NAFTA and Why Democrats are Gun-Shy on Free Trade Agreements

In 1992, the then-independent candidate for the presidency, Ross Perot, made a now famous comment on the proposed North American Free Trade Agreement (NAFTA) by saying that if it was passed, "there will be a giant sucking sound [of money] going south..."   Despite Perot's warning, President Bill Clinton signed NAFTA into law in 1994.

In that year, the United States had a net positive trade imbalance of $1.9 billion with Mexico; meaning that we exported more goods to them than they were able to import into the U.S.  But, by 2000, just 5 years after NAFTA realistically went into effect, our trade imbalance with Mexico became a net negative $24.6 billion dollars and Ross Perot was clearly proven correct.  In 2014, the negative imbalance more than doubled since 2000 at $53.8 billion.

The primary reason that Perot was correct is that, when free trade is allowed, previously protective tariffs and duties on imported products are removed between each of the agreeing countries.  So, for the U.S., that means that Mexico no longer had to pay tariffs on anyone of the 12,000 product-specific imports that we previously had in effect.  Thus, thousand of made-in-Mexico products just got a lot cheaper; and, a flood of that merchandise became much more attractive to American buyers on the basis of cost.  As a result, many Americans lost their jobs. The inverse is not necessarily true -- especially with lower wage countries like Mexico -- because even with the lifting of tariffs and duties, American made products are still too expensive for the average Mexican to buy.

Now, in an odder than odd-couple moment, Obama and the Republicans joined together to push a Trans-Pacific free trade agreement that covers trade between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.  Like NAFTA, there are just too many poor countries in this agreement,       (Chile, Peru, Vietnam), who could also bring back another roar of "sucking sounds" like that of Mexico. Our trade imbalance will only get greater and people will lose more jobs.

This is basically why, not a single Democrat will approve the agreement, and for once, I have to say that I'm with them on this one.

References:

Giant Sucking Sound: http://en.wikipedia.org/wiki/Giant_sucking_sound

Why almost everyone hates the trade deal Obama’s negotiating in Japan: http://www.washingtonpost.com/blogs/the-fix/wp/2014/04/23/why-almost-everyone-hates-the-trade-deal-obamas-negotiating-in-japan/

Obama: Elizabeth Warren Is 'Wrong' On Trade: http://www.npr.org/blogs/itsallpolitics/2015/04/22/401521322/obama-says-elizabeth-warren-is-wrong-on-trade

25 American Products That Rely On Huge Protective Tariffs To Survive: http://www.businessinsider.com/americas-biggest-tariffs-2010-9

Foreign Trade With Mexico: https://www.census.gov/foreign-trade/balance/c2010.html#1999

The False Argument That Clinton Raised Taxes On The Rich And The Economy Boomed

With Obama running around calling for increased taxes on those making $200,000 individually, and on families making more than $250,000, there are those, including the President, who are mis-characterizing what actually happened to the economy in the nineteen nineties when Bill Clinton was in office.

It is true that when Clinton took office in 1993, he and the Democrats in Congress raised the top marginal tax rate of the highest income earners from 31% to 39.6%.  And, it is also true that the economy did well despite the higher taxes on the rich.  What people are ignoring are two critical economic events in the 90's that helped offset the deleterious effects of that tax increase: (1) the implementation of the North American Free Trade Agreement (NAFTA) on January 1 of 1994 and (2) the Dot-Com boom; starting in 1995.

NAFTA alone has seen our inter-North American trade triple since 1994.  The Dot-Com boom created more millionaires and businesses than any other time in our nation's history.  So, to paraphrase Mr. Obama on Clinton's success:  "He didn't do that, someone else made it happen!"

One last point.  The so-called budget surpluses that Bill Clinton created came about because of Newt Gingrich's Contract With America; announced during the 1994 election process.  Once the Republicans took over Congress, they worked with Clinton on the passage and implementation of several bills in 1995-1996 that were designed to reduce federal spending.  As a result, the country went into budget surpluses; starting in 1998.  Any Democrats claiming that Bill Clinton's taxes on the rich created a better economy and reduced deficits is just an attempt to re-write history. It should also be pointed out the the economy did better under the Clinton deficit reduction years than any of the Clinton years prior to that.

Obama's NAFTA Canard

It's all about getting votes. Buying them and lying for them. That's old time politics at its best. And, it appears that Barack Obama is more the old-time lying "politicioner" than his promise of "change" would have you believe.

When running to win the Michigan primary, this proponent of change, Mr. Obama, said he would change NAFTA (North American Free Trade Agreement) or abandon it because it has cost jobs in America. However, his economic adviser, Austan Goolsbe, had a meeting on the "QT" with Canadian officials to say that the abandonment of NAFTA was just campaign rhetoric and don't worry; we won't change a thing. Now, it appears that the master of "change", Mr. Obama, has decided that NAFTA shouldn't be scrapped as he had previously stated (See Full Story). No...now that we are past Michigan and trying to garner the votes from the center.

You've got to wonder, how much "change" is ahead of us from what he has said in the past!

Obama: The FlimFlam Man

A tried and true legal tactic is to "impeach" a witness. Under cross examination, a lawyer will attempt to catch a witness in a single lie. And, if done successfully, that witnesses' entire testimony comes into question.

Such is the case with Barack Obama over NAFTA. At the last Democratic debate in Ohio, Barack Obama pretty much said he would, best case, renegotiate NAFTA and, worst case, dump this entire free trade agreement with Mexico and Canada. Of course, this campaign committment plays well to the labor unions who believe they have lost union membership jobs to NAFTA. (Forget about the fact that NAFTA has created jobs and trade that have greatly benefited this entire country!)

Now, comes the impeachment!

Apparently, Barack's economic adviser, Austan Goolsbee, had met with key personnel at the Canadian Consulate in Chicago to assure them that NAFTA wasn't in jeopardy and "anything" that might be said about NAFTA is really just the politics of campaigning. Oh, really? Just politics!

At first, both the Obama camp and the Canadian government denied such a meeting. Then, a Canadian government memo was leaked to the press and the reality of that meeting became all too true. Then, the Canadian government apologized for the "leak" of the memo. And, no longer were they denying that the meeting didn't occur; just sorry about the leak. And, since the release of the memo, Obama and his team have been dancing around this story like the ghoul-scene from Michael Jackson's "Thriller".

So, this begs the question of how much "more" of Obama-speak is real or just Politics. What's the real story on his relationship with his Church, his pastor, and the connection to Louis Farrakhan with respect to the Jews versus the Arabs? Why does Obama have at least two advisers, Samantha Power and Robert Malley, who have, at the very minimum, controversial opinions about Israel? (Note: In 2002, Samantha Power said that our U.S. military power should be used to "force" Israel to accept a Palestinian state). What is the story on "his" connection to the 1960's radicals such as William Ayers and Bernardine Dohrn? What about the Tony Rezko? And, what about all those promises of getting out of Iraq and the near trillion dollars in "goodies" for things like "green-collar" workers, permanent $1000 tax rebates to all the middle class, etc? Are they just "politics" in words, only?

If you look up the word "flimflam" in the Dictionary, you get this definition: "a trick or deception, esp. a swindle or confidence game involving skillful persuasion or clever manipulation ..." A lot of people have, for months now, said that Barack Obama is "hollow" in what he says. Others flatout say his public opinions are in complete contrast to his beliefs. I say he does both. He is truly the political version of the FlimFlam Man. And, the national press corps now senses that it might be the case. There is the taste and smell of blood in the water with the NAFTA incident. Don't expect the national media to give Obama anymore "milk and cookies" and a comfy pillow to sleep on. The honeymoon is over. Expect the national media to act more like sharks as as their eyes roll back and they come in for the kill. Obama probably never saw that kind of press coverage in the "comfort-zone" of Democratic-controlled Chicago!.

NAFTA or No NAFTA?

In lasts night's Democratic debate, Hillary Clinton and Barack Obama were scrambling on top of each other to prove that "each" would eliminate NAFTA (the North American Free Trade Agreement) if elected. NAFTA and all other Free Trade Agreements (FTA) are now on the "outs" with all Democrats because of the pressure coming from the labor unions such as the AFL-CIO. The unions blame "this" trade agreement for the loss of high-paying union jobs in America. And this hearkens back to a quote from the Independent candidate for President, Ross Perot, during the 1992 election cycle who said that there will be the "giant sucking sound" as we lose jobs and money to Mexico and Canada if NAFTA is approved. Lost in this debate is the fact that President Bill Clinton "and" a Democratic Controlled Congress approved NAFTA; an achievement Bill Clinton had always pointed to in his "legacy" of accomplishments.

The question of whether or not union jobs were lost under NAFTA is somewhat disputable. Those jobs might have been lost, anyway, as a result of cheap international labor and all other active foreign trade. What "is" known about NAFTA is that the previous trade barriers and other mechanisms that had either blocked or penalized American products were eliminated. As a result, American businesses have substantially increased trade with Canada and Mexico under NAFTA. I find it interesting the State of Ohio, the seat of last night's debate over NAFTA, has benefited the most under this agreement. Since NAFTA was passed, Ohio has quadrupled trade with the NAFTA countries. That means more jobs (maybe, not union) in Ohio and and an increase in revenues which has benefited both the tax coffers of Ohio and our Federal government. Also, NAFTA created "good" jobs in Mexico. And, the more "good" jobs we can create in that country, the slower the influx of illegial aliens across our border for those seeking higher-paying employment in the United States.

Given the tenor of last night's debate over NAFTA, it is obvious that we will see "no" more FTA's approved if we elect a Democrat as President and the Democrats still control both Houses of Congress. Currently, FTA's are being blocked by the Democratic-controlled Congress for Columbia and other Latin American countries. As a result, we will become economic isolationists. And, the result of that will be the continuance of trade barriers against American products and, I believe, the loss of jobs and the loss of taxable business revenues. And, the only "sucking sound" we'll actually hear will be that of Americans left "sucking their thumbs" after the loss of trade in a world where trade is so important to us.