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United States-Korea Free Trade Agreement Implementation Act

Floor Speech

Location: Washington, DC


Mr. McCAIN. Mr. President, I support ratification of the three free-trade agreements we are debating. They are long overdue, and they are important to job creation in this country. While we have waited around, these countries have concluded free-trade agreements with other countries, much to the detriment of American exports.

The best example I can cite of that is several years ago, 40 percent of the imports of agricultural products into Colombia were from the United States of America, while today only 20 percent of their agricultural imports are from the United States because while we have been waiting, Colombia has concluded free-trade agreements with other nations which have given them access to their markets while we were not able to expand. One of the ironies of all this is, thanks to a rather complicated process that took place during President Clinton's administration, the results of the Andean trade preference agreements meant there were tariffs on U.S. goods going into Colombia but no tariff on Colombian goods coming into the United States.

But why I am here this afternoon, Mr. President, is because what has been unremarked on--and which was outrageous about this whole process we have been through in these times of fiscal difficulties--is that roughly $1.3 billion is going to be spent on the so-called TAA, trade adjustment assistance. I would like to remind my colleagues the TAA was adopted in order to satisfy many of the concerns of labor and others at the time of the passage of other free-trade agreements, and like other government programs, spending on the TAA has grown and grown and grown and grown.

By the way, this was supposed to be for individuals, and, originally at least, individuals who have lost their jobs as a result of jobs going to the countries which free-trade agreements were entered into.

In 2006, it was $735 million; in 2007, $779 million; and in 2008, $791 million.

But following the so-called stimulus package--and the stimulus was supposed to be temporary--it ballooned to $1.1 billion.

Additionally, according to the Department of Labor, Congress allocated more than $975 million to fund other TAA services, including $575 million for job training. In all, the annual TAA spending for the stimulus expansion totaled approximately $2 billion.

Three weeks ago, the Congress passed an agreement to reauthorize the TAA through 2014. This paved the way for these free-trade agreements to be considered today. The agreement pares back some of the expansions from the 2009 stimulus and funds the program somewhere between the prestimulus and poststimulus levels. This ``compromise,'' which, by the way, was negotiated by Republicans in the House of Representatives, will increase the annual TAA spending by at least $460 million above the prestimulus levels before 2012 and 2013. Therefore, the total cost to taxpayers for the deal to allow these trade agreements to be considered by the Senate will be $1.3 billion through 2014.

According to the Heritage Foundation, the TAA spending legislation passed by this body 3 weeks ago does the following: No. 1, it keeps the 2009 stimulus expansion for service sector workers. The stimulus, by the way, was supposed to be temporary. TAA was originally intended to provide income maintenance and job training to workers from the manufacturing sector. The stimulus bill expanded eligibility to include workers from the service and public sectors. This expansion expired in February, but the agreement restored TAA eligibility for service sector workers.

No. 2, it restored the stimulus expansion of benefits for job losses that are unrelated to free-trade agreements. The agreement retained the stimulus expansion of providing TAA benefits to any workers who lost their jobs to overseas production, not just TAA-certified jobs that were lost to free-trade agreements.

No. 3, it reinstated the stimulus's 160 percent increase in trade adjustment assistance for workers' job training spending. The proposal cemented the stimulus spending expansion of TAA for workers' job training at $575 million a year from $220 million, an increase of $355 million a year.

No. 4, it continued the stimulus's creation of a new and duplicative job-training program. The agreement kept the TAA Community College and Career Training Program, which will dole out $2 billion over the years 2011 through 2014.

So this program cries out for significant reform. The previous administration's agency leader called for FAA deficiencies to be addressed for the displaced workers who need the TAA benefits. In testimony before the House Ways and Means Committee on June 14, 2007, the Deputy Assistant Secretary of Labor called on Congress to take the ``opportunity to improve the current TAA program to help workers gain the skills needed to successfully compete in the global economy.'' The administration didn't listen and neither did Congress.

Let's look at an example of excess created in the temporary stimulus expansion of the TAA program that taxpayers are still on the hook for. According to a February 2011 study by Senator Coburn entitled, ``Help Wanted: How Federal Job Training Programs are Failing Workers,'' quoting from the study that Senator Coburn brought to this body:

Taxpayers may have a case of indigestion when they learn, nearly 2 years after the stimulus was enacted, their money is paying lobstermen, shrimpers and blueberry farmers $12,000 each to attend job training sessions on jobs that they are already trained to do. The stimulus reauthorized the Trade Adjustment Assistance for the Farmers program administered by the U.S. Department of Agriculture, a program that provides subsidies to producers of raw agricultural commodities and fishermen so they can adjust to import competition. Under the stimulus, TAA benefits were enhanced to focus more on employment retraining.

Recently, the Department of Labor issued a report on the TAA program which indicated that only approximately 50 percent of the TAA training participants were actually placed in new jobs. While we can be happy for the 50 percent that used the training for new employment, a 50-percent success level is, of course, dismally low. Our obligation should have been to reform and fix the flaws in the program. Instead, we expanded it.

I am a big supporter of America's community colleges. One of the best community college networks happens to be in my home State of Arizona. It has been suggested that the TAA for Community Colleges Program, which was vastly expanded in the stimulus bill, has become nothing but a vehicle to funnel scarce tax dollars to community colleges around the country whether they need the money or not, with no performance reviews, no standards for graduation, and no oversight.

In March 2010, the Senate and House leadership, together with the administration, funded the TAA for Community Colleges Program $2 billion over 4 years. Just last month--conveniently, right before the end of the fiscal year--the Department of Labor rolled out the money to individual community colleges and consortiums of community colleges. The money started flowing without regard to how well the community colleges did at graduating their students or whether there was sufficient TAA need.

Several of the community colleges have received grants of over $2 1/2 million of taxpayer funds while having extremely low graduation rates. Shouldn't we ensure that an institution can actually graduate its students before funneling money to it?

For example, Oklahoma City Community College received $2.7 million. This institution had a graduation rate of 11 percent. If there was any doubt that the administration was using this program to funnel money to community colleges without regard to need or their ability to help dislocated workers receive training, let me just read from the Department of Labor grant announcement issued last week.

The following is a list of the entities in each State that will be receiving funding. The Department of Labor's Employment and Training Administration is continuing to work with these institutions to develop final performance operating and spending plans.

Earlier this year, the GAO released a study entitled ``Multiple Training and Employment Programs: Providing Information on Collocating Services and Consolidating Administrative Structures Could Promote Efficiencies.'' Here is what the GAO reported on Federal employment and retraining programs, including trade adjustment assistance.

Based on our survey of agency officials, we determined that only 5 of the 47 programs have had impact studies that assess whether the program is responsible for improved employment outcomes. The five impact studies generally found that the effects of participation were not consistent across programs, with only some demonstrating positive impacts that tended to be small, inclusive, or restricted to short-term impacts.

So what are we doing? We are going to spend at least $1.3 billion, part of it on programs that clearly the Government Accountability Office says have not been productive in any way and are small, inclusive, or restricted to short-term impacts.

There are a lot of questions about the TAA Program. Does the TAA Program provide overly generous benefits to a narrow population? According to an analysis from the Heritage Foundation, based on statistics from the Bureau of Labor Statistics, in the third quarter of fiscal year 2009 only 1 percent of mass layoffs were the result of import competition or overseas relocation.

Is there evidence that TAA benefits and training help participants' earnings? An analysis by Professor Kara M. Reynolds of American University found ``little evidence that it [TAA] helps displaced workers find new, well-paying employment opportunities.''

In fact, TAA participants experienced a wage loss of 10 percent. The same study found that, in fiscal 2007, the Federal Government appropriated $885.1 million to TAA programs. Of this amount, funding for training programs accounted for only 25 percent.

In 2007, the Office of Management and Budget rated the TAA programs as ``ineffective.'' The OMB found that the TAA Program fails to use tax dollars effectively because, among other reasons, the program has failed to demonstrate the cost effectiveness of achieving its goals.

Let me close by reminding my colleagues how we got to our current predicament. It is mid-October of 2011, 2 1/2 years since President Obama took office, and we are just now considering these important trade agreements that were finalized half a decade ago, all because of the White House's insistence on making a temporary stimulus program--the dubious extension of TAA--into a permanent domestic spending program.

This is how George Will summed it up, writing in the Washington Post, on June 8, 2011:

President Obama is sacrificing economic growth and job creation in order to placate organized labor. And as the crisis of the welfare state deepens, he is trying to enlarge the entitlement system and exacerbate the entitlement mentality.

On May 4, the administration announced that, at last, it was ready to proceed with congressional ratification of the agreements. On May 16, however, it announced it would not send them until Congress expands an entitlement program favored by unions.

Since 1974, Trade Adjustment Assistance has provided 104, and then 156, weeks of myriad financial aid, partly concurrent with the 99 weeks of unemployment compensation, to people, including farmers and government workers and firms, even whole communities, that can more or less plausibly claim to have lost their jobs or been otherwise injured because of foreign competition. Even if the injury is just the loss of unfair advantages conferred, at the expense of other Americans, by government protectionism.

This process should be appalling to the average American who is looking for an improving economy, not special favors to certain special interest groups.

Our national debt has reached unsustainable levels. Congress and the American people face some truly painful choices about how to cut our Federal budget. At a time when some are even considering enormous and dangerous cuts to our defense spending as a way to get our fiscal house in order, we shouldn't be throwing more and more scarce money at a Federal program that, as the GAO points out, is duplicative and possibly ineffective.

There is guilt on both sides of the aisle for the extension of this program. It has not had proper scrutiny, it has not had proper oversight. The studies that have been done have shown that it is practically useless--or certainly not useful--and ineffective; and now, as a price for these free-trade agreements, which I strongly support, we will be laying another $2 billion on the taxpayers of America, unfortunately.


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