RICHARD N. HAASS: Well, good afternoon. Welcome to the Council on Foreign Relations. I'm Richard Haass, which I normally am. Today I'm Richard O. Haass. (Scattered laughter.) And I want to wish everyone a happy St. Patrick's Day.
We're pleased to have with us today Richard Trumka, who as you all know, is president of the AFL-CIO. We're especially glad to have him here in the midst of a union conflict that is riveting the nation and threatening a cherished institution. So we will all be looking forward with great anticipation to his comments on the National Football League crisis. (Laughter.) And though as a die-hard Giants fan, perhaps the work -- looming work-stoppage is not the worst of all outcomes.
On the off chance that not all of you is a die-hard -- or are die-hard football fans, there are a number of important and serious and truly critical issues that involve working people in this country, beginning with the fact that so many of them are unemployed. There is a jobs crisis in this country, and I expect we will hear about that. And that's something that affects all Americans, because indeed it's not simply unemployment, it's simply the consequences for our economic growth. I really do believe that it has important consequences for the social fabric of this country of ours.
There's three outstanding trade agreements that have been languishing in the Congress now with Panama, Colombia and South Korea, and the question of what is to become of them. There's the issue of comprehensive immigration reform, something that affects and is affected by the labor movement. And there's obviously the question that has taken up so much of the air time and debate of late in our country about the rights and responsibilities of those who are involved in public-sector unions. And we see it in Wisconsin, we see it in Ohio and we see it indeed in many of our 50 states. So we are not going to lack for things to discuss today if I would predict.
All of this comes at a difficult time for the labor movement. The composition of organized labor is changing. In 1960, say, half a century ago, approximately one in four American workers was a union member. Now it's fallen to about one in eight. The majority of these workers is now in the public sector. I think if my statistics are roughly correct, about one in three public-sector workers is unionized, compared to just one in 15 for the private sector.
So these are -- this is a difficult time for the gentleman we're about to hear from. He does not lack for challenges, I expect, when he puts on his Thom McAns or other American-made shoes in the morning. (Laughter.)
He's not the first leader of the AFL-CIO to be here. John Sweeney joined us several times, most recently about a decade ago. Tom Donahue was also here a few years before that. And before that, Lane Kirkland came to the Council on Foreign Relations.
Mr. Trumka began his career in the coal fields of southwestern Pennsylvania. He earned degrees from Penn State and Villanova before becoming the youngest-ever president of the United Mine Workers and then the youngest-ever secretary-treasurer of the AFL-CIO. Are you the youngest-ever president of the AFL-CIO?
RICHARD TRUMKA: Probably -- probably.
HAASS: Okay. That could be researched. (Laughter.) He did become president in 2009. And we are extremely glad that he is taking time out of his extraordinarily busy schedule to be with us.
One or two housekeeping notes. This meeting is on the record. Your workers are listening. Mr. Trumka's going to speak for 10 or 15 minutes, and then he and I will have a conversation before we open it up for questions.
He comes also at a particularly busy time for this organization in this city. Tomorrow morning we're having a conversation with Peter Orszag and myself about the American budget situation, the deficit, the debt and its consequences for this country's economic but also national security future. And tomorrow at lunchtime we're having a town hall with our experts in New York and Washington on the situation in Japan and its consequences for Japan, for the nuclear power industry and for the regional and global economy. So I would hope as many of you could attend that as you can.
With that, let me turn things over to Richard Trumka. (Applause.)
TRUMKA: Thank you, Richard, and I got to say it's wonderful to be here at the Council on Foreign Relations to talk about some of the important and timely subjects that you talked about earlier -- globalization, about labor.
It seems in Washington the globalization debate, like everything else, is pretty partisan and polarized. You're either a free trader or you're a protectionist, and the two camps don't seem to really speak to one another. Instead of having the same old debate again today, I thought I'd try a new angle. Rather than asking, is globalization good or bad, let's ask instead what it would take for the United States to engage in the global economy in a way that's good for working people, the middle class, for democracy both here in the United States and around the world.
See, we're living at a time when young people all over the world are demanding good jobs, demanding a voice at work and a voice in the decisions that impact their economies. It's no accident that newly triumphant young protesters in Egypt sent pizzas to young union activists in Madison, Wisconsin, last month just as U.S. union members had protested outside the Egyptian embassy days earlier.
Workers and young people look at each other across the world, and they see the same goals. They see the same values, the same digital culture and the same tactics of nonviolent protest. The global cries for democracy challenge governments and international institutions to refound our global, economic and political order on a more democratic, transparent and equitable basis. I believe that we need a new vision of global trade and investment policies.
See, there are two distinct issues here. First, what must we do at home to ensure that our international economic policy will create good jobs in sufficient numbers to offer hope and a viable future to our young people? And second, what kind of globalization should we pursue to create a better future for all the world's young people?
See, here in the United States we need a single streamlined, coherent national economic strategy that's about good jobs first if we're going to rebuild our core national identity as a middle-class society in our time and in our children's time. The road to a successful global strategy for the United States is not simply a matter of rewriting trade agreements. We need to deeply rethink our trade policy and how it interacts with other relevant policy levers, including currency, taxes, immigration, government procurement, education, infrastructure, energy and technology.
For a generation, we've made the mistake of orienting our international economic policies around the profitability of U.S. corporations abroad rather than the quality and quantity of jobs at home, or sustainable and democratic development around the world, and the results are in. Large U.S.-based multinational corporations have thrived as global enterprises, but the United States is suffering from massive job loss, unsustainable trade deficits masked by one ruinous bubble after another. The sad truth is that for decades our trade and economic policies have not served the interest of the United States as a world power by delivering good jobs or the competitive edge that we must have. And around the world, inequality and strife are expanding, even as trade and investment flows grow and trade agreements multiply.
So let's step back and look at the weak spots in the U.S. economy today. We can probably agree on several key problems: We have rising inequality. We have unsustainable debt. We have lackluster job growth. We have a crumbling infrastructure, underinvestment in skills and education. We have 15 million people unemployed, and another 25 million people underemployed. See, these problems have multiple causes, but each has been exacerbated by our wrongheaded approach to globalization. And their cumulative impact now threatens our ability to complete -- compete globally as a high-wage society.
Start with the fact that we've failed as a country to invest in schools, bridges, high-speed Internet, highways; while our competitors have surged ahead. In most countries, the business community is allied with labor in calling on government to make these investments, to ensure its own success. The AFL-CIO recently has worked with the Chamber of Commerce to revive such an alliance here in the United States. But there is no question in my mind that large corporations here are less focused on U.S. infrastructure and education than they were a generation ago. As Ralph Gomory, a former president of the Sloan Foundation, has argued, their competitiveness as firms is simply no longer tied up with our competitiveness as a nation. It's too easy for business to campaign for lower taxes and less government spending if most of its production and workforce are located somewhere else. Some other government will foot the bill for high-speed rail or engineering degrees and universal broadband, while we tie ourselves in knots arguing about the deficit and about taxes.
Now, this may be a highly profitable short-term corporate strategy, but it's ruinous for our country and for our children. We need our allies in business to stand shoulder to shoulder with us to demand that we refocus on America's fundamental needs.
Let's look at the rapid growth in income inequality, which threatens our identity as a middle-class society. Fully 56 percent of all income gains in the last 20 years have gone to the richest 1 percent of Americans. There is growing consensus among academic economists that trade liberalization and the offshoring of jobs have contributed heavily to that trend. Worldwide, trade and capital mobility have undermined the bargaining power of workers and made all workers vulnerable to competition from countries without democratic protections or basic human rights.
In Sunday's Washington Post, Steve Pearlstein summarized new research by Nobel laureate Michael Spence. Spence found that most U.S. job growth over the last couple of decades came in non-tradable sectors of the economy -- mainly government and health care. While -- meanwhile, most of the output and income growth came in the manufacturing and tradable sectors. These trends, in Pearlstein's words, are a recipe for increasing inequality and social and political polarization.
The result is that the U.S. economy can't seem to get itself out of this deep slump; partly because consumers, who are workers, are in deep debt, and don't have good jobs, and have seen their wages stagnate for a couple of decades now. But global corporations are booking record profits.
So let's build a new global -- U.S. global strategy -- one founded on rebuilding our competitive position in the full range of high-end economic activity. We can start by improving the woeful state of our infrastructure and investing in our educational system. And we need to use our tax dollars to support and strengthen domestic job creation, get serious about addressing currency manipulation, invest in renewable-energy technology and production, and eliminate loopholes in our tax system that reward offshoring.
The key is to change the incentives facing U.S. corporations, to encourage more domestic investment in cutting-edge manufacturing jobs, instead of gearing all of our trade, investment and tax policies toward pushing jobs to other shores. If we want an economic future that's better than our past, then we need to use the jobs lens to look honestly at the specific rules in our own trade laws and our trade agreements, the partners we choose, and our values.
Now, this is a large subject, so I'll just mention three areas that we've gotten fundamentally wrong and are about to get wrong again. First, there's the foundational issue of human rights. Trade agreements, whether they're global, like the WTO, or more limited, like NAFTA, integrate economies and societies. Trade agreements with countries that do not respect workers' rights make the United States a party to the abuse of those rights and turn U.S. workers into secondary targets. That's why we fundamentally object to a free-trade agreement with Colombia at this time, where 51 trade unionists were murdered with impunity last year.
Now, just as the business community would object to a trade agreement with a country where investment and intellectual-property protections were blatantly disrespected, we believe it's premature to sign a trade deal with Colombia when the government is unable or unwilling to enforce the rule of law and to protect the security, the dignity and safety of workers trying to exercise their right for a better life.
Second, with respect to the Korean trade agreement, while we appreciate President Obama's efforts to address concerns in the auto provisions, on balance we believe the agreement will put at risk too many good jobs. According to the Economic Policy Institute, that agreement will cost us an additional 150,000 jobs. It's a last-generation trade agreement, not a next-generation one.
And third, we need new investment provisions in our trade agreements. We keep negotiating new investment chapters, which are loosely based on the NAFTA model, which was based on our bilateral investment treaty. But nobody has answered the question that Congress and other critics keep asking: Why do foreign investors have the right to sue our government over regulations they don't like when our own domestic companies don't have that same right? Why are investors the only parties that can bypass government-to-government dispute resolution?
Now, if those concerns sound familiar to you, they should, because Obama raised them in the 2008 election campaign, when he called for a new trade model. Today President Obama has an opportunity to put his stamp on a major trade agreement, the Trans-Pacific Partnership. There's a chance to make good on the president's commitment to craft a new trade policy for the 21st century that makes sense for working people and not just for multinational corporations.
And the AFL-CIO and all the labor movement is ready to work with the president and his team to make the TPP a new model for America's trade policy. But that'll require new thinking on investment and services and government procurement and the will to move forward on the labor and environmental front by strengthening commitment, streamlining dispute settlements, building new institutions and improving enforcement.
Unfortunately, we must change both the details of our trade policy and embed that policy in a coherent national economic strategy if we're going to close our current account deficit and quit borrowing billions of dollars from the rest of the world year after year.
The key steps to a successful high-wage economic strategy in a globalized world are really not a mystery. Just look at Germany and Japan and Denmark and Sweden. These countries all run trade surplus. They have high wages. They're heavily unionized manufacturing sectors and invest multiples of what we do in lifelong skills development, education and infrastructure. And they all have a lower unemployment rate than the United States.
So high wages, strong unions and well-trained workers are not the problem in a globalized economy. In fact, we believe they're the solution.
We live in a world today where hundreds of millions of people lack the very basics of life. Just as the New Deal brought back basic security to all Americans, a global New Deal could see to it that every one on this Earth has the minimum necessities of a decent life. And then imagine the dividends of this investment, not just in terms of economic growth and demand for U.S. exports, but in terms of global security and stability.
I was heartened to hear President Sarkozy speak at the World Economic Forum about his commitment to a global development agenda and the need for a global financial transaction tax to help fund these investments.
Now we understand that we cannot have either an end to the job crisis in the United States or solutions to poverty worldwide if the United States and the world community go down the path of competitive fiscal austerity and tax cuts for the rich. Yet here in Washington and Brussels and London, that's exactly where policymakers are going.
Next month the AFL-CIO will host a meeting of all the world's labor movements to release a report on global economic strategy that's focused on jobs and development. Policymakers should be listening because all around the world people are in motion, demanding investment in good jobs, as well as democratic accountability.
Democracy and workers' rights are not the means to some greater good; they're part of the fabric of the good life itself. Silencing workers, no matter for what purpose, undoes our common future. And when workers reclaim their voice, we reclaim our common global democratic future, a future where all of us -- and I mean all of us -- can ultimately prosper.
Thank you. (Applause.)
HAASS: Well, thank you. You've given us one or two things to react to. And I'll start, and then I will turn to people in this room who are far more qualified than I am.
Several times you were critical of offshoring and the rest. So why doesn't the AFL-CIO support a lower tax rate for American corporations who basically would then be more incentivized to build their new plants here rather than overseas?
TRUMKA: We think that's part of the solution, talking about those things, changing the type of tax that we have. Most of our competitors have value-added tax. They deduct it when it leaves shore, their cars come to our country, their product comes to us. When our product goes to their country, they add it. Germany -- it would be about 17 (percent), 17 1/2 percent, throughout European -- we're willing to talk about that. It has to be a coherent policy where all things are considered.
HAASS: Also, on competitiveness, historically, some of the great job creators in this country -- and if you look, say, at Silicon Valley, you look at the last names and where these people came from, they're immigrants. Over the last decade or so, the number of visas for high-skilled, highly educated people has been cut by more than half, down to about 85,000, give or take.
Would you be open to the idea of, say, going back to where we were, to doubling that again, so we get people in this country who are highly skilled, highly educated and the sorts of people who have historically been in the vanguard of places like Silicon Valley?
TRUMKA: Oh, let me ask you this question. Do you believe that we lack the skills in America to compete? Because that's implicit in your question.
HAASS: I believe that immigrants have been a powerful stream of talent. And in this country, one of the reasons, I think, we are competitive with the world is because of immigrants. And we are denying ourselves --
TRUMKA: Well, I agree with you about that, having come from immigrant parents. Yeah.
HAASS: We are denying ourselves, I think, some of the -- we're such a great magnet. Our higher -- our institutions of higher education are a great lure. And what we're basically doing is then kicking people out afterwards, so rather than having the people stay, here like they used to be able to, we're losing that talent.
So are Americans who are, quote, unquote, "homegrown" lacking talent? Of course not. But an extra 75(,000) or 100,000 people a year who have these amazing skill sets, historically, again, they have been a major generator of creativity and of jobs.
TRUMKA: We have a very comprehensive policy on immigration. We welcome immigration. However, we don't think in some instances where you can automatically or a business can declare a shortage, bring people in, pay them half the wages of American workers and drive down the wages -- we don't think that's good.
Here's -- here would be our solution to it. Ray Marshall, former secretary of labor, put together a five-point program. One of the points, of course, is legalization for those immigration -- the immigrants that are here, because they get abused. They're used to drive down wages. Every time they try to organize, they get fired, they get sent out. So there ought to be a path for them to have equal rights.
When it comes to the shortage of labor, we would put together an independent commission that would actually say, you know, we have a shortage of people here. Let's bring them in. When we do that, it automatically triggers something else. It triggers us starting to train in that area where we have the shortage, so that companies can't simply say, we'll bring -- we need engineers, we'll bring them in at half the price and use that to drive wages down.
Do I think we ought to be embracing immigration? Yeah. I come from a family of immigrants. I would say so. With a name like Trumka, I wasn't born here, you know, but --
HAASS: That's why I raised the question. (Scattered laughter.)
Moving around a bit, Colombia. You talk about your opposition to the FTA with Colombia, and you cite a statistic about -- I think it was 51 unionized -- union members who had lost their lives. I think --
TRUMKA: Not lost their lives; they were assassinated.
HAASS: Killed. OK. There's a big difference, though, between -- then you said it was because the government was either unable or unwilling to enforce the rule of law. Big difference between unable and unwilling.
And secondly, the question is, to the extent it's unable, why do you -- why do you think that the absence of an FTA with Colombia would improve the situation? Wouldn't an FTA which, among other things, brought greater resources to the Colombian government, greater integration between our two economies -- why wouldn't that increase capacities to deal with situations?
TRUMKA: Well, it didn't do it for the Mexican people. After NAFTA, their standard of living got lowered. Why do you think it would be better for Colombia?
And look, here's what we're saying: Don't reward people who can't enforce the laws. What would business do if none of the property rights were enforced, for whatever reason? I don't care whether it's unable or unwilling. If you weren't enforcing property rights in a corporation, how many of you would say let's go with that? How many businesspeople would go with it? You'd scream bloody murder. Well, we happen to think that human life is at least as necessary to be protected as property rights.
HAASS: But I -- where I would disagree with you, in many situations where the conditions are imperfect, whether it's human rights, labor, environmental regulation, issues like this, to me, the question -- you can say unless it's perfect, we're not going to have an agreement, or you can basically say would we better off, would the trajectory be better off with or without an agreement, and it seems to me in many of these cases there's an argument to be made it would be better with an agreement.
TRUMKA: You're totally mischaracterizing our position. We're not saying never. We're saying give them standards and benchmarks to meet. Once they show us that they can enforce the rule of law and they can protect people, then we ought to -- we ought to have a trade agreement with them. But we ought not to do that, because it hasn't been the magic elixir that you implied, Richard, that it is.
HAASS: We have a philosophical disagreement here on one issue, which is in negotiations --
HAASS: -- I know -- (laughter) -- good we're sitting down -- which is an emphasis on preconditions, I have found in my career, often precludes agreements. And I always tell people, worry less about preconditions and where you go into agreements than where you come out of them. And to me the question ought not to be can countries meet certain absolute standards necessarily beforehand, but you've got to ask yourself: With agreements, are they more likely to get to certain points?
TRUMKA: You know, you and I -- if you had my job, you would probably have committed suicide then -- (laughter) -- because you'd have been so frustrated, because labor has to meet multiple preconditions before we get to the bargaining table. I'd like to have your standard applied in the good old U.S. of A.
HAASS: Like I said, we're not going to have a shortage of things to talk about here. (Scattered laughter.)
Education. Obviously, we agree to -- is something we do agree on. It is one of the critical components of competitiveness. Yet there's many studies that show that one of the reasons we have problems in K through 12 education is not a lack of funding. We spend a lot on our students, but a lot it's administrative. A lot of it doesn't go into learning. And we've got a real problem with teacher quality. Would you be flexible about such things as that seniority ought not to be the critical factor and that we ought to look at measures of quality with our teachers in determining job protection?
TRUMKA: If you had the ability to settle this, you and I could sit down and talk about that.
You know, look, the problems we have are far more than K through 12. It's lifelong learning. It's skills training.
And by the way, just for everybody's edification, the labor movement provides more skills training than anybody else in the United States. We're the biggest provider of skills training. We do it every single day.
Are we wiling to be flexible and look at that? Yes, if everybody also has to be willing and flexible, to say part of this parent involvement. If -- you can have the best teacher in the world, and if you don't have parent involvement, you don't get a good education. It's also resource-based. If you have the best teacher in the world and they say, teach 40 students, it doesn't happen.
That triangle has to be put on the table, and when it is, I think you'll find us very, very willing to sit and talk about ways to improve teacher skills, not just to punish them, but take a teacher who could be better and help them get better. That should be all of our job. That should be what every businessperson or every American does to every one of their workers -- continually improve their performance, so that we get better after -- year after year after year after year. That would be our goal.
HAASS: Our teachers are one subset of public sector employees, so let me -- that issue's obviously prominent. I expect it's taken up a bit of your time of late, given the debates.
TRUMKA: I've heard about it.
HAASS: You've heard about it. That's good.
HAASS: Is there any potential deal here where, in order to keep rights of collective bargaining, which has come under assault in some places, that you believe that workers should either give up their right to contribute to political campaigns or give up their right to strike? Do you think there's a potential deal to be made here?
TRUMKA: You know, that's really a terribly one-sided question. Would you be willing to have corporations give up their political voices? We'd take that deal, probably.
United -- the Supreme Court just opened up the floodgates with Citizens United. Corporations spent over a billion dollars in the last election. And this election, it's -- that's going to look like chump change, because it's going to be $3 (billion) or $4 billion getting flooded in, so that people can buy the best candidates or the best representatives that their business will allow.
Look, this is about democracy. It's about people having a voice. This isn't about deficits. Scott Walker said it was about deficits to begin with, and let me just tick down with him all the things.
First he said it was because Wisconsin public workers made too much.
Well, then we find out that they make less than their private sector counterparts, and if you have a degree, as much as 25 to 30 percent less than the private sector.
Then he said it was about the pension fund. And we find out that their pension fund is nearly fully funded. Anybody would be proud to have that pension fund there.
So he kept moving it and moving it and moving it and moving it. It was about power. It was about silencing workers. That's what it was about. And it's not individual. This is about them paying back their corporate donors, people like the Koch brothers, who put millions of dollars into Wisconsin and every other state. It's about paying them back.
In fact, in his budget proposal, he had a provision that allowed him to sell power plants, cooling plants and energy facilities, no bid, to anybody at any price he decided. Now I can't imagine the Koch brothers would have been in on any of that, but that's a different story.
So this isn't about talking about whether we're willing to sit down and share in -- when there's a deficit, because we are. In fact, in Wisconsin they agreed to his proposals and to give more.
TRUMKA: The other -- the other thing, you know, that I think is questionable to say is -- you know, workers are a bit frustrated that you come to them and say, you have to pay, you have to give back. A Wisconsin person making a $19,000-a-year pension -- that's the average. That's not an exorbitant pension.
We didn't cause the problem, but we've paid three times already.
First we paid with our jobs when this recession hit. Because of Wall Street's excesses and the lack of regulation, the economy went to the brink of disaster. We paid with our jobs, 15 million of us.
Then we paid with our homes. We were losing our homes; 2.5 million people will lose their homes this year in mortgage foreclosures.
And then we paid because we bailed them out. And after they bailed out, they're back to business as usual, with record profits and record bonuses, and nobody -- nobody -- raises an eyebrow and says, what about them? Those that caused this problem, shouldn't they somehow share in the -- in the fixing of this thing? Isn't that what share and sacrifice is all about?
So workers get understandably angry. Yet despite all of that, in state after state where there's a genuine budget crisis, they've said, we'll sit down and we'll work with you.
HAASS: I got one or two other questions, and then I'll open it up, because again, you're putting lots out there.
Given the crisis in Japan, what is your -- I mean, you come out of a coal background. What is your sense about the future for nuclear power in this country?
TRUMKA: I think it was made incredibly more difficult. I think we're going to have to confirm and convince the American public and, I think, the rest of the world that nuclear power can be done safely under any circumstance. And if that happens, then I think it'll be part of the mix.
HAASS: Do you think -- do you think that's possible? I mean, because the numbers are quite daunting. We've got about a hundred-plus operational nuclear power plants in this country. Even with service life extension, they're due to be retired over the next 30, 40, 50 years. We've got -- we've probably got to build new ones at the rate of at least two a year just to stay even. Can you imagine the politics in this country allowing that?
TRUMKA: I could. It'll take a lot of education, and it'll take a lot of health and safety rules. They won't be able to do the no-bid contracts like Scott Walker wants to do. This'll have to be done so that everybody's convinced it's transparent and we can see that the safety mechanisms that are necessary to protect the American people are in place. And I think we have the capability to do that.
HAASS: You referred to, in your opening remarks, the situation in the Middle East a little bit. One of the ideas on the agenda is potentially a U.S.-Egyptian free-trade agreement as a way of helping the Egyptian economy. In this context, could you -- can you imagine supporting that?
TRUMKA: It all depends on the agreement. We've supported trade agreements in the past. We're willing to support them in the future. But we really think that they have to be more than what they've been in the past. The old NAFTA-type chapter -- we really have to start integrating all of the policies into these things so that we can build an economy that works for everybody.
Because, look, if we sign 50 more trade agreements, everybody would -- a lot of people would say, yahoo. And if every one of those cost this country more jobs, think about the consequences for that. Without coming together to bring the policies together -- tax policy, immigration policy, infrastructure, all the things that are necessary to build a world-class economy -- then we probably would not support additional agreements that will take us further down the road to oblivion.
HAASS: Well, put that way, I can understand it. (Laughter.) That little kicker at the end. For the record, I don't support agreements that would take us into oblivion either.
TRUMKA: But you have. (Laughs.)
HAASS: Well, we disagree on that. I think we're better off for those agreements, economically as well as --
TRUMKA: Just let me ask you this about that, though, right?
TRUMKA: We've signed a lot of trade agreements.
TRUMKA: When was the last time we had a trade surplus?
HAASS: The --
TRUMKA: No, no, answer that question first.
HAASS: We haven't had a trade surplus for a generation, but that's not the --
TRUMKA: Because you have -- you have -- you have to agree to this. Every time we have a trade deficit, it is a drag on the GDP of this country.
HAASS: No, it's not. No, it's not.
TRUMKA: A trade deficit is --
HAASS: Not at all, sir. The -- what matters is whether American exports are growing. And second of all, imports are not bad. Imports are not bad. Imports give us greater choice. They fight inflation. Do you think the American automobile industry would be doing anything as well as it's doing now without the competition from imports?
TRUMKA: Imports aren't bad unless they're flooding the exports. But when you have the tremendous imbalance that we have in trade, nobody can -- I can't believe you seriously said that our trade imbalance is good for us. Because we can't sustain that. You can't!
HAASS: America has run a trade imbalance, at times consciously, as a generator of jobs and stability around the world. We are the world's largest economy.
TRUMKA: Well, that's exactly right. But we weren't using it as fiscal policy or trade policy or economic policy. We were using it as state policy. We used it after World War II to build Europe so that they could be an economy and a market for us. Now they're bleeding us. And if we can't come to agreement that we -- do you believe what's -- what we're doing in this country right now is working?
HAASS: But we have slightly different analyses as to why.
TRUMKA: Well, okay, but do you believe it's working?
HAASS: Some of what's going on here is, and some is not. That's clear.
TRUMKA: Yeah, but -- so most of it isn't, or we wouldn't be dropping in world standards.
Here's my only point to all of you. It isn't working. And even he said that. (Laughter.) We have to sit down and figure out a way to make it work for the best of this country. And all of us have to be willing to look at things and say, I give, you give.
But it can't be the continuous path that we've been on for the last 20 years, because it hasn't worked. And even the architect of NAFTA, Bob Rubin, admitted to me that it's not working.
HAASS: But again, without NAFTA, I believe whatever problems Mexico has today, they would be far, far worse by orders of magnitude without it.
TRUMKA: Well --
HAASS: Again -- (inaudible) -- the fair trade agreements, you know, is that they solve all things. Of course not. Mexico faces tremendous problems now with violence and instability in its northern reaches. You can't blame that on NAFTA. You can perhaps blame it on American appetite for drugs and the availability of guns in this country, on the weakness of the Mexican judicial system.
TRUMKA: You can also blame it on a fact that Mexicans don't have jobs and Americans don't have jobs and Egyptians didn't have jobs and Tunisians didn't have jobs. And when they don't have jobs, they resort to other actions. And if we are fomenting that or helping that occur because of our policy, we should reexamine our policy.
HAASS: We could continue, but I will -- (laughter) -- I've learned to resist temptation in my life, so I will -- I want to give you all --
TRUMKA: That was the nicest way to say "I submit" that I've ever heard. (Laughter.)
HAASS: No, I have other responsibilities here. (Laughter.) For the record, I do not. (Laughter.)
We've got microphones. If people would wait for microphones, stand up, tell us your name, your affiliation and be as succinct as possible.
This gentleman in the shirt in the back, right -- yes, sir. I mean, most gentlemen has shirts on but you don't have a jacket on. (Laughter.)
QUESTIONER: Hi, Mr. Trumka. Thank you for speaking with us today. I just want to know
HAASS: Tell us who you are for a second.
QUESTIONER: Yes, my name is Ben Hancock. I write for Inside U.S. Trade here in Washington.
I want to know, is it your sense that the White House has made a political decision to move forward with all three trade agreements this year? And also, do you feel that you're being sufficiently consulted by the White House on the Colombia trade agreement in terms of benchmarks? Thank you.
TRUMKA: First of all, it's not my sense that they intend to move forward this year, because Colombia -- with all three of them; they're going forward with Korea obviously -- but with Colombia because they have been unable to meet any of the benchmarks that we've talked about. And we have -- I think a lot of people have access to the administration. I feel that we have adequate access to the administration, and we're talking genuinely and seriously about those benchmarks and how we can make them work.
I could tell you some personal stories about Colombia. There's a guy by the name of Dario Hoyos, who was assassinated. Dario came to the United States, actually stayed at my house, he and his vice president. They went back to Colombia. When they were negotiating, we sent members of our union down to sit in with them on negotiations to help them.
Dario was assassinated. It was on a bus. There was a bus that commuted between the mine and the town about three-quarters of a mile away. They assassinated the vice president at the mine. They got halfway back to the town. They stopped the bus with all the workers on it, make you kneel down on the ground, and they put a bullet through Dario's head. Dario's daughter and wife we had to help relocate nine times so that they could stay away from this. They were still after them.
And they called us and said: We have great news. We've convicted the men that have killed Dario Hoyos. And I was excited about that, until I found out that they convicted them in absentia. They are still at large. They named four people convicted and then said, that one's solved; let's move to the next one.
Now, look. Let me ask you: If that was a property right and that was the remedy that you got for a property right, not many people would be willing to stand up for it. That's why we oppose it and that's why we think before you go with a partner, you should choose them carefully so that you don't aid and abet that type of thing. And if you set the benchmarks that everybody understands and they meet them, then they're a decent partner; then you go with them.
HAASS: Well, we have -- we clearly have a profound disagreement on that, but we won't pursue it.
TRUMKA: About what? About the murder?
HAASS: Colombia has made tremendous progress, I believe, both in security, stability, as well as human rights. I'm not saying it's perfect, but it's come a long way over the last decade, first under Mr. Uribe, now under President Santos.
TRUMKA: If 51 CEOs got assassinated last year in Colombia, would you want to do business there?
HAASS: Again --
TRUMKA: Would you want to do business, Richard?
HAASS: Obviously --
TRUMKA: No, I can tell. You're right. (Scattered laughter.)
HAASS: No, you look -- no, that's a cheap shot. You look at what you have with an agreement or without it. You ask yourself what is the way to help a country move in the right direction. It's not a debating point; it's an honest answer. It's not a debating point; it's an honest answer.
HAASS: Bill Lane.
QUESTIONER: Bill Lane with Caterpillar, and thank you very much.
I might ask just a question, and it's just about the overall discussion you had with the trade deficit. When you look at the U.S. trade deficit, we have a trade surplus in services, we have a trade surplus in agriculture, we have a very large trade deficit in oil, and we have a very large trade deficit in manufactured goods. Except if you look at the 17 countries where we have trade agreements, free trade agreements, we have a trade surplus with those countries, which is a validation that, if there's really a level playing field, American manufacturers do quite well. Recent ones were Chile, Australia, Peru -- we've seen big increases in exports to Peru. What is it about Chile that scares you? Is it all the fresh grapes that come in in the winter or the wine that's coming in? I mean, what is the competitive issue? If we're doing so well where there's truly a level playing field, why wouldn't you embrace more trade agreements and more domestic energy -- which you are doing, on that score?
TRUMKA: Because, you know, 10 years ago, you at Caterpillar -- and I happen to know your company -- how many people do you have in the United States now, employed?
QUESTIONER: More. And we just opened six new factories.
TRUMKA: Well, wait. Whoa, whoa, whoa.
QUESTIONER: Six new factories in the U.S. in the last year.
TRUMKA: You don't have more than you did -- you don't have more than you did 10 years ago. You have --
QUESTIONER: Yes we do.
TRUMKA: You only make your big Cats here. You make all your small Cats overseas.
QUESTIONER: That's not true.
TRUMKA: Oh, okay. Well, I got to fire my research department over there. (Laughter.)
QUESTIONER: That'll increase unemployment.
TRUMKA: All right, put your hands up. You're finished. (Laughter.)
QUESTIONER: Allan Wendt.
As you know, Mr. Trumka, most federal workers do not have collective bargaining rights. Why should a different standard be applied to state and municipal workers?
TRUMKA: Most federal workers do have collective bargaining rights.
QUESTIONER: Do not. Certainly the vast majority of white-collar federal workers do not have collective bargaining rights.
TRUMKA: So? Most American private business don't have collective bargaining rights either because of the laws and the attacks on unions, but we still think each should have the right.
QUESTIONER: But why -- is this not a double standard? It seems to me it is.
TRUMKA: It's nowhere near a -- look, there's 7 (percent), 8 percent of the American -- the private enterprise in this country, the workers that have a union. Eight percent. Do you think that's a double standard?
I mean, federal workers and government workers, here's our belief. Government workers ought to have the right to be able to come together to bargain for a middle-class standard of living. And if you look at that, they don't get -- they're not overpaid, they don't get exorbitant pensions that everybody thinks they do. They ought to have the right to come together. Why shouldn't they? Federal workers have the right. In fact --
QUESTIONER: No they don't. The vast majority of federal workers do not have collective bargaining rights.
TRUMKA: Many do, and I'll give you the exact percentage before long. And TSOs are in the process right now -- 43,000 of them are in the process of organizing.
You know, in an industry -- take my mining industry. We had -- the industry, we were at one time probably 90 percent organized. We're not there now. But just because a smaller percentage of the federal employees aren't organized, why does that mean that state employees shouldn't organize?
QUESTIONER: They're organized, but without --
TRUMKA: Well, they have collective bargaining rights. They do.
HAASS: Yes, sir, in the back.
QUESTIONER: Steven Donahoo from McLarty Associates.
TRUMKA: I'm sorry, I didn't hear. I didn't hear.
QUESTIONER: Steven Donahoo from McLarty Associates.
Given that the labor chapter in the Colombia FTA provides an enormous amount of leverage over Colombia for the U.S. government that we don't currently have, don't you think that Colombian laborers would be better off with an FTA than without one?
TRUMKA: Colombian workers tell us that they would be worse off because Colombia wouldn't enforce them or they're unable to enforce them. And we've talked to our Colombian counterparts. I don't speak for them; they spoke with us and said, we oppose this agreement because it would be bad for us as Colombian workers.
QUESTIONER: Steve --
HAASS: Wait for the -- you want to wait for a microphone?
QUESTIONER: Thank you. This is Steve Charnovitz at George Washington University Law School.
I just want to make one correction for the record. I think the architect of the NAFTA was not Bob Rubin, but rather Carla Hills, and I'm sure she's very proud of what she did on that.
I want to ask you about the Colombia Free Trade Agreement. You talked about the bargaining table, and this is an agreement that went to the bargaining table back in 2006, and the U.S. and Colombia agreed. In 2007, the Bush administration renegotiated it at the request of the congressional Democrats in the House. And now I guess you're suggesting that it be renegotiated again.
So I would agree with you that we could perhaps have a better model for a free-trade agreement. But these are ones we've already signed.
TRUMKA: No, we haven't signed them. They haven't been signed. They've been negotiated, and they're awaiting ratification.
HAASS (?): They've been signed by --
TRUMKA: Until they're ratified, they're not signed.
QUESTIONER: Well, I think they've been signed. But leave that aside. They certainly have to be approved by the Congress. My question, though, is, don't we have -- I mean, this is something that the U.S. and Colombia agreed to at the bargaining table. There were preconditions in the law, in the trade-promotion authority. I think the preconditions for labor and environment were certainly met. I've never heard of any argument for why they were not met.
So why would you then want to change the deal after the fact? Is that what you mean when -- you want a new U.S. global strategy? We say one thing and then we take it back?
TRUMKA: No, that's not what I mean at all. I think we ought to get it right the first time. We didn't get that one right, and this country is incapable or unwilling to enforce the law. So no matter what the words say, they don't matter.
Well, why should anybody -- any country sign an agreement where it's useless? That's the point. Until they're capable -- either willing and able to do it, we shouldn't sign an agreement with them or anybody else. We should -- we should choose our partners carefully, and we should choose those where we're not going to aid and abet the denigration of the working population in that country.
And the workers in Colombia believe that if that agreement's signed, their lot will be worse, not better. I honor that. Because we think if it's signed -- I mean, economically it doesn't make a lot of difference, but this country shouldn't be aligned and allow people to get assassinated.
I ask you the question again: If 51 CEOs were assassinated in Colombia, how many people would say we should sign the agreement? Raise your hand.
Look at that. Not very many. You're in the minority. (Laughter.)
Were you asking a question or raising your hand for -- (laughter).
HAASS: Let me go to Paula Stern. Okay, Rick, let me -- I'll get you next. Let me get Paula first, then I'll get you, Rick.
QUESTIONER: Oh, thanks. Paula Stern. Thank you very much for your speech. The focus on competitiveness I thought was very, very productive and fruitful. And I would like to ask about the point you made with regard to tax policy. You mentioned VAT. But we also touched a little bit in the conversation on taxation regarding corporations. Now --
TRUMKA: With what?
QUESTIONER: Regarding corporations.
TRUMKA: Corporate taxes? Oh.
QUESTIONER: Taxation regarding corporations. We have, parked overseas by U.S. corporations, trillion, trillion and a half -- the numbers are enormous -- of -- that is in the form of earnings that are not coming back into the United States because of, in the corporations' view, tax.
My question to you is, can you foresee a deal, a political deal in this country in which we would encourage the repatriation, if you will, for investment in the United States that would be politically acceptable to you? For example, perhaps some conditions put on it as to whether the money repatriated would be spent by the corporations in terms of --
TRUMKA: Capital expenditures? (Inaudible) --
QUESTIONER: -- stock buybacks or compensation. But in other words, other conditions. I'm sure you've thought about this, and I would like to know if you think that that would be part of a deal, given the fact that we are so focused on this deficit. But taxes have got to be part of that conversation.
TRUMKA: I can answer that in one word: Absolutely.
QUESTIONER: What are they? Give us details. (Laughs.) (Off mic.)
TRUMKA: Well, some of the money being repatriated would have to be spent on capital expenditures and job creation. It couldn't be spent on bonuses and additional things like that. But that's part of the provision, I think, in the tax code that we do need to look at and we do need to change.
HAASS: Rick Smith.
QUESTIONER: Hedrick Smith, PBS --
HAASS: Wait for the microphone there. I know the microphone's a stranger to you. (Laughter.)
QUESTIONER: You're right. Yeah. Hedrick Smith, PBS. Thank you, Mr. Trumka. Your remarks were interesting. Listening to your litany of problems, I think most opinion polls would indicate most Americans would agree with your assessment about a lot of the things that are wrong in this country. But one of the things that's striking is, neither the labor movement nor the middle class has really demonstrated in a way that it used to in the past.
We had problems with the environment: 20 million people went out on Earth Day in 1970. We had problems with civil rights: there was a civil rights movement. Women's rights: women's rights movement. A war: peace movement.
What happened in terms of the link between the trade union movement and the middle class, and the activism of the American middle class? Because that affects the political dynamics today.
TRUMKA: Well, first of all, the middle class is being destroyed. There's little left of the middle class right now, so -- but that -- your question would have probably been very, very accurate 30 days ago. I don't think it's accurate right now, because we had 130,000 people show up in Madison, and we had 140 events in Madison and around the state where people showed up. The same thing's happening in Ohio, in Indiana, in other states like that where -- 14(,000), 15,000 in Indianapolis the other night, to talk about those issues.
Here's what happened, I think, over the years. People got really beat down. I mean, they got really beat down. They were working overtime -- two, three jobs sometimes. They really didn't have time. And I know people say: What do you mean, you don't have time? Well, they didn't have time. And then, I think some of them actually lost hope, that no matter what they did, it wouldn't make a difference. Now I think they're starting to get their hope back. I think they're starting to understand that there is a path into the middle class. If workers are allowed to come together, we can actually build a bridge into the middle class again.
Because look, from 1946 to 1973, productivity in this country doubled, and so did wages. And the interesting part about that is, during that period of time, the people in the bottom two quartiles, their wages were increasing faster than the people at the very top, so the wage gap was closing. From '73 to date, productivity has continued up, but wages have stagnated, for a number of reasons, for those policy -- for those policy reasons.
Of course, from '46 to '73, 37 (percent) to 40 percent of the workers in this country had collective bargaining. So all the money that Bill makes around the world and everything, we got to negotiate for a part of it. And our wages -- our standard of living was increasing. Now, with 11 percent of the people in collective bargaining, we don't drive wages. Because we drove wages for union and non-union people back then, and the wealth that was created was shared equitably.
Now, here's your -- here's my question to you: How are we going to correct the inequality? Tell me how signing a trade agreement with Colombia is going to correct the inequality, or with Korea, or with any other people? There's got to be a bunch of policies that are integrated together, so that we as a nation start to make things together. And we have to -- here's the biggest challenge for all of us: realigning the interests of multinationals with the interests of this country, because they diverge right now. They need to be realigned. If we can do that, all of us can win, because we're a rich nation; we've got a lot of resources.
We've got a lot of changes that we have to make. And I can tell you, we're willing to participate in that, even when it means giving something. But it doesn't -- we can't participate if we're the only ones that give.
HAASS: Yes -- the microphone -- two rows -- one row up -- right here. Stand up. If you stand up, they will give you a microphone.
QUESTIONER: Thank you. My name is Reba Carruth. I'm starting as an adjunct at Georgetown University.
I'd like to commend both of you for the presentation today. You're both right. (Laughter.) But -- (chuckles) -- but I think the way forward has to be more of a socioeconomic framework. Clearly, as we go forward, all nations are going to be under -- rulers in all nations are going to be under pressure to make sure that the benefits of globalization and capitalism and markets is grounded in the needs of the country and the interests of the people of that country. That's a type of justice which is, I think, correct. But I want to --
TRUMKA: I wish we would do more of that, personally.
QUESTIONER: Yes. Yeah. So I fully agree with you on that. I would like to hear more about how in the United States we are going to re-localize the benefits of global markets back to communities and to citizens in urban and rural areas, and how we can avoid this sort of unstated but nevertheless dangerous elephant in the room where American people -- native American people are somehow not as good as people who are newly immigrant, OK? Now, I think that's something we have to -- we have to address, you know? Clearly.
TRUMKA: My answer is -- I'd like to hear Richard's answer, quite frankly. But my answer is, it takes integration of all the policies that I mentioned in my speech. It takes all of us, all of us being willing to do it. And when you come to education, you can't simply dogmatically say it's the teacher's fault. It's convenient politically, but if you've got a single mom who's working a job, coming home, trying to take care of the house, do the shopping, pay the bills, and she can't help the kid with homework, that kid's disadvantaged.
There are a lot of factors that we have to be willing to sit down. And we have to get rid of the labels. I detest the labels. I say I oppose a trade agreement, I'm a protectionist without ever hearing why. We've got to get past the labels in this country, because the problems are too big and too complex. There are no bumper-sticker answers to these problems.
So my answer is, you have to integrate every one of those policies together to make them work for the American people; make them work for us, not just American corporations and multinationals, but American people.
Now, I don't know if you agree with that or not. (Laughter.)
HAASS: Partially. (Laughter.) We've got to do the things to make us more competitive. And I would say improving our -- not just K through 12 but our higher education, which increasingly is getting squeezed by budget cuts; lifelong skills training; trade-adjustment assistance is a small piece of it. We've got to change the economic model in this country to make lifelong education and training a real possibility.
But there's one thing you left out of your answer. The best jobs in this country are export-oriented jobs. And what we've got to do is increase our trade. And we need more of that, and if we want (our ?) people in the cities or in the suburbs or anywhere else -- we have got to basically increase our exports. And 95 percent of the people in this world don't live in this country.
TRUMKA: Right, but --
HAASS: The economic -- the economic growth in the world is far greater outside our shores, because we're a much more mature economy.
TRUMKA: Let's agree on something.
HAASS: With two or three times higher levels of growth in Asia and the developing world, we have got to have access to that, and that's where trade becomes really important.
TRUMKA: Let's agree on something. I agree with you we've got to do more exporting. But in order to export products, you've got to make products. You've got to create jobs here at home so that we make things again and we are the pride of the world economy.
I have absolute belief in American ingenuity, America's hardworking -- the management, the business management of this -- of the corporations of this country, that we can make products that can compete and out-compete anywhere if given a fair opportunity. What we need to do is integrate all of those policies together so we get that fair opportunity, and we will export more.
HAASS: Well, on that rare note of -- (laughter) -- seeming overlap, I want to thank Richard Trumka for coming to the Council on Foreign Relations. We hope it's not 10 more years before we see you. (Applause.)
TRUMKA: Invite me back.
HAASS: Thank you.
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