diet coke for breakfast


Wednesday, August 13, 2003

Posted by Jake
Steel of the Century -- President Bush can undo his worst economic mistake.

I remember going "wha?" when I first heard about the steel tariffs. It is sort of mystery to me why they ever set it up in the first place. Not only are the Steel Workers not really a Republican constituency, but they also have a really easy out now: compliance with a WTO ruling.

There is a difference between being pro-business and pro-market. Time to embrace the later.

James--
Although I think the tariffs were and are a bad idea economically, there was an understandable but weak political rationale. There may also have even been a market/trade rationale. First, policitally: steel union leadership is not a typically Republican consituency. Steel rank and file is a bit more ambiguous, however, the way one wins elections is by stealing your opponent's constituents. Reagan won because a signficant number of Democrats found his outlook appealing. Pennsylvania, home of America's steel manufacturing carrys a large number of electoral votes. The Administration probably made the assessment that it couldn't hurt them in PA to impose steel tariffs. If they could carry a few more democrats, Bush might win the state in 2004. The market rationale, may have been more simple. Bush wanted fast-track trade authority. It had expired during Clinton's Presidency, and Congress had refused to renew it for several years. The only way that Bush was going to get it was to placate protectionist liberals (and a few on the FAR right) who oppose the idea of all-encompassing free-trade. It seems to have worked in the sense that he's gotten fast-track trade authority, but I think he probably would have won that vote, even without the tariffs. Moreover, his success in that endeavor is all the more reason why he should repeal the tariffs now; they're no longer necessary.


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