Commerce Secretary Carlos Gutierrez talks free trade
December 4th, 2007 by Brendan SteinhauserFree trade is an issue that has not been at the forefront of the presidential debate, other than the occasional protectionist rhetoric of Hillary Clinton, John Edwards or Mike Huckabee.
Watch this short video clip of U.S. Commerce Secretary Gutierrez talk about trade versus protectionism. There is a series of clips from his speech at the Heritage Foundation here in Washington. [Hat tip to Robert Bluey.]
December 4th, 2007 at 7:27 pm
That is why every person and PAC should oppose Huckabee at all costs. We can’t let him get the Republican nomination.
December 4th, 2007 at 8:37 pm
The debate is not just free trade vs. protectionism, some opposed to free trade are very much pro-import, because you need imports, tons of imports, to pay the taxes via revenue tariffs. That’s how we used to fund gvt. in the 19th and much of the 20th centuries, and for much of that time we didn’t even need an income tax as a result. (Not a bad trade-off, huh?)
The difference between revenue tariffs vs. protective tariffs is whether or not it is intended for the tariff to be collected. Revenue tariffs (10-20%) provide revenue that allow you to reduce taxation domestically, giving our manufacturers some more breathing space. Protective tariffs (1000% or whatever) are not meant to be collected, but just designed to force you to buy domestic. I share your disdain for that latter but thoroughly support the former.
The problem with free trade–aka 0% revenue tariffs–is that it requires you to hike up taxation domestically in order to make up for the lost revenue, which hurts domestic industry and gives an unfair advantage to foreign producers. Free trade–raising domestic taxes in order to exempt it on foreign products–is really just reverse protectionism in disguise.
December 4th, 2007 at 9:42 pm
Or you can cut spending instead of hike taxes.
When it gets right down to it, tariffs are taxes.
December 5th, 2007 at 1:57 am
Of course–revenue tariffs are taxes, no more pleasant or unpleasant than the income tax, property tax, sales tax, and whatever other taxes. It feeds government coffers. When you zero revenue tariffs out, you only have to raise it elsewhere, dollar for dollar. There’s no such thing as a free lunch.
Further, if the “elsewhere” hits domestic industry, then you have more unemployment, which means more people not paying taxes, needing public assistance, committing crimes and needing expensive imprisonment, etc., etc. So you now need to raise income taxes not just dollar for dollar but even *more* due to the societal changes.
You can cut spending by shifting some of the tax burden from the income and corporate tax to the revenue tariff. Reducing corporate taxation allows for more Americans to be hired, which means fewer Americans on welfare, more Americans paying taxes, less crime, etc., which means less $$$$ needs to go to the federal piggy bank, which mean taxes can be reduced even further.
Within certain percentages, the revenue tariff is the most efficient form of taxation around. Because of the societal changes it engenders, $1 of taxation via revenue tariffs probably does as much good as $4 via income taxes. That’s why the federal government could survive on revenue tariffs alone for so much of its history.