A Barack Obama administration would mark a “break” from the US trade policies of the last few years and push for agreements that would help overcome America’s growing scepticism towards globalisation, says Jason Furman, Mr Obama’s economic policy director.
Many observers have expressed concern about Mr Obama’s fealty to existing trade deals, such as the North American Free Trade Agreement, which he has promised to renegotiate to improve its labour and environmental protections.
Both Canada and Mexico, America’s Nafta partners, have signalled anxiety about Mr Obama’s pledge to re-open the deal. But Mr Furman, a former Clinton administration official who joined the Obama campaign earlier this month, insisted that Mr Obama was “a free trader” who was “firmly committed to the multilateral trading system”.
That did not mean he would dilute his promise to reopen Nafta: “Barack Obama believes that the benefits of Nafta were oversold to the public and that it has cost a significant number of jobs [the Obama campaign estimates 1m job losses] in lots of communities and sectors of the economy,” said Mr Furman, in an interview at Mr Obama’s 11th-floor headquarters in downtown Chicago.
“Ultimately this has made Americans more sceptical about free trade. Improving Nafta requires a break from the trade policies of the last few years, but not a break from trading with the world . . . We are confident we could work together with Canada and Mexico to find a way to amend Nafta that is in the interests of all three countries.”
Mr Furman said the details of how Nafta would be reshaped had yet to be worked out. And he was sceptical about prospects for reviving the Doha Round of world trade talks. “It is impossible to talk about what Senator Obama’s views are on an agreement that doesn’t exist,” he said. “He does not want to pull back from the world – he wants to pull back from the failed trade policies of President Bush.”
Mr Furman, who would be in line for a senior role in an Obama White House, sketched out an administration that would re-calibrate America’s approach to globalisation, both by amending its trade stance and by boosting investment in the middle classes, which he described as the engine of US growth.
He was scathing both about the effects of Mr Bush’s economic policies on the middle classes and about John McCain, whom he described as someone “who isn’t straight-talking about the choices we confront”. Mr Furman pointed out that the median household was almost $1,000 (€642, £508) worse off in real terms today than in 2001.
“Someone smarter than me can figure out a bumper sticker that says this was the first expansion on record where typical families ended up worse off than when they started,” he said. “There’s nothing in George Bush’s fiscal policies that an Obama administration would want to emulate. They’ve contributed to the significant weakening of America’s economy.”
Among Mr Obama’s priorities would be restoring public investment levels in basic scientific research, middle class education and creating a system of universal health insurance. He would also push fiscal redistribution by eliminating most of Mr Bush’s tax cuts for those on more than $250,000 a year while pushing through a $1,000 tax cut for middle class households. In addition, the wealthy would be subject to Social Security taxes on earnings above $250,000.
Mr Furman also drew a contrast with Mr McCain’s tax plans, which include a sharp reduction in the corporate rate to 25 per cent. “This race is not over who is cutting taxes. The question is: Who are you cutting taxes for? Barack Obama is cutting for middle-class families, John McCain for corporations and high-income households.”
He said all of Mr Obama’s proposals were fully paid for by offsetting measures. He contrasted this to Mr McCain: “It is when you pretend that you can get a huge corporate tax cut and pay for it by eliminating fraud, waste and abuse, that is indicative of someone who doesn’t know what a budget is,” said Mr Furman. “Mr Obama is totally willing to put his priorities down on the table, and that is the most important emblem of fiscal seriousness.”
But the centrepiece of an Obama administration would be to make globalisation work for a majority of Americans, he said. “Globalisation is clearly posing an increasing set of challenges,” said Mr Furman. “It is the source of America’s strength economically, but much of those benefits have been captured by the most successful while others have been left behind as inequality has increased and insecurity remains high.”
Copyright The Financial Times Limited 2008
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