Coalition policies center on fair trade and tax reform
On a sunny day in Dayton, Ohio two weeks ago an unlikely assembly of farmers, labor leaders, local politicians, former Reagan Administration officials, academics and business owners came together to discuss what ails the American economic system and what can be done about it.
Organized by the Coalition for a Prosperous America, the event was one of several regional meetings held across Ohio in the past couple of months. Drawing its support from a support network of manufacturers, labor and agricultural organizations, CPA describes its mission as working for a new and positive U.S. trade policy that delivers prosperity and security to American citizens, farms, factories and working people. CPA views the U.S. trade deficit as an economic headwind, holding U.S. industry and agriculture back while allowing emerging economies to grow on the backs of displaced American workers and shuttered factories and farms.
In August alone, the U.S. trade deficit was nearly $29 billion. Agricultural products are as much a part of the issue as the manufactured goods consumers hear so much about in the media. According to CPA, the U.S. is now a net importer of these products as well.
What lobbying and policy strength CPA has built over the years appears to come from two sources. First, it is a coalition that can’t be defined as either right or left and is not beholden to either of the two dominant political parties in the U.S. When you get Dan DiMicco, CEO and Chairman of Nucor Steel – a non-union U.S. steel producer – around the table with leaders of the AFL-CIO one might expect the conversation to devolve into labor issues. The difference with CPA is that the industry, labor and agricultural leaders involved in the organization agree to focus on just the issues that benefit them all. The country’s weakened position in the international trade arena has emerged as the primary issue they can all agree on and work together to change.
Joe Logan, Ohio Farmers Union executive committee member serves on CPA’s executive committee as the agriculture co-chair.
The second strength of CPA is its focus on the grassroots. Much of CPA’s time and other resources are spent on organizing events like those recently held in Dayton, where the group can educate local citizens and opinion leaders where they live.
The event in Dayton was billed as the Dayton Economic Summit and was organized by local government, labor and industry leaders with CPA. Speakers included Clyde Prestowitz, founder and president of the Economic Strategy Institute and former counselor to the Secretary of Commerce in the Reagan Administration; Pat Choate, economist, author and in 1996 Ross Perot’s Reform Party vice presidential running mate; Charles Blum, president, IAS Group, and former State Department official and Assistant U.S. Trade Representative; Marlilyn Landis, president and CEO, Basic Business Concepts, and an expert in small business finance and lending issues; and, Buddy Roemer, former governor of Louisiana and current presidential candidate.
Prestowitz said that in the beginning of the Reagan Administration, the U.S. trade deficit was $21 billion annually and that it is now nearly $600 billion. “If we didn’t have a trade deficit, we would have hardly any unemployment,” Prestowitz concluded.
Prestowitz went on to describe the two over arching reasons that the U.S. trade deficit has exploded. He said that Americans have forgotten their own history and that we’re prone to embrace false doctrines for far too long. His historical point centered on the total lack of a U.S. industrial policy. He said that in the past when faced with competition from the likes of Great Britain and others, the U.S. government had leaders that pursued, “a concerted policy for 150 years” that occurred during a time of enormous American economic growth. He pointed out that the U.S. Navy was at one time a 50% shareholder of RCA Corp. and that government involvement in businesses was used to expedite innovation. In his experience at the Commerce Department in the early 1980s he recalled being at a meeting where officials discussed U.S. semiconductor industry leader complaints about Japanese dumping of chips onto the world markets and hurting U.S. business and manufacturing interests. The conversation, he said, turned to “why do we want a U.S. semiconductor industry?” rather than dealing with unfair trade practices and how the government could help. Federal officials need to adopt a whole new attitude and move toward a U.S. industrial policy.
Prestowitz said the second problem with U.S. policy makers is that, “It’s possible for smart people to embrace dumb ideas for a long time,” when referring to current U.S. trade policies and free trade agreements. He argues that due to currency manipulations, lax labor and safety standards, lack of respect for intellectual property and environmental regulation differences, the U.S. is not on a level playing field with so-called free trade partners and hasn’t been for decades.
Choate focused directly in on China, “Any company that is competing against a state champion is competing against the government of China.”
Choate’s point was that U.S. businesses dealing against Chinese firms are in fact competing against the entire country because many Chinese businesses are state-sponsored to one extent or the other. He said that, “We’ve made the assumption that the rest of the world wants free market capitalism,” but that it’s not the case and U.S. “free” trade policy is hurting the entire U.S. economy more than it’s helping selected businesses here at home.
Blum added taxes and currency manipulation to the discussion. “We’re not over taxed,” Blum said, “We’re very badly taxed.”
Blum pointed out that value added taxes adopted by nearly every other country in the world are used against U.S. goods and businesses abroad. He also said that Chinese devaluation of its currency gives their products a further 20 to 30% discount to American goods. He advocates – as well as the CPA as an organization – for passage of the currency manipulation bill currently languishing in the House of Representatives. (The U.S. Senate passed the bill in early October.) He also advocates for an overhaul of the U.S. tax system to be re-designed to be more competitive with the rest of the world.