Blame game fact check!

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After seeing Paul Krugman say that the collapse of Doha is less troublesome than the 2002 steel tariff, Brad DeLong starts the blame game:

I remember Glenn Hubbard, Larry Lindsey, Greg Mankiw, and company all saying that Bush had to impose his steel tariffs in 2002 as a price for getting fast-track authority so that he could successfully complete… the Doha Round.

When and where did they say it? Here’s a WaPo review of how it played out:

R. Glenn Hubbard, then chairman of Bush’s Council of Economic Advisers, drafted detailed analyses against the tariffs, including state-by-state job losses that he forecast for manufacturing…

then-Treasury Secretary Paul H. O’Neill expressed philosophical opposition to tariffs, but he was more interested in opening talks with allies on limiting steel production capacity abroad.

At a crucial meeting of the economic team, tariff opponents said they were abandoned. O’Neill sent his undersecretary for international affairs, John Taylor. Then-Budget Director Mitchell E. Daniels Jr. told Hubbard, who also has since left the administration, that he would back him, but left the meeting before Hubbard’s presentation. And Lawrence Lindsey, the famously opinionated chairman of the White House National Economic Council, decided his role was to facilitate the discussion, not express an opinion.

Perhaps most importantly, former Bush economic advisers said, Robert B. Zoellick, the U.S. trade representative, supported the tariffs, figuring that backing them would win congressional votes to give Bush “fast track” trade negotiation powers.

So we can indict Zoellick. And Lindsey and O’Neill can be blamed for being too passive. In fact, an article in the Sunday Times (“Steeling away,” 10 March 2002) makes it clear that Lindsey was on board:

“Instinctively, I am a free trader. But in the case of steel, the free-trade argument is tough to make. Tariffs are never my first choice, but the second, third and fourth choices weren’t too good either.”

And what about the electoral politics? “I’m sure that never entered the calculus,” says Lindsey, his broad smile giving him away.

Also blame Karl Rove and Commerce Secretary Donald Evans, who fought Hubbard, according to this NYT story.

Greg Mankiw was not in the administration at the time, and Factiva and Google return no relevant results for Mankiw + steel in 2002. When did he say something in support of the steel tariffs?

Blame Rove. Blame Zoellick. Blame Lindsey. Blame Evans. Indeed, Bruce Bartlett blamed them when the tariffs were imposed. But where’s the dirt on Glenn Hubbard and Greg Mankiw?

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One Response to “Blame game fact check!”

  1. Brad DeLong Says:

    Lindsey is in the National Journal in 2002 http://www.j-bradford-delong.net/movable_type/archives/000429.html: “Let’s take steel first. I am not telling anything here that wasn’t public. There were two legitimate economic points…. One argument is that tariffs are never good. I certainly taught that in my economics class. The other argument [represented by Zoellick and Evans] is a little bit more subtle. The world has excess capacity in steel. In any market where that is the case, price is going to be at marginal cost, and marginal cost is going to be below long-run average total cost…. Either you say, “OK, we’ll let our firms exit, and we’ll let other countries pick up [the business], and we’ll just import our steel.” Or you say, “Well, that’s not a very tenable long-run strategy for any country, because you are effectively letting others pick which industries are going to prevail.” Do you unilaterally disarm, or do you use laws that are now on the books?…. There is a sound economic case for doing what we did.”

    Hubbard is here http://www.j-bradford-delong.net/movable_type/archives/000557.html: “The steel tariffs are a complicated question. If you ask the narrow question, are steel tarriffs in the US economic interest, the answer is no. But that’s not the decision the President had to make. He had to make a very difficult structural adjustment that would rationalise the steel industry for the long-term and enhance the prospects of obtaining trade promotion authority, which he got.”

    IIRC, Mankiw’s comment was to Christie Romer at an NBER dinner in 2003…

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