Friday, January 30, 2009
During the election cycle, Obama gave mixed signals on trade policy. After signaling the terms of NAFTA had to be altered, his representatives contended it was simply “political posturing” according to the Canadian Consul General in his memo to Ottawa. But organized labor wants its payback for its election support. And that means restrictive import policies. Both Senate and House versions of the Stimulus Bill contain a “Buy America” provision for all steel and other products used for infrastructure projects. It hasn’t taken long for the EU to react, as reported in the London Telegraph: The EU trade commissioner vowed to fight back after the bill passed in the House of Representatives late on Wednesday included a ban on most purchases of foreign steel and iron used in infrastructure projects. The Senate's version of the legislation, which will be debated early next week, goes even further, requiring that any projects related to the stimulus use only American-made equipment and goods. The inclusion of protectionist measures has quickly raised hackles in Europe. Catherine Ashton, the EU trade commissioner, said: "We are looking at the situation. The one thing we can be absolutely certain about, is if a bill is passed which prohibits the sale or purchase of European goods on American territory, that is something we will not stand idly by and ignore." It seems our Congress has a short memory. In 2002, Bush imposed tariffs on steel and steel products to fulfill a campaign promise. The EU and several Asian nations challenged them with the W.T.O. In a little over a year, in November 2003, the W.T.O ruled the tariffs were illegal and authorized $2 billion in retaliatory tariffs. Now here is where the EU did its homework. They have learned how to game the US political system. Instead of using a shotgun, they targeted each member of the House Ways and Means Committee. In each committee member’s district, they selected an industry for retaliation to create the maximum angst among a small but influential group. For Jerry Kleczka from Milwaukee it was a tariff in Harleys, for Mark Foley from south Florida it was orange juice, for Wally Herger of northern California, wines. It was a unique approach that brought pressure on Congress and the President to reverse the tariffs and he soon backed down. But tactics aside, trying to solve a banking crisis with protectionist measures is a recipe for disaster. It doesn’t help, it makes it worse. When we faced the problem once before, we tried to solve it with the Smoot-Hawley Tariff Act. Our trading partners of course retaliated. International trade dried up and the unemployment rate jumped from 7.8% to 25%. Writing in The NextRight, Allen Peel describes how this led us into the Depression. Despite these pleas and protests, Hoover signed Smoot-Hawley in to law and the goods imported from Europe alone decreased by half of what they were before the act. Also, there was a backlash where a number of other nations increased their tariffs on American goods. The other tax increase was in 1932 with a Democrat-led Congress and Hoover. This time, it raised the top marginal tax rate was raised from 25 percent on those making $100,000 or more to a top rate of 63 percent on those making $1,000,000 or more (by comparison, the rate on $100,000 to $149,999 was raised to 56 percent). On top of that, the corporate tax rate was increased from 12 to 13.75 percent (an increase of almost 15 percent). The end result was a jump in the unemployment rate from 7.8 percent in 1930 to 25.1 percent in 1933. It would not be until 1943 when the unemployment rate dropped below 10 percent. Smoot-Hawley didn’t work before, it won’t work now.
Tuesday, January 27, 2009
One of the givens over the past seven years is the absolute avoidance of the word terrorist by the major wire services when associated with anything Islamic. Generally the term militant, extremist, activist or some other mild euphemism is used. Yet in the past two days there have been two articles that break this rule. The first is an AP article that ran in over 600 papers over the weekend about a 70s terrorist Khalid al-Jawary who has now served his prison term, and is about to be released. NEW YORK (AP) — In 1973, a young terrorist named Khalid Duhham Al-Jawary entered the United States and quickly began plotting an audacious attack in New York City. He built three powerful bombs — bombs powerful enough to kill, maim and destroy — and put them in rental cars scattered around town, near Israeli targets. It traces his travels and possible association with Black September, Yasser Arafat’s notorious terrorist organization. It concludes with an ominous prediction that he will continue his tradecraft when freed. …Once he's released, Al-Jawary will be handed over to U.S. Immigration and Customs Enforcement and held until his deportation.It remains unclear where he'll go, largely because Al-Jawary's true identity remains in question — even to this day.Those who helped put Al-Jawary behind bars believe he'll pick up where he left off. The second article by AFP ran on France’s Channel 24 on January 26. It is a major break with AFP’s policy in that it not only brands Hamas as a terrorist organization, but it quotes an EU official who puts at least a portion of the blame on Hamas. A senior EU official touring Gaza on Monday blasted the "abominable" destruction in the enclave and said its "terrorist" Hamas rulers bear overwhelming responsibility for the war. "It is abominable, indescribable," Louis Michel, European Commissioner for Development and Humanitarian Aid, told reporters in Gaza after touring some of the worst-hit places of Israel's deadly 22-day assault on the territory. "At this time we have to also recall the overwhelming responsibility of Hamas," he said. "I intentionally say this here -- Hamas is a terrorist movement and it has to be denounced as such." Somehow it is hard to believe this change in their style books and attitudes coming so close to Obama’s inauguration is totally coincidental. Where the wire services scrupulously avoided giving Bush cover in his aggressive pursuit of terrorism, they seem more than willing to change the rules for Obama. It is to be expected.