Jobs still job one for Congress, Administration

Irate Independents abandoned the president and indiscriminately defeated Congressional Democrats, without fully embracing the Republican Party or its ideas, according to exit polls.

So what were voters trying to tell Congress?

Ditch party dogma or risk being washed away in the next tsunami of voter anger. Instead, focus on pragmatic and bipartisan solutions that put Americans back to work.

For instance, Republicans and Democrats can find fertile ground for agreement on job creation if they tackle U.S. trade policy. Enforcing the obligations of our foreign trade partners won’t cost a dime and could save or create tens of thousands of U.S. jobs.

The White House is willing to negotiate on the issue and Republicans have been itching to advance several stalled trade pacts. Liberals in Congress want to fix the NAFTA model that encouraged offshoring of jobs.

Advocates of new trade agreements must get tough on countries that aren’t playing fair on trade and are siphoning off our best jobs, creating a “giant sucking sound” as Ross Perot famously characterized it during the NAFTA debate.

The case for the new bipartisan trade agenda might begin with getting tough on the European Union and the international aerospace giant it created and subsidizes, Airbus. Over the past several decades, the EU funneled $178 billion of subsidies to Airbus[1], giving flight to its dreams of aerospace supremacy and slowly drawing off hundreds of thousands of American aerospace jobs[2]. The World Trade Organization recently condemned these subsidies as illegal in a historic decision on the largest case ever brought before the international body.

Now Airbus wants our defense contracts. The European aerospace giant is vying for a $35 billion U.S. military contract to build airborne refueling tankers for the Air Force. The aircraft they are attempting to sell American taxpayers was built with $5 billion of the very subsidies that have claimed American jobs, according to the WTO. These subsidies could allow them to underbid their American competitor, Boeing, for the tanker contract. That could cost the U.S. tens of thousands of aerospace jobs across nearly every state in the country. 

Finally, after decades of getting away with the theft of thousands of American jobs, Airbus might have finally overreached. The administration and Congress will be under enormous pressure to act on a new jobs agenda just in advance of when the Defense Department must decide the victor in the tanker contract competition. It would be a no-brainer for the Senate to immediately act on House-passed legislation that would level the playing field in the tanker competition.

The House’s measure is simple and delivers just what the doctor ordered: it would direct the Defense Department to account for the value of Airbus’s subsidies in the tanker competition. The value of the assistance, which came in the form of below market rate loans, could be converted to the cost of capital raised on the open market. The bid offered by Airbus would then be adjusted to reflect the higher costs. The U.S. would be well within its rights as the World Trade Organization ruled Airbus’s subsidies to be illegal under our existing trade agreements.

Presidential historian Richard Norton Smith described Election 2010 as “schizophrenic,” as voters demanded change that appeared to be radically different from the “change” they’d voted for only two years ago. But maybe voters aren’t so crazy. They’re telling politicians of all persuasions to put aside their pet issues and policy preferences and focus on job one: job creation. A bipartisan trade agenda that actually sticks up for American workers seems the best way to go.

Robert E. Scott is senior international economist at the Economic Policy Institute.