers who did not, which shows the program is
"broadly ineffective," Sherk said.
'POLICY DECISION' TO BLAME FOR JOB LOSSES
Supporters say that finding was based on an evaluation
performed about a decade before Congress started reforming TAA
in 2002 and is therefore irrelevant.
Major business groups such as the U.S. Chamber of Commerce
and the National Association of Manufacturers that usually back
Republicans on most issues support TAA and have called on
lawmakers to work with the White House to renew the program as
part of broader deal to pass the trade pacts.
"TAA is as vitally important today as it has been over the
years," the groups said in a letter to congressional leaders.
Greg Mastel, a former Democratic congressional staffer who
is now managing director of Dutko Worldwide, a lobbying and
public affairs firm, argues the government does have an extra
responsibility to help workers displaced by trade.
"In large part, workers who lose jobs because of trade do
so because of a policy decision by government. The government
decided to allow imports, the government decided to allow a
liberal investment policy," Mastel said.
"I happen to agree with those policies, but you can't deny
they sometimes disadvantage groups of workers," he said.
Howard Rosen, a visiting fellow at the Peterson Institute
for International Economics and executive director of the TAA
Coalition, argued the roughly $1 billion annual cost for the
program is tiny compared to large benefits the U.S. economy
gets each year from trade liberalization.
Workers displaced by foreign competition have a harder time
adjusting than other laid-off workers because they tend to be
older and less educated and have higher earnings, Rosen said.
Many of the reforms passed in 2002 and 2009 were
specifically intended to address shortcomings that hampered the
program's effectiveness, he said.
(Editing by Mohammad Zargham)
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