The American people are continuing to struggle with economic uncertainty and are perplexed as to what it’s going to take to turn the economy around. Recent Department of Commerce (DOC) figures are depressing and don’t help for optimism as consumer spending suffered a 0.1 percent decrease in May, adjusting for inflation. This comes on the heels of a 0.2 percent drop in April. It’s no wonder that Americans are reluctant to part with their hard-earned money given the state of the economy at large.
Last week, we were treated to yet another grim reminder that our so-called “recovery” is more like anything but. According to DOC’s most recent review of the data, the U.S. gross domestic product (GDP) shrank 2.9 percent in the first quarter of 2014. GDP is critically important because it measures the market value of the goods and services produced by a nation. And while 2.9 percent may not seem like a massive drop, it happens to be the worst such contraction in five years.
The Wall Street Journal provided even greater context, pointing out that the economy performed worse in this quarter than those in which the 9/11 terror attacks, Hurricane Katrina and the implosion of Lehman Brothers occurred. According to their analysis, for the economy to catch up with its previous growth rate, it would need to grow at a rate of more than four percent for the remaining three quarters of 2014, which the Journal said hasn’t happened in over ten years.
Getting our economy moving again is certainly a challenge, but the United States does have one secret weapon in the fight against stagnation which we have yet to deploy: our full international trading power. By passing Trade Promotion Authority (TPA) legislation, Congress can work with President Obama to finalize crucial trade agreements so that American goods and services can flow more freely around the world, supporting domestic jobs and giving our economy the boost it so desperately needs. Unfortunately, TPA has been held up for far too long because of shortsighted political calculation.
Passage of this legislation would help the United States hammer out trade agreements with both new and existing trading partners. Our trade with Europe would increase via the Transatlantic Trade and Investment Partnership (TTIP), and we would trade more with Asian and South American allies through the Trans-Pacific Partnership (TPP). We sent $2.3 trillion worth of quality American goods and services around the world last year, and these two trade agreements would only enhance our trading clout. And that means maintaining support for the 38 million American jobs – one in every five – which depend on international trade. But trade isn’t immune to economic forces either – the recent Commerce Department report stated that U.S. exports declined by nearly nine percent. This downward trend must be reversed.
The problem lies with members of the President’s own party. Democratic leadership in both houses of Congress, Harry Reid in the Senate and Nancy Pelosi in the House, have vowed to block TPA legislation. Earlier this year, Pelosi said it was “out of the question.” Not at all coincidentally, TPA is also opposed by Big Labor. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka has been an especially strident critic, taking to Twitter to state that his organization “opposes the TPA legislation in the strongest of terms and will actively work to block its passage.” As union membership – and hence, union dues – continue to decline, labor bosses have reason to fear an expansion of free trade. It only accelerates Big Labor’s inevitable fall into irrelevance. That’s been a long time coming; however, it’s shameful for union bosses like Trumka to put their own interests above those of the American workers whose jobs depend on international trade.
But Big Labor won’t get the message as long as Washington politicians like Reid and Pelosi – who take plenty of union campaign contributions – keep heeding their every last word. The President has the power to lean on members of his own party to pass TPA, which would remove roadblocks to trade expansion and give our economy a much-needed shot in the arm. The recent dip in GDP should make clear to him that the time for such action is now.