Economic illiteracy's imminent danger

Stagnant wages are a key issue in the presidential election, and they should be. Lawmakers in both parties currently have a chance to go beyond campaign promises and support two policies that would create jobs and raise living standards.

Yet both policies are in trouble, threatened by forces that prefer ideology to intelligence, and that deny economic reality in favor of ignorance and political pandering.

Last week, the Obama administration concluded negotiations with 11 other Pacific nations on a massive trade pact that would open foreign markets to a wide range of American-made products and services.

"It's an agreement that puts American workers first and will help middle-class families get ahead," the president said. Most economists agree with him that increased global commerce would strongly benefit the U.S., the world's second-largest trading nation after China.

But doctrinaire liberals like Sen. Bernie Sanders, and his allies in organized labor, ignore these facts and oppose the deal. So do some conservatives - like Donald Trump - who hate anything Obama supports.

Then there is the Export-Import Bank, which for 80 years has enjoyed wide bipartisan backing because it helps American exporters compete in the global marketplace. In fiscal year 2014, the bank used its insurance and loan guarantee programs to support 164,000 jobs, at no cost to the American taxpayer. In fact, the agency generated a $675 million surplus.

The bank's authorization ended in June, and the Senate has voted 64 to 29 to renew its operations. But a band of hard-core right-wingers in the House - egged on by outside pressure groups - have denounced the bank for practicing "crony capitalism" and blocked the reauthorization from even coming to the floor.

"Mind-bogglingly idiotic," is the way Sen. Heidi Heitkamp, a North Dakota Democrat, describes the bank's opponents. John Engler, president of the Business Roundtable and a former Republican governor of Michigan, brands those foes "economic illiterates."

On trade deals, at least, there are two sides to the argument. There are losers as well as winners in any dynamic economy. And while the benefits far outweigh the costs of increased trade, the costs are real, particularly to certain industries and communities bypassed by innovation and victimized by foreign competitors.

That's why the president signed into law a six-year extension of the Trade Adjustment Assistance program, which aids workers impacted adversely by the global marketplace.

The Ex-Im Bank is a different story. There are virtually no costs at all - except perhaps to foreign-based manufacturers who lose business to U.S. firms backed by the bank. In fact, companies in countries like China are cheering on the bank's foes, because they know the demise of Ex-Im will undermine the competitiveness of their U.S. rivals.

Even the bank's supporters agree that in an ideal world, export subsidies would not be necessary. Every company would compete on a level playing field. The free market would determine the outcome.

But this is not an ideal world; that's an undeniable fact that the bank's opponents simply refuse to recognize. About 60 other countries have some sort of export subsidy program, so the playing field is far from level.

The other argument against the bank is that private lenders and underwriters would fill its role if it disappeared. But they can't and won't. Some deals are just too risky and expensive for the private sector to finance.

"Companies come to us when they can't get a deal done in any other way," Fred Hochberg, the bank's president, told Joe Nocera of The New York Times.

The damage caused by the bank's opponents is hardly a theoretical question; it's already happening. Last month, General Electric announced plans to move 500 manufacturing jobs overseas to countries that still offer export subsidies.

"In a competitive world," G.E. vice chairman John Rice told the Times, "we are left with no choice but to invest in non-U.S. manufacturing and move production to countries that support high-tech exporters."

Boeing has lost two contracts for building satellites - one in Singapore, the other in Bermuda - because the deals were not backed by a U.S. government guarantee. Instead of hiring more American workers, the company is laying off employees in its satellite division.

It does not take a graduate degree in economics to realize how stupid and self-defeating this is. More trade means more jobs at better wages for American workers. And yet, two actions that could advance those goals - ratifying the trade pact and reauthorizing the Ex-Im Bank - are in serious jeopardy.

This is beyond economic illiteracy. This is pure idiocy.

Steve and Cokie Roberts can be contacted by email at stevecokie@gmail.com.

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