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Trade and Foreign Policy [Rush Transcript; Federal News Service, Inc.]

Speaker: Roy Blunt, U.S. Representative from Missouri (R)
July 14, 2008
Council on Foreign Relations

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MODERATOR:  We're very fortunate to have, with us this afternoon, Congressman Blunt, who has been in the Congress since 1997, who has had a distinguished career in the Congress as the Republican whip and, in that important position, has responsibility, as you know, for garnering votes and for knowing where the votes are, on all key issues.

He has had a distinguished career in the Congress.  You have a brief bio with you, so I won't go through his record in any detail.  But in addition to his career in the Congress, he also served as a university president and has produced four children, including one of whom is the distinguished governor of Missouri, who we have been reading a lot about recently.

Our game plan today is to invite Congressman Blunt to give a few remarks on trade.  And then we'll have a brief discussion and open it up for questions.  So please join me in welcoming Congressman Blunt.  (Applause.)

REPRESENTATIVE ROY BLUNT (R-MO):  Thank you and I'm pleased to be here.

I at one point had hoped that Harold Ford, my colleague in the Congress, was going to be here as well.  I think he had a death in the family and wasn't able to be here because of that.

But Harold and I worked together on a couple of things, principally the Charitable Giving Act, that we were the principal sponsors of, most of which has lapsed as of the first of this year, but all of which deserves to be reinstated.  And I hope that happens.

Somebody, the other day, introduced me as the second most powerful Republican in the Congress which, I immediately said, well, that's sort of like being the second tallest midget in the room, you know?  It's not what it once was.  (Laughter.)

I'm glad to be here with John Brademas, former whip of the House.  And I never got to serve with John but I've heard lots of great things about him.  I'm honored, that he would be here today, and that Richard would be back from Ukraine.

You know, Washington, D.C. is where they say the pundits commit suicide by diving from their egos to their IQs.  (Laughter.)  And probably never a year that was more proof of that than this year.  Trying to anticipate what was going to happen politically this year has been pretty hard to do.  And I'm not going to do that.

I am going to talk a little bit.  I'd be glad to do that, if you want to talk about that later.  I want to talk a little bit about trade and the real challenges that trade faces now.  And I know I'm doing that in a room where a lot of people think about this every day, more than I get to.  And I'll be glad to hear your comments later.

Certainly in the presidential campaign, we've had everything from John McCain going to Canada during a NAFTA discussion to going to Colombia, I assume, not anticipating he would be down there for the release of the hostages.  But if he is that well connected, that's a good thing for me to know.

But the trade discussion on the other side has been pretty amazing.  And I think it says a lot, about where the polling is, and where the country must be at this moment on trade.

In what The Washington Post labeled a unilateral threat to withdraw from the pact, from the NAFTA pact, Obama said, I think we should use the hammer of potential opt-out as leverage.  He also called NAFTA a bad trade deal.  He's called it devastating and he's called it other things as well.

Mrs. Clinton said, I was against NAFTA from the very beginning.  And maybe she was.  I mean, that would have all been inside the White House.  Her husband certainly wasn't against NAFTA, or it wouldn't have happened.  And I want to go to that here pretty quickly.

In fact, let me just remind everybody in this room that prior to World War II, it was the Democrats in the country who were pro-trade.  And with great consistency, most of the Republicans were against trade.

I've been talking about energy lately saying, in the 12 years I've been in the Congress, 90 percent of the Republicans have always been for more supply.  And 90 percent of the Democrats have always been for less supply in the last 12 years.

Some number like that, I suspect, would relate to trade before World War II.  I'm sure you could find a Republican here and there that was pro-trade.  But clearly the Republican Party position had been on the other side, sort of culminating in the Smoot-Hawley Tariff.

And Jim Symington, a good friend of John Brademas and mine, was talking to me about it.  This is my only Smoot-Hawley story that I have.  Mr. Smoot was the first Mormon elected to the Senate.  And there was some great consternation about this.

And finally somebody, and I believe it may have been Senator Borah, according to Jim Symington, said that, well, it was all about the issue of polygamy of course.  And not that Reed Smoot was a polygamist, because he wasn't.

But I think Senator Borah said, well, I'd rather serve with a polygamist who doesn't polyg as a monogamist who doesn't monog.  (Laughter.)  And that was the telling point.  From then on, I guess, Reed Smoot was accepted, as was his tariff.

Eisenhower was the first Republican president to be pro-trade.  And that was after a pretty vigorous primary fight, with the Taft and essentially anti-trade wing of the party.

But from Eisenhower on and particularly starting with President Kennedy, you had presidents who were always pro-trade and generally pro-trade in the Cold War context, that trade was the way to open the doors of the world and bring people into our sphere of influence, as opposed to somebody else's sphere of influence.

With the rise of the Internet, with YouTube, with concerns about globalization however and with the labor unions prioritizing trade as an issue, in ways that they didn't do in the past, it wasn't -- I don't think labor unions were ever particularly pro-trade.  But they had such bigger fish to fry.

They had so many other things to worry about and more gains to make than worrying about trade.  In fact, I think, if you really got down to it, generally unions in a post-World War II environment saw trade as more markets for American goods, though they never wanted to talk about that.  This was opening markets to our goods rather than the other way around.

Globalization, the big concern about globalization:  We had Gordon Brown in, right after he became the new prime minister in Great Britain, who was very aggressively pro-trade in his comments, with the Democrat and Republican leaders from the House, around a little table in the speaker's conference room.

And the most memorable thing he said was, as he was serving as chancellor of the Exchequer, he went to one of these world trade forums and he walked outside.  And somebody was holding this big banner that said Worldwide Coalition against Globalization.  (Laughter.)

See how much dinner you had.  It takes a while to think that was either funny.  Or surely if you didn't think it was funny, you at least thought it was ironic.

How did we get here on trade?  Again as a global leader, the United States played the leading role in establishing the IMF and GATT.  The lure of our markets, the rapid economic growth that they had really tended to draw the smaller countries of the world into our sphere of influence, as opposed to the Soviet sphere.  And the combination of personal freedom and economic freedom eventually overwhelmed the USSR.

Multilateral negotiations were completed and implemented by Congress in 1946, 1967, 1979 and 1994.  And let me just mention here, all those years -- '46, '67, '79 and '94 -- there was a Democrat in the White House that saw that those things happened.

Our trade ambassador, Susan Schwab, leaves for Geneva next week to try and wrap up the Doha Round.  But if they wrap up the Doha Round, we have no trade promotion authority to advance whatever agreements would be made between now and the end of the year.  And we can come back to that, if you want to.

Where this battle really counts, at least at this moment, has been in the House of Representatives.  The Senate has been able to maintain a pro-trade view of the world.  The House is increasingly difficult for us to get there.

Clearly the protectionist views that have been expressed in the primary, principally by Senator Clinton and Senator Obama, they wouldn't be saying those things if they didn't think they'd resonate in the country.  And they're clearly not the things that President Clinton was saying, 10 years ago or 15 years ago.

Between 1974, when modern trade protection authority was first established by Congress, and 1998, when the effort to renew TPA failed, the average vote in the House on trade votes was a little bit over 80 percent.  Between '74 and '98, average trade bill would come to the House floor, the average vote was about -- was over 80 percent.  In the ten years since 1998, the average vote has been a little less than 60 percent.

Today's Democratic leadership in the House moves substantially away from the pro-trade consensus that exists in the country.  Now, let me go through just a series of other votes here pretty quickly with you to make my point that the House has become increasingly challenged in this regard and that Democrats have had a hard time meeting the goals of their constituency, and particularly labor and the environment, that is, again, one of the factors that led to that decline.

In 1993, when the House passed NAFTA, obviously joining President Clinton to support it, the people that voted for NAFTA included Tom Foley; Nancy Pelosi, the current speaker; the current majority leader, Steny Hoyer; the current head of the Foreign Affairs Committee, Howard Berman; Anna Eshoo; Sam Farr; Jay Inslee; Ed Markey, none of whom voted for CAFTA.

People who have gone over to the Senate side who no longer are pro-trade who voted for NAFTA would be the assistant majority leader, or the majority whip, whatever they call themselves now on the Senate side, Dick Durbin; Maria Cantwell, Ron Wyden all voted for NAFTA.  Even Pat Schroeder and Dan Rostenkowski voted for NAFTA.  And again, the time you got to CAFTA, a few years later, they weren't there.

But 40 percent of Democrats voted for NAFTA; 35 percent of Democrats voted in 2000 to have permanent normal trade relations with China; 12 percent of Democrats in 2002 voted to extend or to return to trade promotion authority, 12 percent of the Democrats, 25 of them.  So you had 40 percent voting for NAFTA, by 2002 -- again, these aren't exactly the same boat, but they're analogous enough of a trend about trade, I think they matter -- 12 percent.  In 2005, when we finally put together a coalition for CAFTA, the five Central American countries plus the Dominican Republic, only 15 Democrats voted yes.  That's 7 percent of the caucus.

And just a few weeks ago, whenever the majority decided to turn off the clock on Colombia, a procedure that never had been thought about as a possibility before with TPA, only 4 percent -- that's 10 percent (sic) of the Democrats -- voted not to turn the clock off.  Four percent of the Democrats voted to go ahead and have that vote.

Colombia, for reasons, again, we can discuss later if you want to, I think is likely to be the most important foreign policy vote for this hemisphere in the next decade.  And a rejection of that makes no sense on economic terms, because, remember, we let all the Colombian products come in now under the Andean agreement.  There'd be much more intellectual purity here if you voted against the Andean agreement and then said you're also opposed to the Colombian trade agreement.  To say you're for letting Colombian goods come in here but against letting our goods there because of environmental and labor reasons makes no sense at all, and it's a huge foreign policy decision.

But at this point, that'd bring this very much in limbo.  It could happen after the election, but I think there are more reasons to believe it's not likely to happen after the election.

And all this is happening at a time when exports are becoming an even greater driving engine to our economy.  The prosperity that we have right now, the brightest spot in our economy, is the export part of our economy.  As a percentage of GDP, we're at a 10-year low in the trade deficit, if you take oil out.  Our trade deficit's only about $250 billion without oil.  It's about $600 billion higher than that with oil, but if you take oil out, this is a pretty -- this is a time when trade appears to be headed very much in the right direction.

Framework for trade has changed some.  In May of last year, the Democrat leaders -- I went to the press conference with them.  They'd worked particularly with the secretary of the Treasury and they announced that they had a way to move forward on trade.  We just needed to do things on labor and the environment and some health care issues and we'd be able to move forward.  The outstanding agreements at the time -- Peru, Colombia, Panama and South Korea -- were all modified to meet that new way forward on trade.  And only Peru has gone to the House floor.  And when it did go to the House floor, it took not -- a majority of the Democrats voted against it.

As Democrats have been less willing to vote for trade, it's been harder and harder for us to do our part, because we do have Republicans from particularly textile areas -- though there are fewer textile areas all the time, but there's still a textile area of culture where, you know, these things that take the last remnants of that part of our economy away are very hard in the Carolinas and other places.  And we have significant manufacturing -- it's hard for those Republicans to be for trade, but it's hard to pass trade bills now without almost all the Republicans voting for it.

When the CAFTA issue was voted on -- 75 percent of House Republicans

voted for NAFTA, but it took 90 percent of the House Republicans to pass CAFTA by two votes.  And frankly, we just can't sustain -- in an environment where both of the presidential candidates on the other side are out there attacking the most difficult to attack trade agreement, you can't sustain those 90 percent numbers with just Republicans, so we've got to figure out some way to get beyond that.

The Oman trade agreement in 2006 actually had more labor and more environmental protections that the Bahrain trade agreement the year before.  Bahrain passed easily; Oman barely passed.  It was something like 222 to 200 it was passing.

Now, let me get quickly to the end here.  How did we get there?  I think about three major things have happened that have really shifted this balance:  More -- one is that Americans for many reasons are feeling more economic insecurity.  Two is when President Bush went to the White House, it became much easier for Democrats to oppose Bush-negotiated agreements than it did Clinton-negotiated agreements.  And three -- why am I saying just Clinton instead of all the Democrat presidents since World War II?  Three, the third reason is the Cold War, I think, was a huge motivator in keeping us all together on continuing to try to open doors to other countries in the world.

Now, you can make the case -- and many of you do make it and others, I would think, could easily make it -- you would make the case that in today's environment, we'd have an equally big stake in not wanting to radicalize parts of the world because they have a lack of economic opportunity.  But that argument that resonated in the Cold War doesn't seem to resonate now.

Where do we go from there?  There are really a couple of options.  Some people say, well, we should have more multilateral agreements and fewer bilateral agreements, because that would minimize the frequency of the pain of trade votes.  That might be right if you could actually think that it's realistic that you could put together a lot of multilateral agreements.

For whatever reason, Mrs. Clinton talked in her campaign about the U.S. taking a "time out" on trade.  And that may be the one thing in her campaign that has absolutely been successful.  Whether we intend to or not, we're taking a time out on trade, and nobody else agrees with that.

So the other countries in the world are out there aggressively doing what we're not.  Canada and Colombia just concluded a bilateral trade agreement.  While we're dithering about that Colombian agreement, they're opening up that market.  China is aggressively pursuing bilateral trade agreements all over the world.  The European Union's likely to conclude a South Korea agreement in the very near future.  And of course, of all the agreements I've mentioned that are still outstanding -- Panama, Colombia and South Korea -- South Korea's the one that has the huge economic potential, as the 9th or 10th largest economy in the world.

Allowing other nations to overwhelm us in this area is a bad idea.  We could easily have a robust trade protection, trade adjustment act this year, but whatever is the case, those of us who believe that the country benefits from trade have to get as vigorously into this fight as the other side, the labor and environmental side that somehow thinks that labor and environmental issues are going to be better solved in other countries without these agreements.  And so hopefully we can get into that fight.  And as it is in so many ways, this forum can be a great forum for that, and I'm glad to be here with you today.

So thank you all.  (Applause.)

MODERATOR:  Thank you very much.

Let me start by asking you a couple of questions about one of these important points you made.  We have three pending bilaterals, and we have the Doha multilateral round with a ministerial meeting next week and a full-court press by this administration to try and conclude it this year.  If they were able to fashion a package, can you imagine in the current environment that the Congress could engage with that package constructively?  And is there a difference somehow between the multilateral versus the bilateral in the politics of trade?

BLUNT:  I think agricultural trade is particularly impacted or can be by Doha.  It's hugely -- it's a hugely important part of the economy right now.  I don't know that it would happen, but my view is that there is some likelihood that you could get a TPA extension just for the implementation of whatever could be negotiated post-Doha.  If you have that agreement reached, have whatever it takes to then finalize that, I think you could probably have a TPA exclusive that would allow a set of Doha agreements to be put in place, if they can be achieved.

And Ambassador Schwab was by to see Brian Diffell, who's on my staff here, in the middle of the room, and I -- a couple of weeks ago, with some optimism about Doha.  And I hope it was well-founded.

MODERATOR:  So there is -- you can imagine an environment where some crafting of a bipartisan core could be achievable with the right package.  Is that a fair interpretation?

BLUNT:  I think -- that's my belief, though frankly that's tempered -- my belief that could happen is tempered a little bit by all the concern about domestic food cost and grain prices now.  If we'd had this discussion five months ago, I'd say, you know, one -- it's a great opportunity for us.  Everybody realizes we can really be -- we can really dominate this world agricultural trade economy, and why wouldn't we want to?

But that was several price adjustments ago.  Those price adjustments very well relate more to energy than they do any other single issue, certainly than they do to ethanol.

But to try to convince people that -- it's a little more complicated than it was but, I think, still possible.  And I would think that Chairman Rangel would want to -- my bet is that he would initially, at least, until persuaded otherwise, be on the side of a PPA (sic) extension to Doha.

MODERATOR:  And that means that Doha would be subject to an up-or-down vote.

BLUNT:  Yes, as opposed to an amendment.  That's really the big difference.  As you all know, in trade promotion authority, not only does the House have a role as well as the Senate, but it's an up-or-down vote role, rather than an amendment role.  Nobody wants to negotiate an agreement that had -- that can be amended in the United States Senate.  And whenever we don't have trade promotion authority, we have no agreements.  And when we do have, we have significant interest in countries wanting to make agreements, obviously to open this huge market to them, just a sliver -- it's like the Andean countries.  Just a slight opportunity to get into this big market is worth eliminating the one-way advantage you now have, because it becomes permanent, it's kind of a take it to the -- "you can take it to the bank" relationship, because suddenly you had a permanent long-term agreement, rather than just an agreement where you send all of your things into our country.

We had a little bit of a hard time on CAFTA, the similar situation, explaining to our members.  Well, if this is everything you say, why would the CAFTA countries even want to have this new agreement?  You're saying that their -- our market's largely already open to them.

And so, you know, this is a -- this is -- to get access to our market, to have a permanent relationship with the United States and permanent access to that market is worth taking a risk for, for countries like the CAFTA countries or like Colombia -- or certainly, once you get Panama, you've really linked up the entire hemisphere from tip to tip -- is -- in the hemisphere, we don't have a trading relationship with everybody in it, but we have trading relationship from the bottom of Chile to the top of Canada.

MODERATOR:  Congressman, you made the point that trade is a reflection of anxiety in the country about economic well-being, broadly -- I think that was your suggestion -- that it becomes the proxy for worries in society about their future.  Is there a way, in your thinking, of addressing adjustment assistance, separating it somehow from trade as such, that would help get at this problem?  In other words, is -- you know, if trade is the proxy for economic worries broadly, how does one address that problem without addressing trade as such?  Or is there a way of doing that?

BLUNT:  I'm not sure there is a way of doing that.  And part of the reason there may not be a way of doing that is in most of the country the trade story is always told from the point of view of the losers rather than the winners.

You know, if you live where I do in the middle of the country, in Missouri, the trade story's always about -- I would say shoe factories, but I don't remember the last shoe factory that closed; that was probably about 20 years ago.  I don't remember which factory it was.  You know, at one time Missouri was a huge shoe manufacturer, and then we were a huge apparel manufacturer.  And the story's always about the hundred-year-old pants factory that's about to close, and then it closes -- you know, six months of that.  Then it closes and then six months of the story of what happened to the people who had worked there for 38 years and suddenly are out of a job.  And their skill was at a sewing machine, or wherever, whatever they did in the factory.  And that's the story that's told, you know, that -- about that 82 jobs.

During that same period of time, you don't hear the story of the 3(00) or 400 jobs that were added, two or three or 10 at a time, because of the positive side of trade.

And in fact, just to see if we could do this, a few years ago I brought Bob Zoellick into my district in southwest Missouri -- Springfield, Joplin, Branson, the very southwest corner of our state.  And we spent a couple of days just at locations that were really doing a lot of business in the international marketplace, to see if it was possible to come up with a strategy to achieve positive trade press.  And we did, and both on radio and television.  I shared it with my colleagues.  I think almost none of them tried to repeat it.  And Zoellick and his crew are willing to go anywhere to do this again.

But frankly, it's like on these trade votes, there are very few members of Congress that are going home and, even if they know it's absolutely the right thing to do, are going home and bragging about the trade vote.

So figuring out how to tell the story better, and on trade assistance -- whatever you do on trade assistance probably needs to be linked up with getting some substantial pro-trade thing done at the same time.  There's no reason to toss that away and then later, when you need it as a tool to get more TPA or to do get a Colombia agreement or whatever, to have to have that tool out of your toolbox.

MODERATOR:  It's always part of the package.

BLUNT:  Right.

MODERATOR:  Well, thank you very much.

With this, let me invite questions.  There will be a mike circulating.  If you could wait for it and please identify yourself and ask a brief question --

BLUNT:  The mike's on the way.

MODERATOR:  Right behind Jonathan.

BLUNT:  About to get to you, John.

QUESTIONER:  Thank you.  John Brademas, 3rd District, Indiana.

BLUNT:  (Chuckles.)  Former majority whip of the House.

QUESTIONER:  That's right.  You and I had converging lives, in one sense.  You were a university president, then became a congressman and the whip.  I was a member of Congress and the whip and then became a university president.

I hope it doesn't upset you, Roy, if I tell you that basically I agree with your analysis.  (Laughter.)

I would like to hear from you a little more on a matter you did not discuss:  your charitable giving expansion act.  Just what does that do?

I finally would say that I wish you well and hope you continue as minority whip.  (Laughter.)

BLUNT:  (Laughs.)  I understand.  I say one of my best friends in the House is Steny Hoyer, who's the majority whip (sic; leader), and when he was the minority whip and I was the majority whip, we'd go places and do things together.  And I'd say now, you know, the majority whip's job is to go to the floor every day and win, and the minority whip's job is to go to the floor every day and lose, and Steny is excellent at his job.  (Laughter.)  That's not nearly -- it's not nearly as funny as it used to be -- (laughter) -- whenever I have to tell it the other way.

The Charitable Giving Act that Harold Ford and I did together was sort of the last -- was the victim of the system of the houses working together falling apart.  I think it was late 2003 that we passed that bill out of the House and that was about the same time that the Senate decided we're not going to have any more conferences unless the Republicans and Democrats in the Senate agree on the outcome before we go to conference.  And so we never got that bill to conference, but we got a lot of it in the tax bill the next year.

And probably of the -- it was a variety of things; probably the biggest one was being able to give out of your IRA without negative tax consequences -- huge negative tax consequences to giving out of your IRA.  We wanted -- I wanted to make it you could give out of it any time you wanted to after 59 and a half at no limit.  We finally got it to where it was $100,000 a year after you were -- after you were 70, after your mandatory having to draw out of your IRA for --

QUESTIONER:  (Off mike.)

BLUNT:  It only lasted for two years.  That's right.  And now it's --

QUESTIONER:  (Off mike.)  (Laughter.)

BLUNT:  Well, Richard knows what a good thing it is.  And he's right.  And it was a huge hit on my college president friends, John, were just -- this wanted -- access to this particular pool of money is a huge opportunity for charitable causes, from a council to college campuses to Habitat for Humanity or your local hospital, it was a great thing.

On one of the tax bills -- and there have been 25 tax votes in this Congress so far that Charlie Rangel's put out there -- restoring that part of the Charitable Giving Act has been part of it.  I think we got a piece of the Charitable Giving Act back in the farm bill, to encourage both prepared and other food donations to food efforts.

But it was very broad-based.  We had what we thought would be a really popular idea in there that never got fire, but it was always good to talk about, where you'd let non-itemizers deduct a certain amount of their charitable giving.  You know, as it turns out now, the guy that doesn't itemize and lives on a block where nobody else itemizes and gives 10 percent to his church every week or her church every week gets no more credit for that in the standard deduction than the people on either side of him that never gave a penny to anybody.  And that was one other element of a broad base of elements.  But the biggest potential component for charities was probably the IRA without penalty donation.

MODERATOR:  We have a question here.

QUESTIONER:  David Halleneck (sp).  Testing your powers of prediction, you know, you have cited each of the Democratic presidential candidates -- and now there's one -- in their concern and cautiousness about trade or, in the worst case, being opposed to free trade.  Senator Obama is a very curious case:  One, because the Canadians tell us that he may be a free-trade advocate and we don't know whether that's true or not; but two, he's about to embark on a European trip which is likely to draw crowds even bigger than Mile High Stadium.  And one would expect that that might have a favorable impact in the way he looks at trade.  Do you have any thoughts on that?

BLUNT:  No, I really can't predict what's going to happen there.  I would like to think, at the very least, if Democrats are successful and Senator Obama becomes the president, that we'd take advantage of this post-election opportunity to at least clear the decks of these three trade bills that are out there.  They're all significant for us, Korea in a big economic sense, Colombia in a -- particularly in a foreign policy sense, and Panama because there's just no reason to have free trade opportunities on all sides of Panama and leave this good friend of our country alone.

I don't quite know how he gets back there if he's elected president, but I hope he finds a way to do that if he is.  And I frankly think -- I believe the polling on this is verified by what both Senator Obama and Senator Clinton said.  And for Senator McCain to so overtly be out there on the trade side of this doesn't appear to me to be very political, but it's certainly where I am on the issue.  But if I was him, I'm not sure I'd be trying to fly that flag quite as high right now as he is.

QUESTIONER:  Thank you.

MODERATOR:  You had --

QUESTIONER:  Hi.  Jonathan Chanis (sp).  You mentioned ethanol before.  Do you have any expectations that things could change next year?  I mean, the administration's under a lot of pressure.  First it came out and said this 3 percent of food inflation is from ethanol, and then it said it's 10 percent and now there's people saying it might be as much as 25 percent.  Any changes next year on ethanol policy?

BLUNT:  On ethanol policy, there are -- there are lots of figures out there.  I tend to believe -- I'm interested in the ag issues always, and I tend to believe that the number of ethanol impact on food is at the low side, because you've got to factor in -- immediately you've got to factor in, without MTVEs, which nobody should be for, as an additive -- what happens if you take all that ethanol away from the gas pumps?  Even a few million gallons of it makes a difference.  But it does make some impact.

I think you've got to look at the long-term numbers, which are way too big, and very dependent on cellulosic ethanol.  And I don't think we can get there that quickly.  And that would relieve some pressure.

A lot of this is what people think is going to happen.  You know, just like two or three weeks ago -- and there's probably some people who -- there have got to be people here who understand the commodities markets generally better than I do, but two or three weeks ago the corn acreage number came out.  It was much higher than anybody thought.  It was at the end of the week and they actually had to stop trading.  They quit trading that day because corn prices, futures prices were going down so quickly.  And that's not on a -- that's without a single ear of corn harvested yet.  It's just the anticipation of what can happen.

But I think you have to look at the long-term numbers.  I think the current number is not going to be reduced, though I think it -- my guess is it doesn't go up as quickly as legislation would now require.  And, you know, remember, McCain's the guy who went to Iowa and said he was against all of this ethanol stuff as a mandate, as a government mandate.  And I don't believe that's the Obama position.  So probably it's a bigger fight to get the -- with McCain as president, to get them down, than it is with Obama as president.

MODERATOR:  Thank you.  I think there's a question over here.

Yes.  (Name inaudible.)

QUESTIONER:  (Name inaudible.)  Senator -- Congressman, you have --

BLUNT:  My answers would be a whole lot longer if I -- (laughs, laughter) --

QUESTIONER:  (Laughs.)  Indeed.  Coming back to Doha round, since we're facing the ministerial, shortly.  Even if we succeeded domestically to somehow pull things together, there's still the countries like Brazil and India that we, in a way, failed to convince that they should adhere to some of the basic ideas of the agreement.  Do you think, from your standpoint, in your contract, that that still can be done?  Or is it -- no matter what we do, it's not going to take place?

BLUNT:  You know, you may understand this better than I do.  My sense of this is that the bigger issue in Doha is not the underdeveloped countries adhering, but working out the subsidy issue between us and the EU.  And I think if we do that -- both the EU and the United States have a reason to work these subsidy issues out.

You know, the marketplace is just too big now for us not to want to get to it in every way we can.  You know, dairy use has always been a big impediment to all our negotiating, but we're like the number three dairy exporting country in the world right now, which was not -- you know, that's a huge change in where we are there.  My friends who run the railroads tell me that the railroad cars are full of two things going west:  soft coal, to work -- you know, they bring the hard coal this way and we burn it, and then they send the soft coal to the West Coast and ship it to China -- and grain, to go to China and India.

And so it's a big marketplace.  The subsidy issue's what needs to be worked out.  I think we should be willing to work that out.  And I hope that our friends in the EU are as well.  But they may not.  That's really -- that's been a problem the whole time.  And it -- I'd like to think that this finally works, but there's more reason to believe it won't work than there is to believe that it will, based on all past experience.  But I think it's largely an EU-U.S. issue on Doha.

MODERATOR:  Okay.

QUESTIONER:  Herbert Levin (sp).  Thank you, Congressman.  Some years ago, a couple of wooden clothespin factories closed in northern Maine:  one -- the fact that the machinery went across the border to Quebec; the other one, it went down to northern Mississippi.  The people who worked in the one got trade adjustment assistance, because it had gone abroad and the other got nothing because it had gone to Mississippi.  I wonder if there's some way of handling the alleged impact -- or not alleged, the real impact, negative impact on some people of trade isn't -- they get rid of this, and to broaden programs for people who lose their jobs, who need retraining, who need assistance to move where there are jobs and get rid of having to prove that it went to Canada rather than Mississippi.

Now, the Republicans, traditionally, have not liked that kind of a program.  But I wonder if this is not an area that couldn't solve some problems and get some union support.

BLUNT:  Well, it may.  And whatever we do on TAA, even though I probably would vote for it, particularly as some kind of a package and understanding that we're expanding our opportunities, I frankly won't like a lot of it.  I mean, I think we're willing to go places that we don't think we need to go here.

That example is actually a good example of where I think this becomes troublesome because then you start rewarding states who have a job-creation environment that is not what it should be.  In the five years before Matt Blunt became governor Missouri four years ago, we lost more jobs per capita than any other state, and we lost almost all of them to other states, not to foreign countries -- almost all of them.  And all we had to do to turn that around was send the message that you're not going to increase taxes, you're going to do the right things with worker's compensation, tort reform and invest in education, and it did.

So what you don't want to do is have an environment that encourages states to make bad decisions about job creation.  Now, I don't want to debate about why Mississippi is a preferable place to do business than Maine.  Though actually, the factories -- Mississippi was probably more a foreign location than Canada would have been in terms of every factor you'd think about.  But you just got to be careful there.

I'm willing to have that discussion, willing to be part of that discussion.  But what I don't want to do is create a discussion that rewards states for making decisions that drive jobs out rather than encouraging states to make decisions that bring jobs in.

MODERATOR:  Thank you.

I see in the far back, please.

QUESTIONER:  (Off mike.)  Gordon Bell.  (Inaudible) -- portfolio manager, so I'm a lowly capitalist.

Thank you, by the way -- (inaudible).

BLUNT:  Exactly, exactly.

QUESTIONER:  I've noticed, as a capitalist, there have been a number of --

BLUNT:  I'm wearing black shoes now instead of brown shoes.  (Laughter.)  But the brown shoe company was a huge Missouri company for generations.  That's exactly right.

QUESTIONER:  Due partly as (strategic ?) -- (inaudible) -- important reasons that you have to put an army out there, you got to have (shoes ?) available.

I notice that China -- (inaudible).  They've cut all kinds of deals to get raw materials.  I've noticed that -- (inaudible) -- included a number of copper agreements with Brazil -- (inaudible).  I'm curious if we've lost some ground strategically over time -- (inaudible) -- and what we intend to do about it because I think we need to have, as a strong nation (looking from the point of our country ?), strategic trade agreements with individual situations for a longer term, not thinking short term or one party or one term but 20-year type of (agreement ?).  I think those are -- (inaudible).

BLUNT:  Right, right.  Well, our permanent agreements -- our permanent agreements, either one -- and you know, I'm the Republican whip in the house, so obviously I'm not a person without partisan leanings or partisan interests.  But I hope my discussion today was no more excessively partisan than it needed to be.  The point is that Republicans have done about as much as they can possibly do here.  I'm not sure we can grow our boat on these trade issues beyond where it is.

Unless we figure out a way, and TAA is one way to do it, unless we figure out ways to work with the other side and create an environment where they can be comfortable with some trade votes, too, we're not going to open up those same kind of opportunities that China, as an example, is aggressively working to operate.

And I'd go back to my other statement I think I made in passing that while the Cold War seemed to be a huge motivator for both sides to get out there and expand the American footprint and contact with the world, the current opportunity to impact our potential adversaries and make them potential friends doesn't seem to have nearly the same foreign policy implications that the Cold War did, though I think the end result could be every bit as dangerous as what could have happened in the Cold War if we had decided that we weren't going to be aggressively out there promoting personal freedom and economic freedom through economic contact.

MODERATOR:  Sir.

QUESTIONER:   Jeff Laurente at the Century Foundation.

Congressman, one of the other dynamics behind the first quarter century after World War II, American enthusiasm for free trade was that the U.S. was the world's economic behemoth that was penetrating everyplace else.  And in the '70s, the tide turned.  And Jimmy Carter in doing the global pact, the GATT pact, was facing the first wind in the contrary direction, factories closing across the Midwest, the sense of unionized workers losing benefits, losing wages.

And since that time, average Americans have perceived a loss of their relative income.  And in fact, income statistics show income drifting up to the top 1 percent.  And that what had been as the cure-all, the silver bullet, more education, since 1980, the percentage of young people going to college has basically topped off a little under 50 percent.

Where to Americans, who are not college educated, in this century look to for being able to get the kind of middle-income lifestyle that they remember their parents having had?  And to what extent do you see trade as having driven down the prospects for that share of our national community?  How do we change that dynamic which seems to be really much part of the kind of negative feeling now that's been growing towards trade?  How do we take care of the bottom half of the skills sector of America's population?

BLUNT:  Well, it's a well-stated question that has a lot of information in it.  I'm not sure I've got that quick an answer for that.  I would say that as we argue for us to successfully be part of a global economy that we have to be adding more value to products.  It's hard to make the argument then that the less-prepared elements of our economy are going to do well.  And the economy, we just argued, has to be our way forward.

Maybe a bigger question there is, do we think globalization is unavoidable or not?  And if we think it's unavoidable, you know, maybe we ought to be doing what we can to be sure that our workforce is better prepared and starting before kids go to school and ending when they make that decision, maybe never ending.

You know, one of the great elements of some of the new education programs is that they're available to you for a long time.  Life-long learning, you know, from before kids start to school, looking for programs that intervene early and make parents part of that partnership to lifelong learning is, frankly, I think, a significant underpinning to how you do hope to relate in a global economy where we can only contend that we succeed in that economy if we're better able to do things than anybody.

I'd also say that, you know, in that regard we've done well in so many areas because we're constantly trying to figure out how you can provide a better service or a better product next week, next month or next year and spend less doing it.  The government is the only place left in America that I know of at all levels that still measures how much they care about something based on how much they spend on it.  Everywhere else in America has either decided to be unsuccessful or figure out how they can do more all the time.  And the measuring stick does not become just the money you invest but the result you get.

And as we prepare that workforce for the future, you've got to be measuring on other yardsticks other than, okay, did we spend x number of dollars more this year.  You've got also to begin to figure out how you measure whether you get better results.  What happens on that (post high ?)?  What happens when you get kids through high school?  How does that number look?  What happens in that post-high school decision-making?

And if fewer people are going to college, what does that say about college?  And what does it say about college plus the alternatives that have been seen as not an equal thing to do?  You know, trade school, mechanics, technicians of all kinds are important tools to a competitive society that does things better than the people we're competing with.

And as long as you believe that globalization is unavoidable, you've got to be realistic about how we're going to compete in that economy.

MODERATOR:  Sir.

QUESTIONER:  Congressman, I appreciate your remarks.

Earlier, you addressed the question of ethanol policy.  Maybe just broadening that, what are the prospects for congressional support, legislation or otherwise, toward energy independence, if any?  Is there likely to be any legislation to encourage this or not?

BLUNT:  I think there will likely be some legislation this year.  I frankly think that we have just put such a fire under our friends on the other side on this that they have to do something.  Now, whether what they do is meaningful or just arguably a step in a direction that proves how wrong we were for 12 years, I don't know.

I think in the next Congress, you're going to look aggressively at the kind of alternatives that become much more doable in the 2005 energy bill -- nuclear, deep-water drilling, better use of drilling resources on public lands, particularly looking at oil and gas shale.  But we need to get there.  At today's prices or half of today's prices, at $70-a-barrel oil instead of 140-some-dollar-a-barrel oil, we have lots of recoverable resources.

You know, every other country in the world looks at its natural resources and sees them as an economic asset.  If you want to think for a minute, if anybody wants to challenge me on that, give me the country and the asset they don't see that way.  Every other country in the world looks at its natural resources and sees them as an economic asset.  We've spent almost a generation now looking at our natural resources and seeing them as an environmental hazard.  And the result of that has got us exactly where we are right now.

There's no country in the world where coastal drilling is possible that doesn't do it except us.  You know, you take the countries that Americans consider among the most sophisticated in the world, if they can drill in the deep water, they all do.  We're the only country that has the kind of coastlines we have that are barred from drilling, and there's no reason for it at all except it was a 30-70 issue until about 24 months ago.  Which if you work in Washington, that's apparently a pretty good reason not to do it.  Thirty percent of the people want to do it, 70 (percent) don't.  Nuclear was a 70-30 issue until a couple of years ago.

And those issues are turning around, and we've got to continue to aggressively push the importance of American supply.  Now, I think there will be something significantly different that powers our economy two generations from now, 40, 50 years from now.  I'm not sure I know what it is, but I'm confident that we ought to be doing everything we can to find that.

And while we're finding it, we should be taking advantage of these resources we have.  Oil shale alone, we have way more than twice of the oil shale capacity in reserve that either Saudi Arabia has in oil or Iran has in oil; way more than twice, and that's arguable.  You can argue that number everywhere from 800 billion barrels, and that's what's available under current technology at anything below about $70, to 4 trillion barrels if you want to see -- (inaudible) -- you know.  And 800 billion barrels is twice the known reserves of Saudi Arabia.

And so we've got to get out there.  There's no reason not to be there.  We've held back too long.  And you know, you all would know this, but if it was a less-sophisticated group, I'd quickly say and, you know, after I made that comment and I said earlier 90 percent of the Republicans in the last 12 years have always been for more supply.  The logical question is, well, why don't we have more supply then?  Didn't you guys have control of everything?

And my answer to that would be we repeatedly sent to the Senate the exact kind of bills we'd like to see go to the Senate today, from nuclear to deep-water drilling to ANWR to refinery sitings.  But they were all unpopular, and it was easy in each of those cases to find 40 senators, after ANWR went to President Clinton the first time, to fine 40 senators or more who would say, we don't want to do that.

But we've got to -- for our own defense, if we're going to make the case that we were always for this, we also have to make the case -- and by the way, we also always did it.  But when they went to the Senate, they went to the Senate and only 30 or 40 percent of the people in the country said, yeah, we agree with that.  And 60 to 70 percent of the people in the country said, no, we don't agree with that.  And amazingly, in a democracy, 70 percent prevailed over and over again, and now we're paying the price for that.

MODERATOR:  I'm going to take the chair's prerogative to ask one last question, if I may, and that is getting back to trade.  Trade is bundled with other issues often, and recently it was a feature of the climate bill where a debate about whether to pursue a cap-and-trade system had in it some feature of whether we would evaluate other countries in their comparability and use that trade aspect as a way of evaluating their imports.  Do you have a view on that?  And how do you see trade bundling with other issues, either constructively or problematically?

BLUNT:  Well, to some extent, we've been willing to bundle trade now with concessions that have been made in the last 20 years on issues like labor and environment, more aggressively so in the last four agreements than any other.  But I think you've got to know what you're talking about if you start drawing those lines.  And I don't have any real reason to believe that the members of the House and the Senate, either one, really understand the impact of that discussion.  And I'd hate to go there only to be surprised by what I find out when I get there.  So you know, there's only so much we're going to do.

You know so much more about China and Japan, particularly China that it affects the world economy today.  You know, to say you're going to do this and then not have thought out what happens afterward is pretty scary.  I saw a cartoon in The New Yorker the other day.  These two cavemen, and this giant rock wheel, is rolling down the hill toward them.  As they're running down, the one guy is saying to the other one, my next invention is going to be brakes.  (Laughter.)

You know, you want to be sure when you're talking about something like cap and trade that you don't start this giant wheel in motion to have no sense of what to do with it once you get it started, okay.

MODERATOR:  The council is very strict on timing, so we must stop here.  But please join me in thanking congressman for joining us today.  (Applause.)

BLUNT:  Thank you all.  Thank you.

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