U.S. economists back free trade, worker safety net

[OhioChick]

February 1, 2007

By Emily Kaiser

WASHINGTON (Reuters) - U.S. policy should not seek to stop globalization, but government needs to cushion the blow for those who lose their jobs to foreign competition, leading economists told a congressional committee on Wednesday.

In the first hearing of the Joint Economic Committee under the new Democratic-controlled Congress, former Treasury Secretaries Robert Rubin and Lawrence Summers urged Congress to curb debt but also invest in areas including education and health care to support the middle class.

Global trade, the rise of China and India as economic powers, and technology-driven productivity gains can benefit the U.S. economy, but heavy government spending, large tax cuts and a savings rate near zero were causing unsustainable and unhealthy imbalances, they said.

"I believe that we should establish a fiscal path that systematically reduces the debt-to-GDP ratio year by year and leads to balance, and at the same time, makes room for critical public investments," Rubin said.

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<snip> The hearing reflected its new Democratic leadership with three of the four speakers presenting assessments of the economy that pointed to a widening gap between rich and poor and called for a safety net of health care, job retraining and tax credits for U.S. workers.


Alan Blinder, a former Federal Reserve vice chairman, said outsourcing of jobs to low-wage foreign countries had eliminated perhaps 1 million out of 140 million American jobs, but as much as 29 percent of U.S. jobs could be at risk later on -- and elected officials should take note.