CEOs Propose Progressive Measures to Stem Rising Tide of American Protectionism
“Our prescriptions might, in some respects, seem radical” begins a surprising report on globalization commissioned by an association of CEOs from twenty financial services corporations, including Wachovia, AIG and Citigroup. The Wall Street Journal had coverage of the report the day it was released—incidentally just three days before Bush’s fast track trade negotiating power expired.
The WSJ reporter registered his shock at some of the proposals to combat income inequality: wage insurance (gasp!); eliminating payroll tax for those earning less than $32,140 and even raising it on higher-income earners to offset the lost revenue; and, government-backed insurance of local tax bases to provide payouts during severe economic downturns such as factory closures.
WSJ neglected to mention that while seemingly innovative, many of the ideas floated in the report are hardly new. For instance there was a wage insurance test program inserted into the 2002 trade bill, and the local tax base insurance idea was taken from a 1996 Brookings Institution policy proposal.
According to WSJ, at the same time the report suggests ways to soften the blows of globalization it also proposes ways to streamline trade deals by giving the president permanent fast-track authority (NewsShark can hear Nancy Pelosi and Charlie Rangel laughing already), along with allowing the U.S. to negotiate a broad-free trade agreement open to any WTO member that wanted to participate, as an alternative to global trade rounds (more laughing).
The lackadaisical New York Times waited until late July to even mention the report. In a story about IBM’s new “learning accounts” for worker education (essentially 401(k)s, but without the tax deductibility), NYT said the Financial Services Forum report argued for a change in the tax code that would allow employees to deduct education expenses whether the training related to their current job or not. Another pragmatic solution to help workers brought to you by those unlikely progressives at FSF. (Current law only allows employees to deduct education expenses related to the position they already hold.)
NewsShark Verdict: As Adam Smith put in the Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.” When CEOs start talking about wage insurance they are not doing so out of their humanity but rather to quell the outsourcing outcries. Nevertheless, many of the ideas are spot-on and the only question is whether others in the business community will join them in a serious lobbying effort. Democrats take notice: the butcher, brewer and baker want to cut the price of dinner, or at least make it more palatable.
