While Washington Dithers, the Economic Recovery Struggles
The nation's latest economic barometer, the Labor Department's payrolls report, showed this week that the economy gained 244,000 jobs in April, the biggest increase in almost a year and more than expected by economists. While the news was encouraging, it was tempered by an increase in the unemployment rate to 9 percent from 8.8 percent the preceding month.
The message is clear: while the economy is improving, unemployment remains stubbornly high. Millions of additional jobs are still needed to match pre-recession employment levels and nurse the economy back to full health. Given the mixed picture, you would think Congress and the Obama administration would be doing all it can to make job growth a top priority. But two recent developments suggest that lawmakers continue to dither and play politics with important job-growth initiatives.
In a critical vote, the Senate fell short of the 60 votes it needed to invoke cloture on the SBIR/STTR Reauthorization Act of 2011 (S. 493), a bill that finally would remove uncertainty surrounding two key small business programs: the Small Business Innovation Research (SBIR) program and the Small Business Technical Transfer (STTR) program. The legislation has been stalled since March after lawmakers attached nearly 200 amendments, turning the bill into what's derisively known as a "Christmas tree."
Oddly, Sen. Olympia Snow, R-Maine, the ranking member on the Senate small business committee, almost single-handedly blocked passage of the Senate bill, largely out of a fit of political pique. She wanted her bill, the Small Business Regulatory Freedom Act (S.474), added as yet another amendment. So, a pro-small business bill was used to torpedo another pro-small business bill. This is no way to set priorities or make law.
For the time being, the Senate's inaction leaves the Republican-led House in control of the issue. It's already passed its version of the bill, which gives big venture capital firms, hedge funds, and private equity firms significant access to the grant programs, heretofore earmarked only for small independent companies. The Senate bill, a compromise widely supported by small business groups, would provide access only to VC firms, and at significantly lower levels, preserving more funding for independent companies. Without a bill or a new temporary authorization, the programs will expire this month.
"Countless hours have been spent crafting the Senate's compromise, and it is a detriment to the program, small businesses, and American innovation that it wasn't approved," said Todd McCracken, president of the National Small Business Association (NSBA). "The highly successful SBIR program is too critical to small business innovation for it to be the target of political gamesmanship."
While the SBIR program remains a political football, Congress has been dithering for months on a far more important issue: free trade agreements. Despite the nation's economic problems, Congress passed the last free trade agreement more than four years ago. To date, it has failed to take action on pending agreements with South Korea, Panama, and Colombia.
The situation has left American companies at a distinct disadvantage in those countries. Meanwhile, other nations, such as Canada and the European Union, have raced ahead of the United States on bilateral trade. "If the United States does not implement the trade agreements it has negotiated with Colombia, Panama, and South Korea and fails to move ahead with new trade deals, it will forfeit sales to foreign competitors who are aggressively negotiating free trade deals of their own," said Phillip Wise, who owns and operates Wise Family Farm in Pontotoc, Miss.
"In short, there is no standing still when it comes to trade," added Wise, who testified recently before a House Small Business Committee hearing on trade issues. The role free trade agreements have played in the growth of U.S. pork exports over the last two decades is undisputed, he said, speaking on behalf of the National Pork Producers Council.
Nearly 20 percent of the pork produced in the United States, valued at $4.8 billion, was exported last year compared with only about 6 percent of production 10 years ago, he noted. About one fifth of the U.S. pork industry's 550,000 jobs are related to exports. What's more, each 1 percent increase in production adds 920 direct full-time jobs and 4,575 indirect jobs to the U.S. economy, according to the group.
The benefits of free trade agreements cut across the economy. Jason Speer is vice president of Quality Float Works in Schaumburg, Ill. The small, family-owned manufacturing company exported only 3 percent of its products in 2001. Last year international sales accounted for a third of total sales at his 23-employee company.
"Virtually all of this trade today is the direct result of U.S. efforts over the years to tear down foreign import barriers through bilateral, regional, and multilateral trade agreements," said Speer, who is also frustrated by congressional inaction. "As the pending trade agreements with South Korea, Colombia, and Panama have languished, our trading partners have moved forward rapidly to negotiate their own market opening agreements," he said.
In July, for example, the European Union's free trade agreement with South Korea will become effective, vaulting European companies ahead of rivals in the United States in price competitiveness. His products, for example, are slapped with an 8 percent tariff just to enter the South Korean market. "This is a standard illustration of the crisis facing American companies while we delay action on such agreements," Speer said.
A free trade agreement with Korea would eliminate tariffs on 95 percent of U.S. manufactured and agricultural imports. Indeed, the U.S. International Trade Commission estimates that agreements with Korea, Panama, and Colombia would increase U.S. exports by at least $13 billion annually.
The U.S. economy is still 7.2 million payroll jobs short of where it was at the start of the recession three years ago. In addition, the economy would need to add 3.7 million jobs just to cover those who have entered the workforce for the first time since then.
Unfortunately, no silver bullet exists that will restore those jobs overnight. Rather, the nation needs a coordinated effort in Washington to identify and fast-track initiatives that will move the economy forward. But that's not happening. Instead, it's business as usual. Congress dithers while the administration lacks focus on what should be its highest priority -- creating jobs.
