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  April 20, 2017

Trump's "Hire American, Buy American" Is More Show than Action

CEPR co-director Dean Baker says Trump's executive order "Hire American, Buy American," to change the H-1B work visa, does nothing, but the program should be changed to attract higher skilled workers.
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Dean Baker is co-director of The Center for Economic and Policy Research (CEPR). He is the author of several books including, The United States Since 1980; Social Security: The Phony Crisis (with Mark Weisbrot); and The Benefits of Full Employment (with Jared Bernstein). He appears frequently on TV and radio programs, including CNN, CBS News, PBS NewsHour, and National Public Radio.


KIM BROWN: Welcome to The Real News Network in Baltimore. I'm Kim Brown.

Donald Trump signed an executive order called “Buy American, Hire American” on Tuesday.

The order which Trump signed in Wisconsin, directs the Departments of Labor, Justice, Homeland Security and State, to review the existing policies for the so-called H-1B visa program.

This Visa program gives 85,000 work visas per year to foreigners to work in the U.S., for which no U.S. citizen can be found. Trump's executive order also calls for a review of government procurement rules to see if more U.S. made products can be purchased, especially from the U.S. steel industry.

Here's what Trump had to say about the work visa policy.

DONALD TRUMP: Right now, widespread abuse in our immigration system is allowing American workers of all backgrounds to be replaced by workers brought in from other countries to fill the same job for, sometimes, less pay.

This will stop. American workers have long called for reforms to end these visa abuses, and today their calls are being answered for the first time.

That includes taking the first steps to set in motion a long-overdue reform of H-1B visas. Right now H-1B visas are awarded in a totally random lottery, and that's wrong. Instead they should be given to the most skilled and highest paid applicants, and they should never ever be used to replace Americans.

KIM BROWN: So joining us to analyze Trump's “Buy American, Hire American” executive order; we're joined today with Dean Baker. Dean is the co-director of the Center for Economic and Policy Research. He is also the author of the titled "Rigged: How Globalization and the Rules of Modern Economy Were Structured to Make the Rich Richer”.

Dean, Thank you again for joining us here on The Real News.

DEAN BAKER: Thanks for having me on.

KIM BROWN: So now, the actual executive order that Trump signed does not really do much of anything, except for review existing policies.

However, as we saw in the clip, Trump did suggest that he would like to see restrictions on the H-1B visa program, so that only the highest paid workers would be able to receive these visas in the future. So what do you think about this proposed change?

DEAN BAKER: Well, you know, first off, yeah, basically the immediate action was just for show.

There are a lot of issues with the H-1B program.

As it stands now, as Trump said, he's correct, it is done by a lottery and the winners of that lottery are, to a large extent, Indian sub-contractors who put in for God knows how many positions, and they get a substantial number of them, and they basically act as sub-contractors who hire Indian software engineers and contract out with U.S. companies.

So there's actually a good argument that, why don't we do this: you could do an auction system - whoever's willing to pay more; you could try to more carefully scrutinize skills.

As it stands now you have people that the bottom pay is $60,000 a year - I believe it's 60, it might be a little more than that now - but in any case, roughly $60,000 a year.

These are not highly skilled people. These are people who have skills, but the idea that you can't find anyone in the U.S. who has those skills, that's almost certainly not true.

So there's arguably a good case: whatever number we have, why not get the most skilled people we can find? So that actually, to my view at least, wouldn't be a bad policy. But he's not doing that here. He's mentioning that that would require Congressional action.

KIM BROWN: So some software companies are saying that the main effect of such change would be to encourage more outsourcing.

That is, instead of bringing the skilled workers here to the U.S., the companies instead would re-locate to where the workers are presently.

So what do you make of this argument?

DEAN BAKER: There's something there. But keep in mind if he does as he's suggesting, simply changing the workers but not changing the number, then it's hard to see why that would be the case.

So, in other words, what I mean is, we're going to get a more highly skilled worker who, presumably, has benefits for the U.S economy, greater benefits, I should say, to the U.S. economy than a less highly skilled worker.

So if you're not changing the number, I really don't see that story.

Again, some company that would have gotten a worker through the H-1B program that doesn't get it 'cause you have a different system, maybe they will be more likely to outsource.

On the other hand the company that did get a worker who wouldn't have otherwise, under the current system, they'll be less likely to. So that argument doesn't really work, I would say.

KIM BROWN: So, Dean, what do you think a more sensible policy with regard to the H-1B visa program would look like?

DEAN: Well, I think, certainly, replacing the lottery system with some sort of auction system - so you do have higher paid workers - and another way of getting a kind of similar result is raising the minimum wage.

Again, currently it's somewhere around $60,000. Suppose you made it a $100,000, or $110,000, $120,000. Again, the argument being put forward by the industry is these are people with skills that they can't get here. Well, someone with very specialized skills in software getting $60,000 - that doesn't quite fit.

KIM BROWN: So, let's turn to the portion of his executive order, the “Buy American” aspect of this.

So, here too, did Trump not change any existing policies yet?

But he is saying that government procurement and imports must … more generally should make sure that U.S. made products are given preference. What do you think of the principle, assuming that it can actually be enforced?

DEAN BAKER: Well, we're limited in our ability to discriminate based on something being U.S. made as opposed to imported, based on any number of trade agreements.

So, there's very limited room. You'd have to read up, be more specialized in the knowledge, the treaty language than I am. But there's very little room for the U.S. to have preferences for U.S. made goods over imported goods.

So, again, unless you were to abrogate those treaties - which at times he has suggested he wants to do, but he's not taking any steps to do that with any of the treaties - you're really quite limited in what you could do in that respect.

KIM BROWN: So, the big question, apparently, is whether such policies on “Buy American” can even be enforced, as you just raised.

So, what are the problems in this regard? And do you see any good ways that this could actually even be achieved?

DEAN BAKER: Well, I mean, the problem if we were to do something that was in violation of a treaty, they would almost certainly take it to - let's say it was a violation of the WTO, the World Trade Organization rules - they would take it there, we would presumably lose.

They may also attempt to retaliate. Of course the way the WTO works is, they take the case to the WTO and if it's determined that we're in violation, then we have the option; either we stop the practice; or, alternatively, they're authorized under the WTO to retaliate.

That's generally a path you don't want to go. I mean, it's a path of a trade war. We'll export less of something, in exchange for, you know, we'll have this “Buy American” policy.

Again, in all cases, I wouldn't say that's bad. But you better have a pretty clear idea of where you want to go with it, because the immediate effect is not likely to be a good one.

KIM BROWN: You know, this executive order could be described by some as pretty toothless, considering the strong rhetoric that Trump used while campaigning against this program. And even as he was signing off on it, his rhetoric was still pretty tough.

But, compared to the actual language of the executive order, this is more of just a review rather than changing policy that we have in regard to the H-1B visa program.

So whose benefit is this for, Dean? Who is Trump trying to appeal to by doing this executive order?

DEAN BAKER: Well, during the campaign he made a lot of big promises on trade, bringing back manufacturing jobs, and to date, at least -- you know, I recognize he’s only been in office three months - but he hasn't even begun to take the first steps.

And most recently, he had China's president here, and it seems as though currency was not discussed. They at least didn't make a point of saying that currency was discussed.

So, if you're going to look to try to bring back U.S. jobs or reduce our trade deficit, it seems first and foremost you'd want to try to get the value of the dollar down against other currencies. And China would pretty much have to be at the top of your list.

So, if you're not doing that, then it seems as though President Trump's not very serious about getting the trade deficit down, and it seems like he's substituting a show for action. And so basically what we're looking at is a show, and trying to convince workers he's really on their side.

KIM BROWN: You know, Donald Trump, in his merchandising empire, along with his daughter Ivanka, they have completely outsourced the manufacturing of the goods that they themselves sell for retail here in the U.S. and obviously around the world also.

So, it's a bit hypocrisy here, at least on the surface, for Donald Trump to tell American companies - you know, the big software companies - that they cannot import lower cost foreign workers on these visas, while Donald Trump and his family tend to enrich themselves financially off the low wages of foreign workers themselves, outside of U.S. borders.

What are your thoughts about that?

DEAN BAKER: Well, I'm not as concerned about that, in the sense that I expect people to respond to incentives. So, again, I wouldn't blame the software company for trying to get a lower cost worker. The government's job is to get the incentives right.

What worries me most about the Trump family vis-à-vis their foreign dealings, is they are continuing to do that even as he occupies the White House.

And, as we know, China just offered a number of, approved a number of trademarks, I should say, for the Trump Enterprises. And this is the sort of thing - you don't want your president to be in a situation where he's negotiating with the president of China over getting trade marks for his company.

I don't know if he was negotiating, but we shouldn't even have to ask. But that's the situation we're in right now.

KIM BROWN: We've been speaking with Dean Baker. Dean is the co-director of the Center for Economic and Policy Research. He's also the author of the book titled "Rigged: How Globalization and the Rules of Modern Economy Were Structure to Make the Rich Richer”.

Dean, we appreciate you speaking with us today Thank you.

DEAN BAKER: Thanks for having me on.

KIM BROWN: And thank you for watching The Real News Network.




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