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NJ Daily / ALL POWERS

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Employment is dire, but three things can help and none of them is the Obama jobs bill.

Deal: Ford execs John Fleming (left) and Marty Mulloy.(Gary Malerba/AP)

photo of Major Garrett
October 4, 2011

Note to President Obama: When Mitch McConnell wants to introduce your jobs bill, it’s not a good sign. The American Jobs Act won’t suffer the ignominy of your 2012 budget—defeated 0-97 on a motion to proceed—but it won’t pass and McConnell, the GOP leader, knows it. That’s why he’s calling Majority Leader Harry Reid’s bluff and seeking a vote now.

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Whatever becomes of Obama’s jobs bill, there is a far more pressing, far more interesting, and potentially more far-reaching set of jobs issues percolating through Congress and the U.S. economy.

 

What are they? The three free-trade deals Obama just sent to Congress, the China currency bill, and the United Auto Workers negotiations with Ford and Chrysler. While these three issues appear disconnected—satellites in a vast universe of economic activity—they are in fact part of a tight constellation of interlocking and interrelated economic actions that have a greater impact on job creation than any other votes Congress may take. The trade deals with South Korea, Colombia, and Panama would create, according to U.S. estimates, 250,000 new jobs. These will have a substantial manufacturing component, aided at the margins by Obama negotiating better access for U.S.-made autos. The pact with South Korea will boost the nation’s gross domestic product by $10 billion to $12 billion and generate the vast majority of new jobs. Many of these will come from the manufacturing sector since Obama renegotiated the original Bush treaty and secured better access for U.S.-made vehicles in South Korea. The South Korea deal is the biggest trade pact Congress will consider since NAFTA in 1993. Ratification is certain and the new linkage between the U.S. and South Korea, which Obama will highlight next week during the visit of South Korean President Lee Myung-bak, will set the stage for trade negotiations under the Trans Pacific Partnership. Those talks could for the first time bring protectionist Japan into free-trade talks with the U.S. Battered by this year’s earthquake and tsunami, Japan is now seeking access-behind the scenes, without official acknowledgement-to U.S. markets in a free-trade zone that would also stretch from Singapore to Chile and Malaysia to New Zealand.

While these moves signal an expansion of U.S. trade policy, the China currency bill could provoke a trade war with China. The Senate is debating the issue and China says the currency bill, which cleared a motion to proceed vote 79-19, could provoke a trade war. That’s a potentially big issue, considering China is our second-largest trading partner, to whom U.S. companies sent $92 billion in exports in 2010 and from whom U.S. consumers bought $365 billion in imports. Even so, the Obama administration has assumed a posture of opaque ambiguity.

The currency bill would allow aggrieved U.S. businesses to seek higher duties on Chinese imports that would put finished products on an equal price footing. It appears headed for Senate passage. An identical House bill has 225 cosponsors, 61 of whom are Republicans. A discharge petition to force the bill to the floor for a vote has only 175 signatures—all from Democrats. Interestingly, House Appropriations Committee Chairman Hal Rogers, R-Ky., signed the discharge petition on Monday. Then he heard from furious House GOP leaders and withdrew his signature on Tuesday

Now, to the auto talks. On Tuesday, Ford and the United Auto Workers announced a deal on a new four-year contract. In it, Ford pledges to invest $16 billion to develop, build, and market new vehicles. Of that amount, Ford promises to spend $6.2 billion on new U.S. plants and create 12,000 jobs. Ford did not receive federal bailout funds under the Troubled Asset Relief Program, but it did support bailouts for GM and Chrysler. The UAW leadership negotiated in good faith with Ford, a promising sign of labor peace. But UAW workers and Ford have a history of discord, and there’s a jagged track record on contract ratification. Ratification of this new pact is vital. Without it, Ford and the UAW would have to start over and that could have spillover effects on Chrysler, which is also in negotiations on a new pact. Unlike UAW workers for Ford, auto workers in Chrysler’s employ cannot strike. That was a condition of receiving bailout funds. If Chrysler and its workers don’t reach a compromise, a federal mediator will intervene. If Ford and Chrysler can’t settle their labor issues, a signal accomplishment of the Obama administration, saving the U.S. auto industry, will be jeopardized. Signs of progress are promising, but by no means guaranteed. The fate of thousands of jobs and billions in new investment hang in the balance.

In the next few weeks, decisions will be made in Washington on trade and China’s currency. They will be made in Detroit on labor-management relations in the auto industry, a reignited manufacturing component of U.S. economic growth. While the issues appear disconnected and their proximity to one another simply an accident of history, they are linked by the ability­—or inability—of the U.S. to chart its own economic destiny, engage the world, and give those suffering through economic anxiety reason to hope.

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