Boosting benefits for workers hurt by trade

President Bush had to make some significant concessions to key Democrats in Congress to win special authority to negotiate trade agreements.

The biggest was a major expansion of "trade adjustment assistance" (TAA) – to help workers who lose their jobs because of imports or the flight of factories abroad.

A significant new provision gives displaced workers a subsidy to maintain health insurance for their families. They can get a refundable tax credit covering 65 percent of the cost of keeping coverage.

"This is an incredible precedent," says Howard Rosen, a former Democratic staff director of the Joint Economic Committee of Congress. Mr. Rosen left to work closely with Senate Finance Committee Chairman Max Baucus (D) of Montana to improve TAA for workers.

The White House and key congressional Republicans fought successfully to keep any health-insurance subsidies for laid-off workers out of the stimulus package before Congress earlier this year.

Senate majority leader Tom Daschle gave up on that fight, but strengthened his resolve to push trade legislation he cosponsored that would create an unprecedented federal healthcare benefit for workers hit by imports. Watered down somewhat, that provision was included in the final bill that President Bush signed last week.

"We are starting down a slippery slope here," warns Ron Bird, an economist with the Employment Policy Foundation in Washington, whose organization is backed by businesses, individuals, and philanthropic groups. If the federal government helps one class of unemployed workers keep health insurance coverage, other jobless workers could press Congress for the same.

The AFL-CIO, though opposing the trade bill itself, welcomes the expanded TAA with its health-insurance provision.

"We are glad there is some minimal benefit," says Elizabeth Drake, an international policy analyst at the labor federation in Washington. "It does set a precedent."

Some see it as a piecemeal step toward national health insurance. Texas Sen. Phil Gramm (R) calls the health-insurance aspect of TAA "socialism."

Mr. Rosen sees it as an acknowledgement by Congress that maintaining health insurance is "a necessary expense – just like food and shelter" – for workers.

The expansion of TAA is not cheap.

The Congressional Budget Office estimates TAA's cost rising from $416 million in fiscal 2002, helping 35,000 displaced workers, to $1.2 billion a year, or $12 billion over 10 years. Mr. Bird makes it $23.6 billion over 10 years, making different assumptions as to how many workers will take advantage of the new TAA provisions.

In federal terms, that is starting to be significant money.

But nobody really knows the future cost. Experts can only guess how many workers will apply for benefits under the expanded entitlement program.

To Rosen, TAA expenditures are only fair to workers hit by expanded trade.

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