THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY SECRETARY OF LABOR ALEXIS HERMAN, SECRETARY OF COMMERCE BILL DALEY, AND DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL GENE SPERLING
The Briefing Room
1:11 P.M. EST
MR. TOIV: Good afternoon, everybody. Welcome to the White House. Today we have to brief on the trade adjustment assistance and other provisions that the President talked about today, Gene Sperling, the President's National Economic Advisor; Secretary of Labor Alexis Herman; and Secretary of Commerce Bill Daley. I have to warn you that Gene may need to leave early for meetings on the Hill, so we're going to try to move this along pretty quickly.
MR. SPERLING: Thank you. The President's economic strategy of deficit reduction, investing in people, and open markets has been a winning economic strategy. And this proposal is designed to make more Americans winners from economic change.
This proposal can be -- this is a proposal that is a set of policies that will be in the President's next budget. All of the things in here will fit within his budget and, therefore, within the constraints of the balanced budget agreement.
You can look at this in three overall categories -- first of all, I should say that from the very first time President Clinton -- or at the time, candidate Clinton in 1992 -- spoke on major trade agreements, it was very important that he was setting a new economic vision on open trade, which was that he was rejecting those who called for resisting change through closing markets, or resisting globalization, but also resisting those who suggested that our strategy should be open markets, but every person for themselves.
Instead, the strategy is to have open markets, to try to tear down barriers, and to the degree that some Americans for any reason suffer dislocation, that we should have active efforts to help workers and communities adjust from change and be winners from economic change.
This proposal can be seen in three overall components that come to over $4 billion over five years. So let me be clear on what the numbers are. That is taking the amount that is above what is in our budget now and aggregating it over a five-year total, and that would come to about $4 billion -- a little over $4 billion over five years.
On the worker adjustment component, the first overall area, which Secretary Herman will speak in more detail on, there is number one, our series of reforms that Alexis has been instigating to make sure that worker training programs are working more efficiently, but in addition, there are a couple of holes that we are particularly trying to fill where people have fallen through the cracks in the past. One is that when there is a shift in production, when a company, when a factory closes and goes overseas to a country other than Canada or Mexico, the workers there are not covered. If that same company laid off people because of imports, those workers would be covered. That does not make sense to us and so we are calling for ensuring that workers are covered when a factory closes down and relocates overseas. And that would cost around $349 million over five years.
In addition, one of the accomplishments the President often talks about is that we have been able to double the funding for dislocated worker assistance. We're making a commitment to have a steady path of further increases so that five years from now we will have tripled where we were in 1993, and that would come to $750 million cumulatively over five years over our current baseline.
There is $250 million that is earmarked for another problem, which is that of what is called secondary workers, which means that when a company is hurt by trade there are suppliers, often small suppliers, who are hurt, some of their workers are affected. And these workers have been eligible for NAFTA TA but many did not know that. This makes sure that anybody in this situation be eligible for trade adjustment assistance, or NAFTA trade adjustment assistance. And we're making a commitment that in the discretionary funds there would be $250 million over five years set aside.
Now, I want to make clear -- that $250 million is set aside from current funds. So that is setting aside money to deal with the secondary workers. That is not new and additional funds beyond. The new and additional is the $750 -- and the $349.
In addition, in the actual fast track itself there is a two-year extension of trade adjustment assistance which costs $662 million. So that is the new funds that are part of the trade adjustment -- the worker training part of this package. In addition, there is a new trade adjustment assistance contingency program and that deals with the fact that often those who fear that in some way there could be some possibility that there would be greater need in the future -- this makes sure that if there is additional need for trade adjustment assistance that the door would never be shut on anyone, that funds would automatically trigger for trade adjustment assistance. And so this gives a guarantee to somebody voting for trade agreement that if for some reason things did not go as well as possible or there was a regional problem in a certain part of the economy, that there would always be funds available.
Those are the components that make up the first overall part, which is the worker training and retraining component of the package.
The second component of the package, which Secretary Daley will speak more of, includes $250 million in additional money over five years for a better coordinated effort on community adjustment on the domestic side. In the Defense Department there is an Office of Economic Adjustment that has been very successful in coordinating the government and local communities when there is a base closing. So in other words, they have project managers who are specialists in being team leaders on the ground who catalyze the grass roots and also come together and can coordinate an entire federal government effort.
Unfortunately, on the domestic side we have never been as coordinated as we have in the base closing side. And so what we are trying to do right now, and what this bill would do, is it would create a domestic equivalent of the Defense Department's Office of Economic Adjustment so that at the Commerce Department there would be an Office of Community and Economic Assistance who would make sure that the excellent work that's being done in Labor, in Commerce, SBA, HUD, Treasury are coordinated so that when a community does lose a major industry, there can be a coordinated effort. And I think that is a major improvement and a major reform that we feel very good about and has been something we have been working on and discussing for several months.
In addition in the community adjustment part of the package, we are more than doubling the amount of paid in capital -- actual cash that goes into the NAD Bank -- North American Development Bank community assistance part. And this is money that is available to back up over $150 million in loans or microloans or for grant making. And this helps us make true some of the commitments that were made a few years ago that we feel we need to do more on concerning particularly border communities.
In addition, we're strengthening the environmental part of NAD Bank and improving the export assistance centers so that they're helping more small businesses with exports, particularly those who have not established a track record as of yet.
In addition, the third component is helping workers -- not just those workers in communities who currently benefit from an export economy and may go through an adjustment, but those workers and communities that do not currently have the opportunities or skills or availability of enjoying all the benefits of an export economy. And in doing that, we have several proposals that would be in the President's next budget.
One is that on the empowerment zone, as you know, we won another round of empowerment zones in the balanced budget agreement, but we only had the tax incentive part in. This puts money for grants for economic developments of $100 million a year, or $500 million over five years in here.
Secondly, as part of the youth development work force bill that is being considered now, we are -- Alexis Herman and I are very excited and enthusiastic about one particular part, the out-of-school youth opportunity act, which would provide $250 million, or over $1 billion over four years, to out-of-school youth between 16 and 24. This has been a very successful demonstration project at Labor, but we have been working in a bipartisan way to expand this and we want to make this a strong commitment. And this goes to some of the young people right now and makes sure that they are brought into the economic mainstream and see the opportunity to benefit from higher skills in education.
There are several other proposals in there, including one new tax incentive which is a tax provision for equity investors in specialized small business companies. This was a proposal of Congressman Jefferson that we had tried to get into the balanced budget agreement, but it had fallen out at the end and will be in our next budget.
Overall, before I turn it over to Secretary Herman and Secretary Daley, I think it's important to stress, lower market barriers abroad, more open trade has been a strong economic winner for this country. We've had historic job growth, 4.9 percent unemployment, 4 percent growth for the last four quarters, and an average of 3 percent growth for the entire period the President has been here. Open markets creates high-wage jobs; it leads to innovations; it keeps the cost of products low and consumer products low for American consumers. It is an overall economic winner.
But we also want to say that when we have a policy that is good for the economy as a whole, we still want to make sure that we are there, that this President is there and this government is there for those who would suffer dislocation even in a strategy that has overall positive benefits for the economy, and that's what this package is about.
SECRETARY HERMAN: Thank you, Gene.
Good afternoon. Let me take a few moments to explain to you briefly exactly how the initiatives that the Labor Department will administer will impact workers in the President's proposal that was announced today. First of all, we looked at this issue through the lens of the impact on workers who are basically dislocated because of trade, but also the impact on workers who are dislocated that is not a trade-related impact. We came up with two basic initiatives at the Labor Department to address both sets of workers.
The first set of initiatives speak to a series of reforms that we will engage in to strengthen, to enhance our existing programs to better service both workers. And the second category of initiatives comes under what I call enhanced assistance. Let me speak briefly to the reforms in the first area.
We are basically going to have four reforms in our existing programs. The first reform includes building on and increasing what we're calling our rapid response teams. I liken it to a FEMA situation where we have teams that will immediately hit the ground the day that we're notified that a plant is closing, or in some instances, we will be on the ground before that plant actually closes, so that we will be in a position to certify those workers to expose them to a range of options of what they will have available to them as real tools to help them get the retraining that they need, but more importantly, hopefully training that will lead to real jobs at the end of the day.
The second reform that we're engaging in is what I'm calling fast-tracking our own trade assistance certification programs. We are actually going to reduce the time that it takes to certify a plant that has trade impact and dislocation of workers by one-third, and we have already put those system in place and we expect those systems to be available to every governor in every state throughout the United States.
The third reform that we are executing is to make sure that we can actually measure the outcomes of our programs. Before at the Department of Labor, we know exactly what has happened to workers who have been dislocated because of non-trade issues. We know, for instance, through those programs, that those workers who have come through the dislocation programs at the Labor Department, virtually 72 percent of them get jobs at 95 percent of their previous wages.
What we don't know, oftentimes, is what has happened to workers who have been impacted by trade dislocation. We need to have the same measurable outcomes for those workers as well and to be able to go in go gauge the kinds of jobs that they are getting and at what level of pay in the future.
And then the last reform that we are executing includes closing the basic loopholes that exist in our programs to date. For instance, in our trade adjustment assistance programs for dislocated workers, you can actually get income maintenance support through the unemployment insurance office without necessarily having to go through any kind of retraining that leads to a job.
We think that we should be requiring training as well as income maintenance support in all of our programs, and so we're going to make sure that we put those kinds of initiatives in all of the programs that we are administering to assist dislocated workers.
Under the area of enhanced assistance, Gene has basically already spoken to the two initiatives that the Department will be engaged in. The first, of course, is beginning to look very specifically at secondary workers -- those workers who also lose their jobs because they are in situations related to a major plant, for instance, closing. So if you are a small business in the community or a subcontractor in a community that is providing services to a major plant that has closed down, and your operation can no longer be effective, and you have to lay off workers as a result of that, then these new initiatives will also ensure that those workers who we're calling secondary workers will not lose their jobs.
And lastly, of course, we're very excited about the opportunity to build on our out-of-school youth initiative and to make sure that as we talk about increased participation in this new economy that we don't have winners and losers, and more importantly, that we can especially prepare the young people for the future jobs that they are likely to hold and to know that enhanced education and skill development is going to be the prerequisite to getting the jobs of the future.
Thank you very much, and I will now turn to my colleague, Secretary Bill Daley.
SECRETARY DALEY: Thank you. As you may all know, we at the Department of Commerce Economic Development Administration have been working with communities to adjust the changing economic conditions for over 30 years. And under this President's strategy, as Gene has mentioned, there will be established the Office of Community and Economic Assistance within EDA, and this office will coordinate our federal response to trade-impacted communities. Therefore, it will build upon a very successful model which was employed in aiding local communities to adjust to the tremendous changes in the defense spending.
Learning from this adjustment experience, the Office of Community and Economic Assistance will provide planning grants and also their expertise to help communities develop credible economic adjustment strategies, and they will also bring appropriate state, local and federal groups to the table to provide adequate resources for implementing these plans.
It will be about $50 million a year total -- over five years, $250 million, but $50 million a year -- spread out between $10 million in putting the strategies together and about $40 million in the implementation.
We also at the Department of Commerce play a very important role in the export promotion of U.S. businesses. And our small businesses, which have been the engine of U.S. employment, are producing about three-quarters of the new jobs which have been created over the past few years. It has been obvious to those of us in the Department of Commerce, however, that although small businesses account for about 30 percent of the total manufacturing sales, they represent only about 13 percent of manufacturing exports.
So as part of this strategy to grow exports, we have created 100 export assistance centers around the country which will assist small businesses in their efforts to expand exports. And today we are committing to increase the volume of small business exports and thereby close this export gap, by, one, increasing by 20 percent the share of small businesses receiving export assistance, and, two, increasing by 20 percent the number of rural clients who benefit from export assistance; and third, by instituting new training efforts for all of our export assistance centers around the country to ensure that they will bring full bear, our full arsenal of trade finance and also promotion capabilities to these small and medium-sized businesses, which is as I stated -- are the engine of economic growth in our country today -- in employment.
Thank you very much.
Q Gene, you've got a lot of House members that are still sore about things they were promised in connection with NAFTA that they didn't get. Without any support from Republican leaders for the package you're announcing today, how can you assure that it's actually going to be enacted next year?
MR. SPERLING: We can ensure that it will be in our budget, it will be a priority, and that we'll fight hard for that. We are -- and this is a package; it's right out here. We're handing it out. We've worked with people. We've consulted with people. This is what we'll fight for.
I don't think that you can ever be sure you'll get every penny, even of your top priority, but I think our record has been pretty strong in the area of training and education when we have made something a priority. And I don't think a lot of Republicans are going to want to fight this type of strategy that tries to help people be winners from economic change during a time of dislocation. I met with several Republican members yesterday, and I think many of them will like several components of this plan. Senator Kempthorne came to our event today. So we're being as straight as straight can be. We're telling people exactly what we can do, what we can try to do, and what we'll fight for.
Q Secretary Daley, what are you telling Democrats who are still voicing frustrations about the aftermath of NAFTA and pointing to that as a reason for their opposition to this, saying that some of the promises made along with that have just not come through?
SECRETARY DALEY: We've pointed out that we believe NAFTA has been a success in the report that came out in July, the three-year report. I think we were very -- it was a very credible report that talked about the pluses and also the minuses in the North American Free Trade Agreement. So we've tried to address those concerns. Some of them are legitimate, obviously, and others are just kind of a reaction that in our opinion -- by people who may have been against NAFTA and were going to be against this anyway.
Q What about those who are saying, though, that the guarantees that are promised in side letters or announcements like the one you're making today -- actually, the guarantees are in side letters -- should be at the heart of trade treaties themselves rather than in side letters to those treaties?
SECRETARY DALEY: Well, the President has addressed -- if you're speaking specifically about labor and environment, as he did in the North American Free Trade Agreement, I've constantly reminded my Democratic friends, this is the first President ever to seriously address those two issues when he did in the North American Free Trade Agreement. That agreement was finished by George Bush, but this President wouldn't move it to the Congress until he got an agreement on labor and environment.
Some people can argue whether the environment of the Mexican border has been cleaned up over the last three years; we know it hasn't been. But there has been progress, and had NAFTA not passed, there would be no progress. And as the President stated today in the Oval Office, if fast track doesn't pass, there will not be one toxic site in the world cleaned up, nor one job created in the United States because of that failure.
Q Secretary Herman, how many displaced workers are you prepared to deal with through the programs?
SECRETARY HERMAN: We are prepared to deal with as many as we have to in terms of those that will be impacted. Presently, our existing program has serviced approximately 500,000 workers through the dislocated program in terms of the numbers that I gave of 72 percent reemployment and 95 percent for those who have gotten jobs at a previous wage rate.
But as we look at the opportunities, quite frankly, to do broader outreach and greater outreach under our trade adjustment assistance programs and our NAFTA assistance programs, that is where we know that we can deal with increased capacity, and we're doing that presently.
Q Are you expecting larger numbers than --
SECRETARY HERMAN: It is not so much the expectation of larger numbers as it is my belief that we have to do a much better job of managing the change that is occurring and has occurred, so that we don't lose these workers in terms of the opportunity to get in with an early intervention and to make a difference. We know that early intervention, in fact, makes a difference and reduces the number of long term unemployed in this country.
Q There's a lot of new spending in here. Have any Republicans indicated to you that they may actually end up opposing fast track because of this, the expansion of these programs, and are you concerned about that possible effect?
Q And what's the total of all these components --
MR. SPERLING: I went through that at the beginning, but it's about $4 billion over five years.
Q -- or is that reprogrammed or repackaged existing programs?
MR. SPERLING: No, that's above what would be in baseline, over five years.
Q What are the offsets then?
MR. SPERLING: Much of this is on the discretionary side, so we will have to fit it in our overall discretionary caps. But this is what will be in our budget, and, obviously, everything that's in our budget we will have to pay for, specifically. So there's nothing in here that we have not gone through our budget process on. We've really had to do almost a little mini-budget process to make sure that we can fit the things in here that we can. And we've tried to actually be conservative.
To the basic question, no, because I think that your question would have been right if we had said this is altogether an amendment to the bill. Then that would have required everybody who agrees with fast track to agree with everything in here. This is what we're going to put in our budget; this is what we're going to fight for. People will support some, people will oppose others; but they'll have their ability to do that in the regular budget context.
Q So no one has said that they would oppose -- none of the Republicans have said they would oppose fast track as a result of this --
MR. SPERLING: No, no, not that I know of. Not that I know of.
Q Who were you meeting with on the Hill?
MR. SPERLING: Right now? A member of Congress.
Q Can you talk about the timing of this? I mean, it seems like these are problems that certainly aren't new, they've been around since NAFTA. And all of a sudden, two days before this vote where you don't have enough Democrats you're coming out with this whole grab-bag of proposals. It kind of looks like you're in a desperate last-minute scramble to get this over the finish line.
SECRETARY HERMAN: Your lead statement was could I explain the timing of this given --
Q Why wasn't it done earlier?
SECRETARY HERMAN: Well, actually, the reality is that we have been working on this. This was one of my top priorities when I came in as Secretary of Labor, was actually to look at the impact of dislocation on workers that was trade related and non-trade related. So we have actually been in the process, in recent months, of putting a number of these reforms in place.
I will say, also, that this debate on fast track and consulting with the various members of Congress, my own travels throughout the United States, going into border communities has certainly added to our own information base and has helped to strengthen and to increase the impact of the proposals that we do have today.
Q Secretary Herman, the $750 million, I'm trying to understand what this money is going for. Since you already have a program that covers dislocated workers for a year, does this mean it's going to cover them for two years or is it going to give them more money? How's the money going to be spent?
SECRETARY HERMAN: Okay. There are two new initiatives in the dislocated worker program, as we have traditionally defined it. The first is to look at different strategies around shift in production that Gene talked about. The present NAFTA trade adjustment assistance monies only relates to shift in productions to Mexico and to Canada. It does not include, for instance, Singapore or the Dominican Republic. We believe that shifts in production should be included wherever there is a shift in production and a loss of jobs here. So that's one initiative.
The second area takes into account the secondary worker aspect that we talked about, so that if a small business is related to a major plant environment that is closed down, we believe that we should have the ability to reach those secondary workers as well.
Q -- what's $750 million?
SECRETARY HERMAN: What you're doing is you're taking the existing -- it's really different categories. You're taking the existing base of -- I don't have my figures in front of me; I'm doing this from my head -- I believe it's $580 million is the base there, and we're adding an additional $250 million in that component to reach the secondary workers. In addition to that, in terms of the new requests, we will be asking for $360 million to deal with the shift in production.
Q And the $250 million is for the fifth year, overall five years?
SECRETARY HERMAN: Right.
Q So it's only $250 million plus $360 million? It's not --
SECRETARY HERMAN: Right.
MR. SPERLING: It increases from $50 million a year.
SECRETARY HERMAN: -- $50 million a year over five years is how you get the additional $250 million.
Q And then the $750 million includes the $360 million?
SECRETARY HERMAN: No. That's new monies.
Q What is the $750 million going to be used for? That's my original question.
SECRETARY HERMAN: That's the dislocated worker money. That is actually to deal with the retraining and the traditional payment of benefits that goes to workers who get certified through those programs.
Q -- already, so why do you need --
SECRETARY HERMAN: Right, but the increase is that we're adding to that now. That's what we're doing.
Q Is this the two-year authorization you're talking about?
SECRETARY HERMAN: The two-year authorization plus the new request. We need to give you a chart on that so you can see it graphically. We'll give you a chart on that so you can see that graphically. It is complicated.
Q The unemployment rate, as Sperling remarked, is 4.8 percent, and the Federal Reserve is concerned the labor markets are too tight for the economy right now and are considering raising the interest rates. Why do you think the economy needs another spending program to help people find jobs when they apparently are finding them just fine as it is?
SECRETARY HERMAN: I think what's important to point out when you look at what is happening in the economy today -- and you're right, we have the lowest unemployment rates that we've had in two decades, 24 years -- but the reality is, you certainly have key communities throughout the United States that are still suffering with higher rates than the norm of unemployment. What we want to do is to better target our resources now and to go in with clearer micro-strategies, if you will, to make sure that we impacting those communities as well, so that everyone can, in fact, benefit from the gains that the economy is showing.
But you do have key communities that have not felt the broadly-shared prosperity that we're seeing overall in the nation today. These funds, these resources are designed to target those communities where we know we've had dislocation occur, where we know we've had trade impact, particularly as we look at some of our border communities today in the United States.
Q Secretary Daley, it looks like you're a lot further short of the support you would need to win a House vote than you were at this same stage in the NAFTA debate. Do you have enough time between now and Friday to make up the gap? And how do you think you're going to do?
SECRETARY DALEY: There is enough time to make up the gap. Neither side -- the bottom line is, neither side has 218 at this point. Obviously, if the opponents of fast track had 218, they would be out with the numbers. So neither side has it. It's going to go down to the wire, and everyone from the President, the entire Cabinet, the Republican leadership, and our Democratic friends who are working extremely hard -- I mean, we're just -- all we can do is just keep pushing for the next two days till the actual vote.
Q How many votes is this package worth?
SECRETARY DALEY: We would never look at such a package by votes. (Laughter).
THE PRESS: Thank you.
END 1:44 P.M. EDT