Vilsack Talks Trade

Chatted about globalization and trade with Tom Vilsack, the outgoing two-term governor of Iowa and aspiring candidate for the 2008 Democratic presidential nomination.

The issues played big with voters in 2006, to the benefit of Democrats. Now whenever I talk with Democrats about globalization and any negative effect it may be having on American workers, I try to figure if they are "pretax Democrats" or "after-tax Democrats." (It's a concept I lifted from Jason Furman, the new head of the Hamilton Project at the Brookings Institution.)

Pretax Dems want to alter the global trading system–maybe through tariffs or pushing China to let the yuan rise or penalizing companies that shift production overseas–to protect the income of workers from foreign competition. Think former Missouri Rep. Richard Gephardt. After-tax Democrats think the focus should be on using trade to keep the economy growing and using social policy–better retraining programs, universal 401(k)'s, and wage insurance–to help workers hurt by trade, as well as creating an atmosphere where Americans don't get so rattled by our fast-changing dynamic economy that they become risk averse. Think Bill Clinton. Which one is Vilsack? You decide. (For his part, Vilsack says he combines the best of both.) Says Vilsack:

I think there is the perception that we have not benefited as much from trade as we should have ... and there has been a lot of focus on the negative side of trade instead of the positive benefits that accrue to the economy, and I think we need to deal with this perception directly or we risk essentially closing the door to trade ... This economy has to grow, and to do that you need to do business with the rest of the world ... We have an economy that is based on innovation and creativity, and we can rise above the competition. I also think that technology and globalization have a tendency to hit the middle class hard ... You need to create a new social contract with American workers.

More specifically, Vilsack thinks the government needs to expand unemployment and healthcare benefits for workers who lose their jobs because of trade. He also calls wage insurance an "intriguing idea." (The way the concept is often presented, a laid-off worker who once earned $40,000 and found a new job paying just $30,000 would receive $5,000 a year–broken down into quarterly payments–until two years after the initial layoff. He would also get tons of retraining and education help.)

Give people the educational tools to re-enter the workforce–perhaps in a completely different line of work–with the understanding, Vilsack says, "that they won't suffer if they try to work their way back up the ladder." He adds that while in theory he supports the president's having fast-track trade authority, he is "a little bit leery" of renewing such power for President Bush in 2007. He's worried that Bush won't push hard enough to include tougher labor and environmental standards in any future agreements.