September 22, 2003

The "He Said, She Said" Disease

Mike Allen and Jonathan Weisman of the Washington Post write that the effects of the Bush steel tariff are the subject of:

washingtonpost.com: ...fierce debate. A study backed by steel-using companies concluded that... higher steel prices had cost the country about 200,000 manufacturing jobs... steel costs that rose in some cases by as much as 30 percent. Steel producers have their own job numbers. Investments that flooded into the protected steel industry over the past 18 months brought idled steel mills back on line and kept teetering mills from shutting down, said Peter Morici, a University of Maryland business professor hired by the steel producers. That resurrected 16,000 steel jobs, and more than 30,000 jobs when steel suppliers are included.

Gary Hufbauer, a critic of the tariffs at the Institute for International Economics, said that both sides are exaggerating their numbers. The steel industry has added some jobs in the past 18 months, but not because of the steel tariffs. Steel consumers have shed jobs because of the tariffs, but he said the number was probably 15,000 to 20,000....

But Allen and Weisman's claim of "fierce debate" is false: There is no fierce debate. There is no debate. The steelmakers' tame expert doesn't challenge the claim that higher steel costs have hurt steel-using manufacturers. The steel user-backed study doesn't deny that the tariffs have shifted some steel demand to domestic producers. And Gary Hufbauer's assessment--that both sides' tame economists are overstating their cases, and that the harm done to steel-using companies and their workers has been greater than the good done for steelmakers and their workers--is the overwhelming consensus.

Why say that there is a "fierce debate" when there isn't one? Moreover, Allen and Weisman write that:

Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users...

when they know as well as I do that not "some" but "almost all" economists say the tariffs have done more harm to steel users than they did good for steelmakers. Why say "some"--unless, of course, you are trying to confuse your readers by falsely implying that there are "many others" who think differently?

It gets worse. Allen and Weisman write that:

"It's important to recognize these safeguards have had an adverse impact on [steel] consumers -- that's why safeguards are used sparingly," a senior U.S. trade official said. "But the president thought that on balance the benefits would outweigh the costs, and the story of the last 18 months has borne that out."

Allen and Weisman know as well as I do that the "senior trade official" is lying through his teeth. They know as well as I do that none of George W. Bush's briefings ever said, that none of his economic advisers think, and that none of George W. Bush's economic advisers ever thought that the steel tariff was good for the American economy: whether former OMB Director Mitch Daniels, former Treasury Secretary Paul O'Neill, current Treasury Secretary John Snow, former NEC chair Larry Lindsey, current NEC chair Stephen Friedman, former CEA chair Glenn Hubbard, current CEA chair Greg Mankiw, Commerce Secretary Donald Evans--not a one thought or thinks that benefits to steelmakers outweighed costs to steel users plus the damage done to trade negotiations by the steel tariff's breaking our existing commitments to the WTO. President George W. Bush never thought that the economic benefits to the country outweighed the costs. (He did think that the political benefits to the Republican Party outweighed the costs.)

So why do Allen and Weisman turn what appears under their byline into a platform for White House officials to say things they know are lies? Why do they confuse their readers by pretending that there is a debate over the economic effects of the steel tariff?

I would have thought that no one would choose to become a journalist without a strong underlying drive to inform--rather than to confuse and mislead--their newspaper's readers. What has happened to Mike Allen and Jonathan Weisman?


In a decision largely driven by his political advisers, President Bush set aside his free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia, two states crucial for his reelection.

Eighteen months later, key administration officials have concluded that Bush's order has turned into a debacle. Some economists say the tariffs may have cost more jobs than they saved, by driving up costs for automakers and other steel users. Politically, the strategy failed to produce union endorsements and appears to have hurt Bush with workers in Michigan and Tennessee -- also states at the heart of his 2004 strategy.

"They tried to play politics, and it looked like it was working for a while," said Bruce Bartlett, a conservative economist with ties to the administration. "But now it's fallen apart."

The issue is being brought to a boil by the scheduled release today of voluminous progress reports by the U.S. International Trade Commission. The ITC's mid-session assessment of the three-year tariff program's impact will examine not only the tariffs' effects on the steel industry but also on the hard-pressed manufacturers that shape steel into products.

White House officials said Bush will not make a decision until he has digested the ITC reports. But his top economic advisers have united to recommend that the tariffs be lifted or substantially rolled back this fall, and several administration officials said it is likely he will go along. The retreat would roil the political and economic landscape of the Rust Belt, where both parties expect the presidential election to be won and lost.

It also could produce a tidal wave of negative publicity in West Virginia, a traditionally Democratic state that Bush won by 6 percentage points, and Pennsylvania, which Bush lost by 5 percentage points and had targeted as one of his most promising possible pickups for 2004.

"The only reason they won't do it is if they're unwilling to admit they made a mistake," said a Republican strategist who works closely with the White House.

Administration officials said the office of Bush's top political adviser, Karl Rove, was a vocal and energetic advocate of tariffs during the debate last winter. Rove became so identified with the duties that a Wall Street Journal editorial calling for their repeal was headlined, "Steel Thyself, Karl Rove."

Republican lawmakers from steel states said Bush is considering compromises that would increase the number of exclusions from the tariffs, easing prices for steel buyers.

Administration officials are careful to say they see both sides of the argument. "A healthy steel industry is important to this country," said Grant Aldonas, undersecretary of commerce for international trade, in an interview. "But the small- and medium-sized guys who bend metal for a living have a real complaint about the steel tariffs. There's no doubt about that. We can't hide from it."

Even as they express their sympathies, however, they make no apologies for the tariffs -- or trade "safeguards," as the administration prefers to call them. "It's important to recognize these safeguards have had an adverse impact on [steel] consumers -- that's why safeguards are used sparingly," a senior U.S. trade official said. "But the president thought that on balance the benefits would outweigh the costs, and the story of the last 18 months has borne that out."

That conclusion is subject to fierce debate. A study backed by steel-using companies concluded that by the end of last year, higher steel prices had cost the country about 200,000 manufacturing jobs, many of which went to China. Small machine-tool and metal stamping shops say they have been decimated by steel costs that rose in some cases by as much as 30 percent.

Steel producers have their own job numbers. Investments that flooded into the protected steel industry over the past 18 months brought idled steel mills back on line and kept teetering mills from shutting down, said Peter Morici, a University of Maryland business professor hired by the steel producers. That resurrected 16,000 steel jobs, and more than 30,000 jobs when steel suppliers are included.

Gary Hufbauer, a critic of the tariffs at the Institute for International Economics, said that both sides are exaggerating their numbers. The steel industry has added some jobs in the past 18 months, but not because of the steel tariffs. Steel consumers have shed jobs because of the tariffs, but he said the number was probably 15,000 to 20,000.

But in this case, the facts may be less important than the perception in key states where the tariffs have been debilitating. The tariffs failed to give Bush the allegiance of the United Steelworkers of America, the industry's largest union and one the White House had hoped to win over. In August, the union endorsed Rep. Richard A. Gephardt (Mo.) for president and issued a statement saying any of the Democratic candidates would offer better than "the reactionary policies of the current administration."

Perhaps worse for Bush, the tariffs alienated thousands of small businessmen who run steel-consuming companies. "He didn't win the steelworkers over, and he sure as hell didn't win the users over, and there are a hell of lot more of us," said Jim Zawacki, chief executive of G.R. Spring & Stamping, Inc., a small manufacturer in Grand Rapids, Mich. "A lot of people feel burned," said Mike Lynch, vice president of government affairs at Illinois Tool Works, a large machine tool company outside Chicago.

Political divisions over the tariffs remain fierce, even within the GOP. Sen. Arlen Specter (Pa.), who talked to Bush about the issue this week, contends the tariffs "are saving thousand of jobs in the steel industry, and you had a steel industry headed for more bankruptcies."

Sen. Lamar Alexander (Tenn.), however, insists the tariffs have "shifted more steel-consuming jobs overseas than exist in the steel-producing industry in the United States," causing thousands of layoffs and closing the doors of hundreds of small businesses that supply automakers in Tennessee, a state that Bush won by just 4 percentage points and is counting on for his reelection.

But among Bush's economic team, opposition to the tariffs has hardened substantially. Administration officials said Commerce Secretary Donald L. Evans, one of Bush's closest friends, thinks the tariffs should be lifted as a way of showing that the administration has heard the pain of manufacturers, who account for 2.5 million of the more than 2.7 million jobs lost during Bush's presidency. Treasury Secretary John W. Snow, chief economic adviser Stephen Friedman and N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, are said to agree.

That marks a significant change from 18 months ago, when R. Glenn Hubbard, then chairman of Bush's Council of Economic Advisers, drafted detailed analyses against the tariffs, including state-by-state job losses that he forecast for manufacturing.

But the economic team was fractured. Evans was torn between the steel industries and the steel users. He ultimately decided against the tariffs, but with caveats that the White House political team took as a sign of weakness, former administration economic officials say. Likewise, then-Treasury Secretary Paul H. O'Neill expressed philosophical opposition to tariffs, but he was more interested in opening talks with allies on limiting steel production capacity abroad.

At a crucial meeting of the economic team, tariff opponents said they were abandoned. O'Neill sent his undersecretary for international affairs, John Taylor. Then-Budget Director Mitchell E. Daniels Jr. told Hubbard, who also has since left the administration, that he would back him, but left the meeting before Hubbard's presentation. And Lawrence Lindsey, the famously opinionated chairman of the White House National Economic Council, decided his role was to facilitate the discussion, not express an opinion.

Perhaps most importantly, former Bush economic advisers said, Robert B. Zoellick, the U.S. trade representative, supported the tariffs, figuring that backing them would win congressional votes to give Bush "fast track" trade negotiation powers. Indeed, Congress did hand the president that win. Zoellick also calculated that the lucrative subsidies backed by Bush that year in the massive farm bill would help the cause of free trade, by giving the United States a chip to bargain with at the World Trade Organization's upcoming round of talks to eliminate farm subsidies.

But, trade experts say, Zoellick's calculations have had mixed results. "Fast track" trade powers have allowed Bush to conclude free trade agreements with Chile and Singapore, but those have yet to show results in terms of jobs. And last week, WTO trade talks in Mexico fell apart after poor countries concluded the United States and other Western nations were not serious about cutting farm subsidies.

The strategizing was "too clever by half," Bartlett, the economist, said. "It presupposed that nobody was watching what we were doing, and it presupposed that our credibility was of no importance."

Posted by DeLong at September 22, 2003 09:23 AM | TrackBack

Comments

This is an excellent post. The best, clearest example yet of "he said, she said" disease among journalists.

Thanks!

Posted by: A-ro on September 22, 2003 12:08 PM

The Silence Is Golden

>"...There is no fierce debate. There is no debate..."

One word, Brad: "Camden"

>Camden, New Jersey

city (1990 pop. 87,492), seat of Camden co., W N.J., a port of entry on the Delaware River opposite Philadelphia, settled 1681, inc. 1828. The arrival of the Camden and Amboy RR in 1834 spurred the city's growth as a commercial, shipbuilding, and manufacturing center.

>In 1858, Richard Esterbrook opened a steel-pen factory, and the Campbell canned-foods company originated in 1869. However many of the city's largest industries, such as steel, chemicals, and oil, have declined significantly. The weakened industries left Camden with great amounts of air pollution, high unemployment, and urban decay that has led to widespread poverty and crime.

Of interest are Walt Whitman's home, the Campbell Museum, and the county historical society's museum in Charles S. Boyer Memorial Hall (formerly the Joseph Cooper house; built 1726). Access to Philadelphia is via the Walt Whitman Bridge (1957) and the Benjamin Franklin Bridge (1926). Rutgers Univ. at Camden is there.

http://www.slider.com/enc/9000/Camden_New_Jersey.htm

Okay, I lied. Make it TWO words: "St. Louis"

>As Clinton visit approaches, East St. Louis looks for economic boost

"...Like the factories and retail stores that left this blue-collar town in the 1960s, residents with marketable job skills also have fled East St. Louis, leaving thousands who want to work but have little to offer in the job market.

>Their plight and the city's floundering economic fortunes have made East St. Louis a case study in urban decay. At a time when national economic indicators show that wages are increasing, welfare rolls are shrinking and the unemployment rate stands at a 29-year low of 4.2 percent, areas such as East St. Louis have seen only minimal benefits from the nation's sustained prosperity.

>Indeed, while President Clinton has touted the booming economy as one of the prime legacies of his administration, the nation's poverty rate has not changed much since 1990. Today, President Clinton begins a tour that will take him across the country, accompanied by cabinet officials, members of Congress and corporate executives. They will call attention to these pockets of poverty that the administration calls "economic flat-liners." The tour stops in East St. Louis on Tuesday.

>Later this month, Clinton will offer legislation for new tax incentives to encourage corporate investment in poor, underserved communities. Under Clinton's "New Markets" initiative, businesses that invest in troubled areas would receive the same tax credits and loan guarantees now offered to those who invest in emerging economies overseas.

>The Clinton delegation begins a four-day tour today in rural Kentucky, the heart of the Appalachian region. Over the next three days, the group will visit the Mississippi Delta region, East St. Louis, a poor Hispanic neighborhood in south Phoenix, poor areas of Los Angeles and the Pine Ridge Indian Reservation in South Dakota...."

http://www.kcstar.com/item/pages/printer.pat,local/3773aa0f.704,.html

Walmart.

Posted by: Mike on September 22, 2003 12:25 PM

"Balanced journalism" presumes that every story must have two sides, and *only* two sides.

"Propagandistic journalism" (and you know who you are) presumes that there is only one legitimate "side." Any other purported "side" must be mentioned only to be ridiculed.

Neither "journalism" cares much about truth or accuracy.

These days, only human interest stories have anything to do with the real world.

Posted by: Altoid on September 22, 2003 12:36 PM
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