Wrong Way Charlie

Why does Rep. Charles Rangel, chairman of the House Ways and Means Committee, want the taxpayers to spend an extra $9 billion over 10 years to expand Trade Adjustment Assistance, a benefit and training program for workers who lose jobs to trade?

Here's what the 19th term Manhattan Democrat says: "We must be certain that, as our nation moves forward with expanded trade, we send a clear bipartisan signal that it won't be at the expense of American workers."

It's a puzzling explanation, because trade is helping America. National unemployment is below 5%, exports are booming and creating jobs for millions of Americans, and third quarter GDP has just clocked in at an annual rate of 3.9%, despite turmoil in financial markets and oil prices around $90. Americans' paychecks go further due to low-cost imports.

Trade-affected workers could be helped at a far lower cost. The real reason that the bill passed is because it offers an additional opportunity for Mr. Rangel and other Democrats to expand government and create a European-style social contract, just as they are attempting to expand the State Children's Health Insurance Program to middle class America. On Wednesday, the House of Representatives passed Mr. Rangel's bill, the Trade and Globalization Assistance Act of 2007, by 264 to 157. President Bush's advisers say he will veto the bill if it reaches his desk, and, even with the 38 Republicans who joined the Democrats, the House does not have enough votes to override his veto.

TAA is not the only government program to help the unemployed — it's one of about a dozen. Federal-state programs include unemployment insurance; the Workforce Investment Act program for adults and dislocated workers, with its network of "One-Stop Centers" offering benefits, training, and jobs; and the Wagner-Peyser Employment Service.

TAA, expected to help 71,000 manufacturing workers in 2007, offers two years of benefits and training for eligible workers, and partial coverage for health insurance. In addition, workers aged 50 and older who forego training receive half the difference between the wages of a lost higher-paying job and a new lower-paying job, up to $10,000 over two years.

Mr. Rangel wants to cover more workers with TAA, even those now covered under other programs, and give more benefits — hence the expensive $9 billion price tag. It's SCHIP all over again.

Mr. Rangel would extend TAA to the service and the government sectors, claiming that these workers suffer from trade. Perhaps true, but the economy is generating millions of new service and government sector jobs. Services have generated over 90% of the 8.4 million jobs created since the start of the jobs recovery in August 2003, and government has created another 9%.

The Rangel bill would go further. Whereas workers in particular firms are now certified as affected by trade and eligible for TAA, Mr. Rangel would have entire industries certified as TAA-eligible. If three firms in an industry are certified within six months, all workers in that industry could get benefits, even those at firms not affected by trade. Similarly, if the International Trade Commission certifies that there have been unfair imports of low-cost goods, all workers in the domestic industry would automatically be eligible for TAA.

In addition to expanding numbers of eligible workers, Mr. Rangel would expand unemployment benefits. Workers in training can now receive up to two years of benefits, with an extra six months if they need remedial education. This would be increased to two-and-a-half years of benefits, with three years if remedial education is needed. So workers who can least afford it would be encouraged to stay out of work and lose three years' income.

Mr. Rangel would prevent TAA-eligible workers receiving job advice from anyone other than a state worker. So unemployed workers on TAA walking into a career center would not be allowed to talk to job counselors from the private sector, the county, faith-based organizations, non-profits, and the city. They would have to wait in line to see state workers. Since Democrats have made protection of labor and the environment a precondition to approval of trade agreements, some link passage of the TAA bill to congressional approval of pending trade agreements with Peru, Colombia, Panama, and South Korea. Not coincidentally, on the day of the House vote Mr. Rangel's committee approved the Peru trade agreement, which goes to the House next week.

The Peru agreement could become law even if Mr. Bush vetoes expanded trade assistance, so Mr. Rangel's victory, at least this year, could be purely symbolic. But under a potential Democratic president such as New York's Senator Hillary Clinton, his TAA bill would have a better chance of passage.

TAA can be improved with less costly congressional legislation by focusing the program on training and reemployment, rather than on unemployment.

One-Stop staff could work with trade-affected workers, even before a layoff, to develop individualized plans to find new jobs and determine what training is likely to be valuable. Such workers could be required to register at One-Stop career centers and periodically check computerized job listings for suitable jobs. Then, staff could monitor recipients' job searches to ensure that they are effectively looking for work.

The Labor Department could pay transportation costs for commuting to jobs far from home for up to two years as well as part of relocation expenses, with relocation payments contingent on remaining employed in the new area for at least six months.

Training funds could be redirected to more community colleges. Studies have shown that when unemployed workers take targeted technical courses at community colleges, their future earnings increase.

At a time when European countries such as Germany, Britain, France, and Denmark are trimming unemployment benefits because they discourage work, Mr. Rangel wants to extend them. In his zeal to champion unemployed workers, Mr. Rangel is going in the wrong direction.

Ms. Furchtgott-Roth is a senior fellow at the Hudson Institute and former chief economist at the U.S. Department of Labor. She can be reached at dfr@hudson.org.