After Obama: A 7-Step Economic Recovery Plan for America
Foreign policy should work to advance a constructive agenda—something that’s been largely lacking in the Obama era. Hopefully, the next president will come up with appropriate actions to fill that void. As a cornerstone of that effort, I would suggest a commitment to promoting free trade and more liberal markets worldwide.
I’ve written before that the next president will need a "kick starter" agenda—one that demonstrates that the United States is back in the business of protecting its own interests. But Washington will need to go beyond that. The static defense of interests is a sterile and ultimately, unsatisfactory role for a global power. Lack of leadership leaves a vacuum that competitors are only too happy to fill.
A fresh focus on free-market policies will require stepping out with more nimble and bold initiatives, rather than slogging through the ponderous procedures used to hash out high-profile multistate trade agreements or plowing through the bureaucracy of international and multinational trade regimes.
Free Trade under Obama
In about six years, President Obama has signed legislation implementing only three bilateral Free Trade Agreements (with Korea, Colombia and Panama)—and those pacts were largely negotiated by his predecessor. Not only has he done little else to advance free trade, he has largely failed to garner support for free trade within his own party.
Yet it appears as though Mr. Obama wants to close out his tenure by making a splash on the trade front. He is seeking Trade Promotion Authority (which would also extend to the next president), as well as congressional approval of the Trans Pacific Partnership (TPP), a twelve-nation trade pact.
Even if he pulls his agenda off, this could well be the swan song of big U.S. trade deals. As the Wall Street Journal’s Greg Ip argues: TTP could "lay down rules for the rest of the world in sectors such as services and intellectual property where nontariff barriers are especially onerous." That will particularly impact the services sector.
Currently, “services” exports represent a fraction of national GDP and are dominated by a handful of businesses. But that could change. “There is great untapped potential for more,” writes Catherine Rampell, “since all of these exports are being sold from a tiny share of all the American companies that could participate in the global marketplace.” But, at best, this expansion won’t yield real results until after Obama is long gone.
Further, free-trade advocates remain unconvinced that President Obama is serious about free trade. His zeal for Trade Adjustment Authority (TAA) shows he really does believe government, not the marketplace, should be picking winners and losers. In practice, TAA gives an administration the power to hand out benefits to virtually any firm it wishes—even if the company is only loosely affected by foreign competition. This is pure cronyism. Worse, TAA doesn't even work. There is little evidence it benefits workers displaced by foreign competition.
The Path to Expanding Economic Freedom
The next president would do well to make a strong, pro-growth, free-market agenda a cornerstone of his or her foreign policy.
Here’s a seven-step recovery plan for consideration.
Step #1: Make the Principled Case for Free Trade and Liberal Markets. Simply cheerleading for individual deals at hand, as Obama has done, conveys no sense of commitment to free trade. A president should speak often about the advantages of liberalizing global markets. Anti–free traders seize any ill consequence in markets to trash free trade and offer up protectionist measures or cronyism as some kind of "caring" alternative. A leader should not leave these attacks unchallenged. What’s required is a bold and consistent narrative from the White House of the benefits of free trade, such as: its impact on individual states, the value of imports to the national economy, the realities of outsourcing and the salutary effects of economic growth on the environment. The White House must lead to rebuild a national bipartisan consensus acknowledging the cumulative benefits of free trade and liberalizing markets.