IPI PolicyBytes | Categorised Content

TaxBytes 6.37: ‘Tired’ Thinking

Merrill Matthews Jr. — Tue, 15 Sep 2009 13:27:19 -0500

President George W. Bush had been in office a little more than a year when, on March 5, 2002, he decided to impose temporary tariffs on steel. It was clearly a calculated political move to try and curry favor with steel unions in the rustbelt swing states of Pennsylvania and West Virginia.

As if backtracking on its strong commitment to free trade weren’t enough, the administration pushed economist and presidential advisor Larry Lindsey into writing an op-ed for The Wall Street Journal defending the tariffs.

Conservatives around the country groaned for their friend Lindsey and pitied the fact that he was compelled to defend what he knew was bad policy.

Now President Barack Obama has imposed a 35 percent tariff on Chinese-made tires, and some are lamenting this as a reversal of his stated support for free trade.

TaxBytes 6.27: When Politics Trumps Science and Economics

TaxBytes — Tue, 7 Jul 2009 13:17:42 -0500

Congress has passed a massive “cap and trade” energy bill designed to raise the price of energy in the U.S. in order to reduce the use of fossil fuels by 17 percent by 2020 and by 83 percent by 2050.

President Barack Obama has called the bill a “jobs bill.” But sentencing the U.S. economy to high-cost energy is not a particularly good strategy for creating jobs. Charles River Associates, a Harvard-based economics consulting firm, estimates a net loss of about 2.5 million jobs each year.

During the campaign, candidate Obama also pledged that he would never raise taxes in any form on Americans making less than $250,000 per year. But his cap and trade tax is estimated to cost American families almost $2,000 a year when it becomes effective—due to higher prices for electricity, oil, gasoline, natural gas, home heating oil, coal, food and transportation costs—to almost $7,000 a year for a family of four by 2035.

TradeBytes 106: Trade is the Answer, Not the Problem

TradeBytes — Fri, 22 May 2009 15:40:03 -0500

Congratulations to all of those who have been worried for the last several years about America's "trade deficit"--for the first three months of 2009 our trade deficit has dropped dramatically, running at a rate of $359.7 billion, compared to last year's trade deficit of $681.1 billion.

So, if you're worried about trade deficits, there's nothing like a smacking-good economic collapse to remedy our trade deficit problems. Hope all you trade deficit hawks out there are happy.

(End obvious sarcasm)

No, the fact is that trade is the solution, not the problem. A drop-off in trade is associated with a drop-off in economic growth, and trade deficits in the United States for the last several decades have been associated with healthy economies, not sick economies.

Those who fear trade really fear that the U.S. is not able to compete globally, and fear that U.S. workers aren't able to adapt to changing labor markets.

TechBytes 6.20: Dismantling Innovation 101

TechBytes — Thu, 21 May 2009 14:49:40 -0500

Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week.

Why are domestic policies, both here and abroad, threatening to tear apart the most globally competitive companies? Rather, we should be doing all we can to encourage their success, especially now.

The European Union has been on a tear, swinging a wrecking ball at U.S. globally competitive companies. Just last week the EU fined Intel a record-shattering $1.45 billion for “anticompetitive practices”—the largest fine ever imposed for any breach of EU antitrust law. The previous record-smashing fine was $677 million, imposed on Microsoft in 2004.

Which U.S. companies are next? Could it be:

IBM facing a new complaint after settling a decades-old case?
How about Rambus or Qualcomm, which are under an ongoing inquiry?

TaxBytes 6.20: Obama’s War

TaxBytes — Tue, 19 May 2009 15:50:04 -0500

While Iraq may have been “Bush’s War,” it increasingly seems that “Obama’s War” will be a trade war.

The $787 billion stimulus package included a “Buy American” provision requiring companies, governments and agencies receiving stimulus funds to buy products that are “made in America.”

While such provisions are being touted as a way to reduce unemployment, they’re simply back-door protectionism, which allows the president to maintain he both supports global trade while simultaneously undermining it. As a White House spokesperson said recently, “The president is committed to creating jobs in America and committed to global engagement with our trading partners and does not see any contradiction between those two goals,” according to a recent story in The Washington Post.

TexBytes 09.17: Trading Away Our Credibility—and Jobs

TexBytes — Mon, 18 May 2009 15:19:27 -0500

Note: The Institute for Policy Innovation will be highlighting trade issues this week in recognition of World Trade Week

A Texas company, Dallas-based Mary Kay, Inc., is wondering what’s going on with Congress.

Mary Kay’s concern: What were the people’s representatives thinking when they decided to make U.S.-made personal care products less attractive and saleable in the Mexican market?

Here’s the deal: U.S. truckers wanted to kill a pilot program, set up under the North American Free Trade Agreement (NAFTA), for resolving safety concerns about Mexican trucks driving on U.S. roads. So Congress, with a nod from the Obama administration, used this year’s omnibus spending bill to kill the pilot program; no more “threat” of Mexican truckers bringing us Mexican goods on Mexican trucks.

TexBytes 09.10: ‘Keep On Truckin’

TexBytes — Fri, 3 Apr 2009 15:58:56 -0500

So this Mexican trucker drives up to the Texas border. He stops short, gets out and unloads his truck. An American driver sees the Mexican driver, picks up the unloaded stuff, puts it on his own truck, then drives off…

The punch line? Sorry, but if you’re expecting a joke you’re out of luck, just like the Mexican truckers who’ve been going through this charade since the ‘90s.

In fact, the joke’s on us. The U.S. Department of Transportation estimates this unloading-loading silliness costs $400 million annually—which is passed on to U.S. consumers.

The North American Free Trade Agreement (NAFTA), intended to promote trade between the U.S., Canada and Mexico, was signed in 1992. The treaty said borders were open for trade. But the politically powerful Teamsters said, never mind the treaty, Mexican trucks aren’t safe and we can’t let them in.

Pieler and Laurson: The Promise of Gas

Erin Humiston — Thu, 29 Jan 2009 10:25:16 -0500

In a new op/ed featured today in TCS Daily, IPI senior fellow George Pieler and International Affairs Forum editor-in-chief Jens F. Laurson discuss that while Russia’s gas prices are low, Europe should take heed, diversifying its energy supply and increasing competition.

They write:

“In his inaugural address, President Obama observed that, 'Each day brings further evidence that the way we use energy strengthens our adversaries'. Tell it to Europe, Mr. President.

Russia has resumed delivering Gas to Europe—for now. The latest crisis, with dramatic visuals from freezing Bulgarians, is out of the headlines, but the issue is only becoming more important. Europe's future will be shaped, if not determined, by how soon Western politicians realize the need for a sound, non-ideological energy policy.

Laurson and Pieler: We ignore Bush’s other crusade at our own peril

Erin Humiston — Fri, 5 Dec 2008 12:33:01 -0500

In a brand new op/ed published in South Africa’s Business Day, International Affairs Forum editor-in-chief Jens F. Laurson and IPI senior fellow George Pieler discuss that while the news is focused on the current transition period in Washington, it is important to consider President Bush's final words of advice on the financial crisis, free trade and open markets.

Pieler and Laurson write:

"Here Bush’s advice and policy stance is the only right one, and his words of warning might be the most pertinent, the most needed, of his presidency…

Free trade, lest we forget, is the foundation of that global growth we are so desperately trying to keep alive."

To read the full op/ed, please visit Business Day online.

Jens Laurson and George Pieler in TCS Daily: Why Asian markets may benefit from global financial turmoil and election

Erin Humiston — Tue, 25 Nov 2008 11:45:58 -0500

International Affairs Forum editor-in-chief and IPI senior fellow George Pieler are featured in a new op/ed in TCS Daily discussing why Asia and its markets may be the ‘chief beneficiary’ of today’s global economic turmoil.

Laurson and Pieler write:

“For President-elect Obama, the danger of forgetting such basic truths is acute. He has signaled his belief in a winners-vs-losers concept of markets. A global recession creates losers globally, but there are those who profit in times of distress. In the mid-term, Asia may be the chief beneficiary of this turmoil, thanks to movements in the West that will exacerbate the crisis while trying to fight it.

Among the latter, are France's habitual, knee-jerk protectionist reactions to any crisis, the undue interference of German politicians in coercing banks into being 'rescued', and last but far from least