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tv   Politics and Public Policy Today  CSPAN  May 12, 2016 12:00pm-2:01pm EDT

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interview is available online. thank you for being with us. >> thanks for having me. next an economist says donald trump's proposal to increase tariffs on china, a plan with no economic foundation. gordon hansen's comments came during a discussion on china's trade practices and the impact on u.s. labor markets. jared bernstein a former economist with the obama administration also participates in this forum. let me welcome all of you today. i'm fred berg extend. i wassed founding director of
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the institution, and delighted to welcome you to for thick larry important and timely event we all know that trade has become a central issue in the domestic political debate. we know that the impact of trade on jobs and wages is central to that debate, and we now have with us today the leading experts on that topic of the impact of trade on u.s. jobs and wages, david otter and gordon hansen, along with david dorn, they have done a series of papers that i think are fair to say are the definitive work on the topic widely regarded and widely yod and cited throughout the national debate. in fact, so much so that a couple people coming up and meeting them before the event
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said you are rock stars, we're delighted we knew you back when, which i think is probably accurate. also, i must say, very much to their credit, they have on the one hand quite objectively analyzed some very severe adverse impacts of past china shock trade flows on the u.s. economy and u.s. labor, and at the same time they have said but we don't dump on free trade and open trade and globalization. we think it makes sense, but you have to deal with these down sides and costs of the situation, and they've been very clear, for example, they support the tpp, they're not saying turn your back on trade, but they are flagging in a dramatic way, i think, as well as a highly persuasive and annual lit real -- that have not been dealt with adequately. that's the topic today, dave odder is one of the most distinguished trade economists in the country, a full professor of economics at m.i.t. since 2008, associate head of the economic department there. he taught previously at harvard
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in the university of chicago, won many awards for his work on labor economics, in 2080 outstanding contributions in the field of labor economics, and many other aawards of that type. he copresenter today and co-author, in that whole range of studies is gordon hansen, who's professor of economics at the university of california san diego. as some of you know, we here at the institute refer to that as it is peterson institute west, because we have had so much coordination. gordon holes the chair in international economic relations at ucsd both david and gordon are research associatesty national bureau of economic research. david is editor of the journal of economic perspectives and gordon is a co-editor thereof. they'll make the initial presentation, and then we'll
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have initial commentary by jared bernstein, as many of you in washington know, jared is a senior fellow at the center of budget and policy priorities, prior to which for the first two or three years of the obama administration, he was a center member of economic team, as chief economist and economic adviser to vice president biden. prior to that jared has written widely in both academic and popular venues on issues of labor economics, labor reform and the like. so i think we have an absolutely central topic for today's discussion. we have i think the best possible authors and speakers to present new and critically important findings, without fur ado, i will turn to, gordon will go fir, david, jared will make comments and we'll all go up front for a discussion with the
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audience. gordon, take it away. >> thank vessel, fred. it's been an exciting project that we have embarked on in the last number of years. one of the things we want to try to communicate today in understanding the impact of trade on labor markets is in a sense how can we hold at the same time the belief that trade has had adverse consequences for important segments of the u.s. labor force and still thing that trade is good in the aggregate.
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that sort of subtlety is something that's gotten lost in the current political debate. so we don't need to motivate the notion that trade and politics are intimately entwined today. trade has become a punching bag both on the republican side and donald trump's presidential campaign and in bernie sanders ease campaign. it's useful in thinking about why trade has become such a lightning rod to go backwards in time and think about how we got here. and the promise of globalization that was presented not just in the united states, but around the world. the idea was that globalization was going to make the u.s. commit better off. a foundation well founded in economic theory. there's a substantial amount of research that backing up that idea.
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what we didn't pay that much attention to was the possibility that trade could have adversion impacts on certain parts of the labor force, on certain regions of the united states that happened to be more specialized in industries that are competing. that inattention to the vulnerability of certain key parts of the u.s. economy to trade left us vulnerable to possible disrupting effects of other aspects of globalization. well, what was the big disrupting feature of globalization. it wasn't nafta. nafta's impact were trifling, relative to what the impact of china's growth has been. so we now are very familiar with the idea that china has had enormous consequences for the global economy, as china has lifted several hundred million people out of its own economy.
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it's transformed the way in which global markets operate. that's ex-post wisdom. if we go back to 1990, china's future potential wall street very much in doubt. in 189 "wall street journal" in prognosticating about what would happened in the 1990s said let's think about the three economy that is are most likely to excel. they are bangladesh, thailand and zimbabwe. they identified china as likely to be a laggard in the coming decade, because it wouldn't be able to shake off the -- lo and behod the world turned out much different. i don't want to beat up on journalists here, economists were just as far behind in terms of understanding what xhin's future impacts would behold. what we want to emphasize here is this was really a one in an epoch change. china had kept itself
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tremendously backwards relative to the rest of the world. with four decades of technological advantage, china had very much stayed in 1949. so that meant there was tremendous latened productivity growth that was waiting to happen. the process -- unleashed that growth. that is a big part of china's emergence, if you go back to 1991, imports from china accounted for only about 1% of total u.s. expenditure on manufactured goods in the united states. that 1% is now around 10% today. there are many call at affects, bush rather understanding their consequences on the u.s. economy. i know many that currency manipulation played in china's growth. others have emphasized the role of reform and state-owned enterprises. china's accession to the wto unleashed a complicated set of reforms in the economy that helped growth accelerate.
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so what did it then mean for the united states? well, if we were to take trade theory at the time and say what would china have done, we would have thought in terms of broad classes of workers. it's going to hurt blue collar workers relative to white collar workers. it's going to help the more educated and hurt, the less ed indicated in a relative and perhaps absolute sense. this is decades, if not centuries of economic theory on this, well founded in the traditions of -- and so that's what we had thought, that we should see these diffuse effects across the big sectors of the u.s. market. in truth, what happened was a lot more complicated. this conventional wisdom that, when we have interaction with an economic like china, it's going to spill out generally across lower wage workers turned out to be notice quite right. china's impact his much more concentrated than that and trying to understand those concentrated impacts has been
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what our work has focused on. so to give you a sense of these consequences, what we're going to do is very quickly run through what we have learned about the labor markets consequences of trade, talk about how does -- how does that learning change the way in which we think about the economics of trade and adjustment to trade shocks, and then talk about policy. what has policy done to help or to impede adjustment at the worker level and the regional level from happening, and what might effective policies be going forward in time. so one thing that hasn't been surprising about china's impacts is that the on firms and the industries that have been most directly in the line of fire from china have been hurt. so if you look at trying where import penetration from china has grown at a more rapid clip, what we have seen is higher rates of exit, of manufacturing plants, and we've seen larger
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declines in employment in plants that have stayed in operation. so that part's not surprising, more import competition, you're going to be disruptive effects. what has been surprising to us is the scale of those -- of that disruption at the industry level. so what our work subjects is that the direct impacts of increasing import competition from china can account for about 1 million lost manufacturing jobs in the united states, which is about 17% of the decline in manufacturing employment over the two decades that we look at. so more surprising still has then been to think about not
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just what happens at the industry level, but what happens at the local labor market level. if you think about the u.s. economy. it's a collection of community, a collection of cities that specialize in quite different things. we have parts of the southeast, parts of the southeastern midwest, we have other parts of the country that do very little manufacturing. then when we think about manufacturing regions themselves, there's also enormous head reasonable nayity in those lot. some manufacturing specialize in heavy equipment, some in automobiles, others specialize in more labor intensive industries. so if you map this out and just say if we go back to 1990, and ask based on the patterns of specialization across communities in the united states at the beginning of that decade, who was then -- what did exposure to the coming china trade shock look like? what we see is a checkerboard map. darker colors here show u.s. commuting zones. that were more exposed to import competition from china over the
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subsequent two decades. lighter colors indicate areas that were less affected. what you see is a very striking absence of uniformity. and what you also see, looking through the current political lens is a lot of those darker-colored areas, the areas more exposed to nick in trade competition look like trump country. that is, in fact, what we find. i'm going to plug work we have in progress right now. looking at the consequences of trade exposure for political outcomes in the united states. you see increasing support for politicians at the extremes. primarily on the right, a bit on the left, in response to increasing exposure to trade u. that highlights the long run consequences of some of the shocks. so you then say, okay, fine, we have areas in the southeast. we have areas in the southern midwest that are hit by
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increased competition. what should we expect to see happen. what we thought was the standard rule of adjustment is employment declines, workers leave those regions and go. to areas that have greater job growth. this is just part of dynamic adjustment that's part and parcel of what makes it more flexible relative to europe. our workers found and not just our work. it's a growing body of work in labor economics that looks at other types of shocks to these local communities. that migration response has not been an active margin of adjustment to increasing responses in import competition. so those industries that have gotten hit by greater trade competition with china, they have seen declines. the regions in which those industries are located then see declines in those industries
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that then spill out in activities locally. instead of workers leaving declining regions, what we have instead seen is adjustment along other margins. we have seen absolute declines in employment as a share of the working age population. as workers have exited the labor force or transitioned to long run unemployment. we have also seen as a consequence of that greater benefits, which david will talk more about in a couple minutes. so in the paper we kind of go through great pains to try and put precise metrics on what the nature of this adjustment looks like. and the metric we use, let's think about a commuting zone, let's think about a local labor market at the 25th percentile. one that hasn't been they affected by china.
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and let's contrast that with a local labor market that's at the 75th percentile. high exposure versus low exposure. that difference in exposure amounts over the period we examine the '90s and early 2000s to an increase of about an extra $1,000 in imports per worker. what's the consequence of that greater exposure? so in manufacturing industries, it's a decline in employment as a share of the working age population of about 0.6%. that might not seem like a big number, but this is the share in employment in the working age population, which has changed over time by a magnitude of 3.5%. that's decline is a big number. now if workers were smoothly adjusting between regions, what should have then happened is they moved into other industries. you move in the activities or leave the region entirely.
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we have seen neither of those things occur. what has happened is a movement out of the labor force and increases in unemployment that persist over periods of a decade or longer. not surprisingly, the adverse consequences, the exits from the labor force and persistence in unemployment is more concentrated among lower educated workers. so that's one big lesson that we have learned from our research is that there's this differential exposure of local labor markets. those a areas that have been hit would have persistent declines, without successful out migration. one other important margin of adjustment and turn it over to david to think about putting results in perspective is now instead of thinking about
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industries we're thinking about regions. let's think u about individual workers. let's go back to 1991 and let's imagine two workers that are similar in every observable respect. they have the same number of years of experience. they have the same earnings history. the number of the average wages that that firm pays. the only manner in which these two workers differ is that one works in an industry that it is going to get hit by the china shock and one works in an industry that is not going to get hit by the china shock. so workers displaced from their jobs have adverse consequences. this is work established wi research in the early 1990s.
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those more exposed worker if you think about that worker's twin sees a substantially lower earnings over the subsequent two decades. one set are low wage workers and others are high wage. all of those adverse consequences happen among that lower wage pair. is meant lower earnings in the long run.
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in some what we have seen is less flexibility in response to the shocks as a consequence of trade and so more concentrated losses from trade exposure. this is not that old story of blue collar workers suffering. it's about particular labor markets, particular industries and particular types of workers. and that may be in part why the policy response to those shocks hasn't been as effective as we might want it to be. so as in if our research, we're tag teaming here. i will let david talk about lessons and policy issues. >> great, thank you very much.
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in trying to use microdata and a clear source of variation to identify these causal effects. i want to step back for some of the results and put them in don text. first, should we be surprised by the large effects we find on workers who are displaced by trade? is it trade adjustment or trade itself? the process of getting from here to there or the mere fact we're trading. it's an issue that has a lot of subject to a lot of debate. let me start with should we be surprised by larger losses. this figure is from a paper on jobless. and this just looks at displaced workers. and it looks at average earnings of displaced workers and percentage over a trajectory of 20 years from displacement.
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so zero is the year of displacement. for expansion, they lose about 25% to 30% of annual earnings and even 20 years out they have lost 10% down. if you look at recessions, that initial loss is 40% and 20 years out they are 20% down. and so this finding that workers displaced from long-term employment suffer permanent scarring effects has been around. it's pennsylvania during the big big 1980s and corroborated by dozens of studies. so we know it's robust. we shouldn't be surprised that workers displaced by trade also suffer large losses. that's always been true. the second thing is filling in on this point, this figure shows you the relationship between the size over the first three years and the initial unemployment rate.
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and as you move down, there's losses. someone displaced in 1999 when it was extremely tight it would lose 10% of earnings. they quickly get reemployed. someone in 1983 would lose about 30% over the next three years. it matters when the shock occurs. and the greatest acceleration of the china shock occurred after 2001 and that was a very slack labor market. after the 2000 recession, there was almost no job growth between 2000 and 2007. the unemployment rate was relatively low, but the labor force was falling quite steeply. there was a heeding recession going on. if it you look at 2005, you can see that for the level of measured unemployment, the job loss was much larger than you would have predicted. we think part of that is because the labor market was in worst
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shape than at that time. if there had never been a great recession, 2000 was a lost decade. that's how serious that was. so job loss is costly when the outside options aren't very good. so the china shop was accompanied by a large quantity of job loss and people being dropped into labor market quick sand for which it was very difficult to emerge during the 2000s. why does it have such long-term effects? once they are displaced from manufacturing, how exposed to further shocks? that depends where they go. if you're displaced from textiles and go to leather goods, you're going to be shocked again. textiles to aircraft, you're not going to be shocked again. so this figure, i'll explain
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this briefly. the blue series of dots shows you the correlation between exposure in 1991 and subsequent exposure over subsequent years. it falls to about .5 over the course of 20 years. if you look at the red line, that shows you where workers move out of manufacturing. you can see that's a much steeper fall. so a lot of workers who are displaced from one trade impact sector move to another. especially tend to stay within manufacturing. they keep getting hit. so now there's another question.
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what is the problem? is it the adjustment or the mere fact of trade itself. my frequent colleague and ever present critic wrote on his blog tired of calling misdirection. so we have been emphasizing the cost to displaced workers and the view from some quarters is that's a side show. it's the whole economy being affected. it's important to ask what is the bigger deal here. so in the short and medium run, we know the cost of job loss are sharp and scarring. and concentration matters. so imagine taking two different welfare experiments or social
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experiments. we pick one individual and take $10,000 away from that person. another one we take 10,000 people and $1 away. which does more harm? the concentrated harm is much greater because no one is going to feel it if you take a dollar away from them. $10,000, they are going to lose their house. it matters that the shocks are concentrated. so we know that's going on. but what about the long run? if you increase the supply of a previously scarce factor, the price is going to fall. so prices and wages are going to change. less scarce by globalization. that should not be limited to manufacturing. it should be expanded to the entire group. so how much do we see that. it's a harder question to answer. there's an old line of work.
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they have gotten more comfortable over time. it makes a lot of sense in an economy like the u.s. it responds to its own supplies to a great deal. 1995, update it here for you. u.s. trade rose from 2.3 to 3.9%. that probably reduced high school dropout by .6 to 1.2% and raised college by .7 to 1.4%. that's not zero, but that's very small.
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high school drop out wages fell on the order of 20%. so that's real but small. you might think that's 1995. we know the big shock was coming and that's true. that shows you imports from china as a share of gdp. and it rose from .3% to 2.7% in that period. you can see a lot of that occurred immediately after 2001. so the rise between 1991 and 2001 was .7%. so how did it affect wages assuming it's not concentrated on the workers and spread through the economy. just to get to the bottom line, we would say it lowered high school dropout to high school
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graduate to 1.8%. again, not zero, but small. that's very small on the scale of the wage changes we have seen. they were changing return to education. the growth of inequality between workers of different education. so we come away from that saying the real cost of trade from the welfare is the adjustment that the long run effects are not zero. but that's not the magnitude of change people are feeling. they are feeling the ko concentrated impact. not the general change in the wage. on paper trade adjustment is our main policy tool. but the actual policy response
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that we see in the data has little to do with trade adjustment. it has much more to do with other social transfer programs. so in particular, we find that for eve $1,000 in trade exposure, that was the metric gordon was using earlier. you get $58 per capita in public transfer benefits. where are those transfer benefits coming from? you put them in order. of that $58, $3.65 is unemployment and trade adjustment assistance. another $8.40 is disability insurance benefits. another $10 in retirement benefits. people taking early retirement. another $15 in other government income assistance. and then another $18 in medicare and medicaid.
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so although unemployment trade adjustment respond elastically. most of the dollars are coming from programs not directed at returning people to work. not only this is not what the programs were intended for, but they don't have any good incentive effects into getting people back into the labor force. so how could we deal with this better? what would be the right lessons to draw? is this the right time for higher trade barriers? there's nothing in our work that says trade is a negative for the u.s. economy. all the theory and some evidence suggests it grows the size of the pie, but some slices are getting a lot smaller even as the pie gets a little bigger. so we ought to be thinking about how to better allocate or divide that pie as it expands. so what might poll sus look
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like? one policy idea that people talk about a lot is so-called wage adjustment insurance. when people are displaced from a $20 an hour job, they are reluctant to take a $10 an hour job. i have accepted my reduced stature in life and won't be able to find something actually good. let's make up $7.50 for the first year. $5 for the second year. $2.50 for the third year and zero after that. you help people make that adjustment. you get them back and compensate them on the loss. you help them get back into the labor force quickly u and that leads to a better trajectory relative to waiting around. another possibility, which would
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be more politically shovel ready would be expanding the earned income tax credit. it's for people with dependent children. if you're a family, you get up to $6,000 a year in wage subsidy. you're paid more for work. let's say you're a middle aged man and you have children but they have gone off to college. you can get $400 a year. so it's a policy that can make work more attractive, paid better for everyone if it were expanded in that direction. if we changed the rules, such that it was a broader set of subsidies. it doesn't have to be trade specific. people are displaced by machines all the time. do wecare less about them?
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very hard to figure that out. so better to have a broader policy that supports work and supports reemployment. most other countries do more of this than we do. our workforce designed safety net is decades out of date. has changed very little in the last 70 years. many oh countries are aware of the cost of job loss in both support workers and strongly and actively encourage them. give them incentives to get them back into the workforce. we're going to have to make this trade adjustment. i think many people have the instinct that shock therapy is better.
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get the ping over with. but in labor market that's not going to be true. if an industry is going to sunset over 20 years, people will be retirements, attrition, people won't enter that sector because it's shutting down. there's a natural process through which industry ebbs and flows. if you made that adjustment in the course of a year or a month and everything shut down, that's a huge amount of disruption. so even for the same amount of adjustment, making it more gradual reduces the total amount of pain. the total amount of suffering that occurs. the natural adjustment process can take place over time than it can overnight. so just to conclude, important to stress. trade impacts will look different from the past. the worst of the china shock is over. china has hit many of its own internal constraints. and so even if we did nothing at
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all the next 20 years would look nothing like the last 20. we're not about to experience the same thing again. many people think this is just the beginning. it's not. second lesson we would take away is donald trump and bernie sanders are not as surprising in retrospect as they appeared six months ago and our recent work on the polarization effects of trade show the polarization of the house of representatives has been going on for some decades. it was very concentrated in the last ten years in trade impact and locations. both elections of extreme conservatives and in nonwhite districts pretty strong liberals. there's political fracturing along geographic lines. so we would say the negative has helped to boost it.
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and a mature conversation that recognizes that these costs are real, that we should recognize the benefits of trade and recognize that certain individuals are going to be made worse off and develop policy that helps mitigate those impacts, that's much more effective in the long run than saying it's good for you. don't complain. everyone benefits. so our work has the effect of contributing to a conversation about making trade adjustment more effective. making the benefits shared and the concentrated losses less adverse and less painful. thanks very much. [ applause ] >>s that real delight to be able to speak to this paper, to comment on adh or the china
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shock. because i have u probably read at least 100 papers about trade and wages and this one is my favorite. i think it's extremely u strong imper call work. really a solid notch above what's come before, including some of what david spoke about. i'll get sbo that a little bit. but the nice part is if you really agree with a paper, you don't have to spend a lot of time about coefficients and specifications and things like that and get sbo more fruitful discussion of the type david just very usefully took us through regarding the political economy of trade in this unique moment where something very important and very big and that's the benefits of trade, not just to us, but in many ways more importantly to impoverished country who is can only improve through trading with wealthier countries like ours. those benefits are very much at
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risk. i completely agree with where i think david was at the end that one of the reasons they are at risk is because too many of us in this field have been abject cheerleaders for trade without taking the time to look at some of the costs as adh have done in a series of other papers. i have been part of a small band of economists trying to do that for a long time, but we were typically skunks at garden parties and kicked out of polite places in many cases because if you said anything critical about the costs of trade, you were thought to be a protectionist. i hope my comments so far about the important benefits of trade not just to us, but to our trading partners, would completely obviate that.
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so let me see if i can -- i have one disagreement. it's more fun if you have one disagreement. that's bullet point 2. it seemed like a bigger part of their discussion of gordon and david's discussion today was this argument with larry, who is a long time friend of mine. is this meme true? we were at a conference together. one of the points that i disagree with and i think gordon and david agree with, so this is a point of disagreement between us is it's a typical meme, but it's kind of an internet theme or something. but something everybody believes to be true but isn't. it's this idea that the benefits
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of trade are diffused because we benefit from the increased supply of goods on prices. the benefits are diffused but the costs are acute. and that's why it's such a fractious political issue and why trump can have such traction here because people don't really recognize the benefits because they are so diffuse. but the people who are acutely hurt do. so i actually think that adh's results really give much more support to the costs of trade being quite diffuse. not simply acute. now the worst of those costs are highly acute, but their work shows quite clearly that the costs of trade to noncollege educated workers are real, but they are a lot smaller than the direct effects. one of the problems is you start throwing adjectives around.
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smaller, i don't know how. the indirect effects are smaller, but i don't know how to rank those on a scale of what people really care about. what i think you should say is most workers are noncollege educated workers. that actually the share of workers with a four year degree or above o or a third now. so the costs are much smaller in their work. absolutely much smaller in their work. you might want to call them small if you want to throw that adjective around, but they are definitely there and definitely diffuse. i will say more of that. let me just keep going here. i u do want to -- i see my u friend is here who knows a lot about that fourth bullet.
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i hope you jump in here at some point. i think there are a set of problems in global macrothat adh don't deal with in their paper. it's not a criticism, but they both know a lot about this. there's a problem that loom large here at the peterson institute that i think threaten to amplify some of the effects that adh find. and then i'm completely with david. he did such a good job on this last bullet point that i can save some time. he beat me to that. i'm going to spend very little time on this. i was going to talk about -- actually david didn't get sbo this because he was being modest, but there's nothing obviously wrong about the factor. the work on factor content and
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trade flows, in my view, is far inferior to what adh have done. i'm not criticizing any of the people who use the factor content approach because it's a lot, frankly, it's a lot easier to do. you don't have to crunch the microdata. but the problem with earlier work on content, it just takes the shifts in supply in national skill proportion and maps those using elasticitieelasticities. when you trade with ldcs and using factor content, you cannot find any other than the fact it's going to lower wages. that happens to be something i believe to be true, but i'm weary of confirmation. i don't really like statistical exercises that predict the answer before you get there. in their work, they can correct me if i'm wrong, but if import penetration didn't have the
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effects, their u coefficients would have been insignificant. i think the factor content because it's highlying a gaited and because it has the answer built into it is inferior to the work they have done here. others will take the trade deficit through an input/output matrix and talk about the costs. some of that research, i would say that's also a level or two down from what adh has done. it's a great improvement. i did want to talk a little bit about dh. so china shock, yes, the china shock at some level has maybe seen as over. i'm not so sure. but certainly, i think china currency is reasonably aligned. i don't think china is manipulating their currency now. but there are other countries who have 8% of gdp.
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i'm going to argue that creates a serious im balance and shocks to other countries, other parts of the globe. so one of my questions for adh is to what extent can you extend this work to other places, other countries, even if the china shock is behind us. i'm going to argue i'm not so sure. that doesn't mean other shocks aren't out there. they would not disagree with that. so i don't want to overdo it. i'm going to make it sound like a bigger argument than it is. i think they've got it right, which is that the direct costs are large if you want to use that. they look quite significant to the incomes of effective workers. the indirect costs are
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considerably lower. i don't know what they are exactly, but they are diffuse and i think their research shows that. josh has a model wherein he finds the impact on noncollege educated workers, which are the majority of the workforce. that includes people with some college. about two-thirds of the workforce does not have a terminal college degree of some sort. and that's very much an upper bound. it's higher than what adh would find. josh's work comes from a cge model that's much more in the factor content than the microanalysis and very much works off this notion of factor price equalization, which is when your trade u go up and i think u david talked about this in the context, the impact on your scarce factor, which is we have a lower scare share of workers than they do, is going to be negative on the wage side.
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that's where the adjustment takes place in the model. that may be an upper bound. it certainly is more of the assumed impact than the measure. but josh is a very smart trade economist. and in fact, adh confirmed that factor price equalization is very much operative. they just argue it's not particularly diffuse, but i would actually like to hear them talk more about, by what model do these impacts not diffuse or even by what standard do you say they're not diffuse. if you look at their map, which i won't throw up here, but if you look at their map on panel b, which looks at the cortiles of exposed workers, that is commuting zones or parts of the country that are exposed to the china shock, and you look at the top half, the top two cortiles, you know, a lot of that map is either dark or less dark. i can't do colors, so i hate these maps. they make snow sense to me. it has killed me from being able
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to understand a lot of this research. but i can see that a bunch of this map, a lot more than not, you know, is affected. again, affected in a way that they may want to call small, but affected. in terms of wage losses. they tell you that 70% of manufacturing job losses have been -- are accounted for by the china shock. now, not every community has manufacturing in it, but those who do are certainly highly visible. i'm sorry, 17. what did i say? 17. i wrote 17. 17, yeah, 70 would be a disaster. 17 to me, that's great. 17 to me is a very, very significant share of the problem. but again, calibrating this stuff is maybe a matter of
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adjectives. on the other hand, i think that the diffuse costs, and the fact they're smaller, adh are definitely right that they're smaller than the direct costs, get much -- they get overweighted in the political debate in ways that are familiar to all of us, that david and others have talked about. he said something that was quite profound. somebody said to him in this conference, why is there so much anger about trade? when we can look at these and we can say, well, you know, 17% of manufacturing employment lost through the china shock, i think that's important. that even sounds pretty diffuse to me, but it's not 83%. and what he said was nobody gets to vote on technology. which is the kind of obscure way to say that the thing that people get to vote on, argue
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about, take a stand on, is trade. that's the thing that -- that's the phenomenon, the structural change within the economy that carries a hugely disproportionate part of the weight for everything that ails us. david talked about the 2000s as the lost decade. i have heard other people say that. you look at the median household income, it's a fair statement. and trade is not the only reason for that by a long shot, and david and gordon would agree with that. but it carries that freight because people get to vote on it, to have an opinion, to take a position on the tpc. that brings us to this unique moment. yesterday i read in the "new york times," last night while i was trying to have dinner and reading about trump, which is a terrible idea, digestion wise, donald trump said trade is killing the country. then he said the markets would be fine with a 35% tariff on multinationals that outsource.
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that is bat crazy, and he may be our next president. so we are in a unique and critical moment with statements like that can be heard. where does that come from? why does that resonate with so many people, which it does, by the way. if you don't think it does, you need to get out more. well, one reason has to do with this little slide. the squiggly line is the trade deficit of the shared gdp, that's on the right access. the other line is the manufacturing compensation in real dollars from the 1950s to now. and i'm not saying that these two caused each other directly by a long shot, they're two lines on a graph, by the way, you can see the china shock, the trade deficit of shared gdp goes to negative 6% in 2000.
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but people would reasonably associate the fact that when the trade deficit of gdp was zero, these are blue collar workers, doubled from about $12 to about $25, and as the trade deficit has been persistently negative, and that's large, that's a lot of growth offset, that wage hasn't grown at all. so that's one reason why this message gets to be so resonant. people make that connection. another reason is because hillary clinton opposes the tpp. that's another discussion that we can have, but certainly, when an establishment politician who is a front-runner on the democratic side says i don't think that helps workers, that's going to elevate this as well. china currency which happens to be aligned, the think i wanted to say especially since i'm here at the peterson institute where joe gannian does a lot of great work along with fred and others, is okay, so i definitely agree that the china shock is over from a perspective of the kind of import penetration lines they
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show, but china still holds large reserves. and his work itself showed, i have talked to joe, simply holding trillions in reserves does put upward pressure on the dollar. i think it's probably minimum relative to some of the more direct intervention, but i wouldn't write it off. and while donald trump is wrong when he talks about china currency manipulation as i'll show in a second, that sort of thing still goes on, and most notably, by the way, the most important thing in here, while this is such an indelible contribution are the effects, what you just heard. and adh are very clear in making the political connection between this unique moment and so-and-so. i'm going to stop in a second. elites have been cavalier about the cost of trade. i said that. let me just do this, and then i'll stop. give me another minute, if you would, because my policy points were largely made by david.
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and they will get more of a chance to talk about them in q&a. beyond adh, i think we have a problem in global macroeconomics that is exacerbating trade deficits and triggering the kinds of, if not shock effects, but triggering some of the pressures that adh find in measuring the china shock. ben bernanke talks about savings where countries, many of whom are acting in a mercantilest fashion have suppressed investment and increased their savings, exporting savings here, importing labor demand there. this is something that ben bernanke was writing about in 2005. he thought it would be kind of a temporary problem. i think that the secular stagnation had recognized that it's a tougher one than that and a very important new paper, they show that cay star, those are capital flows and this is just a kind of a typical macroeconomic
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formula for the growth of output, but notice in open ma o macro, these guys are including negative flows an a factor, and one of the things we have seen in recent months is that as capital flows have come here seeking faith assets, you have had the savings investment and balance that larry summers tells you underlies secular stagnation, such that the desire for savings is greater than the desire for investment. puts downward pressure on interest rates, upward pressure on the dollar. so i would include this, and again, i hope jay will comment on this. i would include this as a relatively newer or newly recognized pressure in a zero bound economy that's creating a global macro problem that exacerbate adh effects. i should just show this because it's skra's slide. this is just a slide from jay showing the extent of current account imbalances.
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there's the 8% germany surplus and the ims sustainability target showing some currencies are undervalued, some are overvalued. even while china is just about appropriately valued, it doesn't mean everybody else is. so just closing here, and here i would like to make a proposal to my friends at the peterson institute, to fred, to adam posen, if you're listening, adam, which is that i think we have a real difficulty with free trade agreements. i like many others, and i think this has come out of gordon and hanson, i think there's a big difference between trade and globalization, which can be and should be a force for good, and free trade agreements which have become a process by which stakeholders often from a sector that doesn't represent working people, are having too much influence. and so i would argue that the fta process is kind of broken, and even if you don't believe that, i predict that we're not going to see much in the way of ftas for a while.
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it happens to be there are 300 already in the world, and perhaps we can work on negotiating rules within them. and i have some other ideas that i think would help in the interest of time, i won't go through them right now. tfa are trade facilitation agreements. there might be more of a margin to do stuff there. at the end of the day, i think it's a unique moment. and i think we can usefully tap it together if we stop having these fractious fights about free trade agreements which is a cul-de-sac to nowhere right now and start thinking about ways to do what david particularly said at the end of his talk, promote the benefits of trade, which is going to mean really taking seriously in a way that we haven't before, winners compensating losers. theoretically, free trade has been a big seller because the winners can compensate the loser, but they don't. the power that the winners have
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accumulated has made that a consistent problem for folks, and now we're seeing it in our political economy. thanks very much. >> okay, many thanks to all three speakers for putting an enormous amount on the table. i want to start with one question and then we open it to the floor. to david, particularly, and gordon, your bottom line was that the u.s. labor force is not sufficiently flexible and adaptable to adjust to this particular source of dynamic economic change. why has the u.s. labor force become less flexible than we all thought it was and so thereby cause this problem?
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>> it's not onious that it was ever as flexible as we thought it was. and i think that's what we see from the -- i think that's what we see from the evidence on displaced workers in the 1980s, that involuntary job loss for career workers, tremely costly. we haven't seen it associated with trade because therade adjustments haven't been of the same magnitude. there is a school of thought, certainly, i have been in discussion with people. they say this is all because of the social safety hammock that has discouraged workers. i'm really not convinced that's true. i think we're seeing a very large shock and we're seeing displaced workers and that's the typical response that occurs when you have impacts of that magnitude. that may not be 100% of it. we know that geographic mobility across states and counties in the u.s. has been on the decline for several decades. the workforce is older. so there may be some other structural changes. i do not think it's primarily due to the creeping ivy of the
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social safety net. >> flor is open for questionor . we've got a traveling mike, a standing mike in the back. we'll start here. ralph, identify yourself, and then your question and then we'll go to bob next. >> thanks, ralph carter with fedex. in the first presentation, the last bullet point talked about gradual adjustments, that we could have gradual adjustments through attrition and other things, the impact would be reduced. but are you saying that we can control the pace of those adjustments or is there a policy fix that could look at that? understand kind of what the conclusion was or the action point there was. >> we can't control it all. but we can at least be aware of that. so a lot of the china trade shock is about internal adjustments in china that allowed it to grow to the place it should be.
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so a lot of those were not in our control, although the wto agreement was to some extent. on negotiating future trade treedys, we should think about we shouldn't do it overnight, for example. the point was, is not that we have complete control over the way economies integrate, but we can when we decide to open ourselves up, we can think about the trajectory of that as opposed to simply the end point. >> i think another point there is that once you have openness to trade and capital flows, you're then exposed to big shocks that happen in the rest of the world. china was a big shock, so that puts an extra premium on policy planning to aaccount for disruptions that might come down the line, and we were simply remiss in that sort of planning over the last couple of decades. >> i would amplify one thing david said. when we negotiate trade agreements, we do frequently use long phase-in periods for the
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liberalization in order to ease the transition over time. and in sensitive sectors where there's a lot of domestic concern, that is frequently done. time is sort of the great leavening force. that's been a traditional technique in trade agreements. some of the transitional phases in tpp exceed 20 years. so that's a technique, and that's one way to go about the question. bob. >> bob samuelson, "washington post." a question for david. and gordon. exports must have some effect both on consumer welfare, but more importantly from your point of view, on the local labor markets. and i'm unclear from your discussion as to whether or not you take that into account and what you're talking about in the net effects of the china shock or whether you simply, for whatever reason, did not take it into account.
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>> great question. and we did very much focus on u.s. exports to china as well. the results i showed you were for gross imports of the u.s. from china and all of our work, we also look at net imports, u.s. imports minus those exports to china. it so happens over the time period in part for some of the reason jared mentioned, is that trade imbalances made it such that u.s. imports from china completely dwarfed u.s. exports to china. so to first approximation, the china trade shock was an import shock. in the long run, we expect adjustment to occur that will create new job opportunities in the industries that export to china. we would have thought, i think if you're asking us this question in 1991, that 2016 would have been the long run, but you look at u.s. trade accounts today. w we aren't there yet. >> you can watch the rest at we take you live to the white house and today's briefing.
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>> i wanted to ask how problematic is this for the health insurance program overall and what are the ramifications for plans and consumers if this stands? >> well, kevin, this is not the first time that we have seen opponents of the affordable care act go through the motions to try to win this political fight in the court system. there are a couple things that are unprecedented about this effort, though. this suit represents the first time in our nation's history that congress has been permitted to sue the executive branch over a disagreement about how to interpret a statute. there have obviously been significant differences between the executive branch and
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congress. recently. but these are the kinds of political disputes that characterize a democracy. and it's unfortunate that republicans have resorted to a taxpayer funded lawsuit to recite a political fight that they keep losing. they have been losing this fight for six years. and they'llose it again. >> well the administration appeal the ruling? and secondly, if this does go through, what are the ramifications will insurers be leaving the program, will it have an impact on the price for consumers? >> my colleagues at the department of justice obviously just started reviewing the ruling because it was just
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handed down a few minutes ago. so any sort of formal announcement about an intent to appeal would be announced from the department of justice, but we are quite confident in the power of the legal arguments that we were able to make here. but any sort of formal announcement about an appeal will come from the department of justice. and i have not heard at this point any sort of analysis about the potential impact of a legal outcome consistent with this decision. >> chairman of the house oversight and reform committee has invited ben rhodes to testify on the iran nuclear deal. is this an invitation the white house plans to accept or reject? >> well, with all due respect to the chairman, if he has an interest in a hearing about false narratives as it relates to the iran deal, i have some suggestions for people that they should swear in.
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in fact, some members of the committee actually may have some light to shed on this. congressman ken buck from colorado promised in august of 2015 that iran would get $100 billion to $200 billion in sanctions relief. congressman buck has either wrong or lying, and he can discuss that with the committee. he's a member of the committee, so presumably he knows where the hearing room is, so he can just show up at the appointed time and explain his false declaration. paul gosar, i assume i'm pronouncing that correctly, was quoted in september of 2015 saying this would provide immediate access to approximately $100 billion. again, we now know, we can verify that's not true. so again, i don't know if mr. gosar was just wildly
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misinformed or was lying to the american public, but presumably, if he feels so strongly about the issue, he can explain himself under oath before the committee. he serves on the committee, too, so it shouldn't be too hard to arrange his schedule. cynthia loomis, congresswoman, she explained that in september of 2015, she claimed that the proposed deal, quote, will lead to a nuclear armed iran. that, of course, has not turned out to be true. and in fact, we can verify that that is false. so congresswoman loomis serves on committee. why don't we swear her in and explain where she got this information. and she can explain whether she was just wrong or lying. she may also explain why she continues to make this argument. i don't know what the protocol is for swearing in members of the united states senate to participate in these kinds of hearings, but there are any
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number of senators who can participate. senator cruz could certainly participate. he claimed in august of 2015 over $100 billion will flow into iran as a result of the deal. we've got senator tom cotton, who i know has a special relationship with the supreme leader, so maybe he has interesting insight into the deal he would like to share with the committee. he said that the deal would, quote, give them, meaning iran, $150 billion of sanctions relief. not true. senator cotton, wildly wrong or lying. and so let's have chairman chaffetz get to the bottom of this. maybe the american people do want to actually understand the republican false narrative about the iran deal. so we would welcome the opportunity for those members of congress to explain themselves. the truth is, what the
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administration has said about the iran deal, what mr. rhodes has said about the iran deal, what the president of the united states has said about the iran deal has come true. our critics said that iran would never go along with an agreement. they did. they signed on the dotted line. our critics said there would never be a way to verify that iran would live up to the terms of the agreement. we know they did. international impartial inspectors did exactly that, and they're given the access they needed to confirm that iran has lived up to their end of the bargain. and our critics said, and i just receiited many of them, that ir would get, as steve scalise could also testify, that iran would get hundreds of billions of dollars in sanctions relief. that's false. that's not true. even iran says that's thougnot . in fact, they're saying they're hoping they can get access to more money. so again, i don't know whether
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our critics were just wildly misinformed, mistaken or lying, but if republicans are interested in getting to the bottom of this, they should swear in members of their own congress and figure it out. >> i take that as a no. >> i think there are people who have some explaining to do when it comes to the wildly false accusations they made about the irron deal. it's not just the administration. it's republicans who were demonstrably wrong when it comes to the iran deal. we'll look at the letter, but i assume -- if congressman chaffetz is interested in getting to the bottom of this teal, then i assume similar letters were received through the interoffice mail in the house of representatives. >> one district follow-up on that. you have taken issue with the predictions of more than $100 billion in sanctions relief. do you know how much has actually resulted? >> well, we know it's a whole lot less than that.
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what we had said in the context of the deal before it went through, that the kind of benefits that iran was likely to enjoy, was something around $50 billion. but even a significant chunk of that money was committed to repaying debts that iran owed. that's why you saw iran's central bank governor come out and indicate that their expectations about the amount of sanctions relief they would receive was around $30 billion. i don't have an updated assessment to share in terms of the amount that they have actually received, but it is by all accounts far less than the false criticism that was put forward by republicans. >> tim. >> any reaction now that rousseff and brazil has been suspended by the senate?
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>> not any one that's different than i have shared here a couple times. this is an outcome that many observers expected, and the president does continue to have confidence in the durability of brazil's democratic institution to withstand the political turmoil there. >> is anyone in the white house reaching out to the acting president? >> i'm not aware of any calls from the white house to the acting president's office, but you might check with the state depart to see if there have been any diplomatic conversations. >> on the global steel bust that president obama spoke about it with australia pm, as they said last night. we saw the comments from usgr last month and others. it suggests there's some new white house initiative that might be going on, a broader initiative to tackle that? >> i think what both ambassador
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froman and secretary pritzker made clear is that the united states is working bilaterally and through multilateral institutions, including the oecd to build a policy consensus on addressing the excess capacity in the steel market and other industries as well. so we're going to continue to pursue vigorous international engagement as part of our broader effort that includes aggressive enforcement right here at home. for instance, the u.s. government has initiated an h historic number of trade meetings assessing more than $45 million in penalties on imports of steel products for violating their right to pay. the enforcement of these rules is mnsomething the administrati takes quite seriously, and it's also an important part of our foreign policy. so when president obama is on the phone with world leaders
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including the leader of australia, they're talking about a range of issues. we're talking about important national security issues, about broader economic issues, but we're also talking about the importance of addressing something as technical as excess capacity in steel. and so i think those who follow this issue closely will recognize that's not a particularly surprising development. but for those who don't, this should be a revealing look at the priority that the president places on enforcing trade agreements. >> also, prime minister turnbull told the press in australia that obama advised him that the new timeframe for tpp would be at the end of the year, after the election. and that sort of contradicts what president obama said in germany, he said he thought it could be done after the
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primaries. does the white house see the new congressional window for tpp in it, in the lame duck? >> i don't have any more information to share about the conversation between the prime minister and president obama. our view is that congress should act as quickly as possible to implement this agreement. that delaying the implementation of the agreement only puts off the significant benefits that american businesses and american workers can enjoy as a result of the agreement. for example, there are, once the deal is implemented, we'll get about the work of cutting 18,000 taxes other countries impose on american goods. the longer that congress delays the implementation of the tpp, the longer american businesses and american goods will be subject to these 18,000 taxes that other countries impose on american products. so the good news is that many
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republicans on capitol hill share the president's view that cutting those taxes would be good for the american economy, and it would be good for american business and good for american workers. so we're going to work with those republicans to identify the most expeditious timeframe possible for congress to do the work that's necessary to implement this agreement. >> jordan. >> thanks, josh. i want to ask about merrick garland's upcoming speech at a high school commencement. a little unusual for a supreme court nominee. i wonder if he's going to be specifically addressing the nomination fight during his speech? >> he will not. he will be specifically addressing the class of 2016 at niles west. obviously, he is an alum of that fine institution. and he was invited by the
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principal of the school to deliver the commencement address. and obviously, that community and that high school in particular is quite proud of the accomplishments of what probably is now their most famous graduate. and so it seemed like a good opportunity for him to address the class of 2016. and i had an opportunity to talk to him about this a couple weeks ago. and i know that he's very much looking forward to going back and reliving some old high school memories, but also having an opportunity hopefully to impart some wisdom and inspiration to the class of 2016. >> any more details on what, the subjects he's going to speak about during that? >> no, you'll have to show up and find out. should be fun. >> he was suspended from office for the duration of her
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impeachment trial, her vice president became the acting president with authority to appoint ministers in policies. how does the u.s. government view this impeachment process, and also, what does the white house expect from this new government? will they call the acting president? >> i'm not aware of any planned calls. if a call like that were to take place, we would certainly let you know. as a government, we intend to respect the government institutions and traditions and procedures that the brazilian government follows for governing that country. that's what we would expect other countries to do when they're observing our legislative process, for example. all too often, the legislative process here in the united states doesn't work nearly as rapidly as we would like. and there may be other countries who get a little frustrated about that kind of inaction. but we assure them that
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invariably that the president is frustrated by how slow the process works as well, but our expectation is we're going to follow the rules and laws and expectations of the government in handling the affairs of the united states. and we certainly are going to respect the brazilian government as they follow the rules and traditions for governing their country. and that's what we'll do. >> one more question. the white house says brazil has a mature democracy, and today, they said brazil has a young democracy. does the government, the u.s. government -- is following the brazil law? >> i'm certainly no expert on the brazilian constitution, but our expectation is that the institutions of the brazilian government that have been built up over the last few decades are
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sufficiently mature and durable to withstand the political turmoil that that country is facing right now. and that is not to downplay the obvious significance of the events of the last few weeks. but it is an effort to convey to the brazilian government and to the brazilian people that the united states values the important relationship that our two countries have. we cooperate on a wide range of issues. and the president had an opportunity to visit brazil in his first term. and that was an opportunity for him to state affirmatively early in his presidency about the importance of the relationship between our two countries. that, of course, was renewed when president rousseff visited the white house not too long ago. the united states will stand with brazil, even through these challenging times, and we continue to have confidence in the capacity of the government to rely on their well established traditions and laws
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to manage their way through this challenging time for their country's politics. okay. james. nice to see you today. it's been a while. >> three subjects i want to cover quickly on each one. first, the remarks this week by the fbi director, james comey, in a briefing to reporters at the bureau in which he once again described what he has alternately termed the ferguson effect and the viral video effect, previously, when he discussed those matters, it led to direct rebuke from the white house, both from this podium and you and the president himself. but the fbi director appears to be doubling down on those comments in his most recent statements to reporters saying, and i quote, there's a perception that police are less likely to do the marginal additional policing that suppressing crime. that getting out of your car at 2:00 in the morning and saying to a group of guys, hey, what are you doing here, end quote. i take it in the time since this was last an issue between the
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white house and director comey, in october and november of last year, nothing has arisen in crime statistics or any other external phenomenon to cause the white house to now side with director comey in interpreting these events. >> well, james, i anticipated somebody might ask this question today. i think it is certainly a relevant one. and i had an opportunity to talk to the president a little bit about it this morning. so what i can tell you is that we have observed over the last year or so an uptick in some communities across the country in violent crime rates. and that's a source of some concern. and last year when this potential trend was first noticed, the president tasked his attorney general with supporting the law enforcement
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agencies in those communities to help them confront the challenge of fighting that potential increase in violent crime. and there are a number of steps the department of justice has taxen. earlier this spring, the department of justice announced the u.s. marshal service had conducted a high impact national fugitive apprehension initiative that was focused on the country's most violent offenders. and that six-week initiative resulted in the arrest of more than 8,000 gang members, sex offenders, and other violent criminals. that is an indication of the important role that federal law enforcement can play in supporting the work of local law enforcement in these communities. what's also true, though, is that more broadly, crime rates across the country remain at or near historic lows. so the challenge for the department of justice has been
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to try to focus on those communities where the uptick has been noticed and try to blunt the impact of that. now, as it relates to getting to the undermining cause of those upticks in violence, there's still no evidence to substantiate the claim that the increase in violent crime is related to an unwillingness of police officers to do their job. and i know that this is an observation that the fraternal order of police has made in indicating that they don't believe their members are afraid to get out of their cars and do their jobs. so the president's point is that as we consider policy approaches to addressing those communities where we have seen an uptick in violent crime, we need to make policy decisions that are based on facts and evidence, and not anecdotes. >> so what we have before us,
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then, is the spectacle of the fbi director twice in six months before the national press making assertions about crime and incidents of crime that are in the view of the white house based not on the facts or the evidence but on anecdotes. and doing so in a very public way, and so the resulting question is, why this doesn't shake your confidence in the fbi director? >> well, i think in part because the fbi director actually made clear that he didn't know exactly what was going on either. and i think, look, the fact is this is a complicated issue. that's exactly the way he described it. he said why does dallas see a dramatic spice and houston doesn't? he acknowledged, he continued saying it's a complicated, hard issue but the stakes couldn't be higher. later on, he said i don't know for sure what's going on, but something has happened. clearly, it has. we need to make sure that our policy approach to addressing this situation is rooted in evidence and facts and director
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comey has indicated, and i think this was sort of part of the reason that this discussion arose is that director comey indicated he was seeking out additional information and additional evidence about what was exactly happening in these communities. it's clear we don't have enough evidence at this point to substantiate the claim that police officers gnaw doing their job is the reason for this uptick. i think the president's concern actually is really focused on rebuking this false choice between protecting civil rights and fighting crime. the truth is, the vast majority of law enforcement officers that put on the uniform every day do both. they both are committed to fighting crime and doing it in a fair way. the best law enforcement agencies have made clear and have funded training and put in place policies that actually make it easier for their officers to pursue their job to fight crime and do it in a fair
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way. and so the president's quite interested at a federal level, figuring out what additional support could be provided by the federal government to local law enforcement agencies as they pursue both tasks, fighting crime and also protecting civil rights. >> two other subjects much more quickly, i hope. returning to iran and ben rhodes. did mr. rhodes seek approval from anyone in the white house management before agreeing to allow mr. samuels of the "new york times" magazine to shadow him and quote him as he did? >> there was a decision made by the white house to cooperate with mr. samuels' reporting. >> and that decision involved individuals aside from rhodes himse himself? >> correct. >> has mr. rhodes been rebuked by anyone in the white house management structure following the publication of that article? >> not that i'm aware of. mr. rhodes has served the white house and this president with distinction. that's true when you consider he led the effort to open up
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diplomatic channel with the cubans, to bring about an effort to normalize relations between our two countries. he's at the forefront of our policy effort to transform our diplomatic relationship with burma and to encourage the democracy that was forming there, and ben has also played a leading role in trying to establish the programs that are focused on cultivating young leaders in regions across the country in helping them, giving them access to the united states and our relationship with them. ben has had a very broad policy portfolio at the white house, and he has carried out his responsibilities honorably and with distinction, and i think everyone at the white house is quite proud to work with mr. rhodes. >> no one has told him they considered his comments in the "new york times" magazine article to be ill advised? >> not that i'm aware of. >> last question on him and following up on the questions about his request for the testimony from the house
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oversight committee. i take it from your comments in saying you're reviewing the letter from congressman chaffetz that the white house is not reflexively asserting executive privilege claim with response to that. >> that's correct. >> last subject, both you and the president have for long time now, months now, jettisoned the standard posture of white house officials and the white house press briefing with respect to the opposing party's nominating process. normally, it has been my experience in washington the white house waits until there's a nominee for the other party, doesn't wade into the process, doesn't comment on specific candidates or what they have to say and says typically the time will come. that posture has been jettisoned for months now with respect to donald trump, long before he cleared the field in his party. and one of these sets of comments by the president and others here has been to the effect that mr. trump's candidacy is already creating a
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great deal of consternation among foreign leaders and allies of the united states who are supposedly conveying these sentiments and these concerns to the white house and state department and so on. put very simply, does president obama's view that the election of donald trump to the presidency would constitute a direct threat to the national security of the united states? >> well, let me say the this way. president obama has been asked on a number of occasions to weigh in on mr. trump's candidacy. and i think more often than not, the president has shared his opinion on this. so what i have tried to do is choose my moments carefully in making a point about the impact of the election on the ability of president obama to do his b
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job. i have also made clear that president obama's priority is focused on protecting the important progress we have made over the last seven or eight years. his interest in the election is rooted in the idea that he wants his successor to be somebody who is committed to building on that progress and not tearing it down. and that's the way that he has engaged in the debate so far, and the predhas certainly expressed concerns in the past about some of the rhetoric that a number of republican presidential candidates have used. and the president has observed that those kinds of comments and that kind of rhetoric does have an impact on our national security and certainly has an impact on our standing in the world. it certainly has an impact on our relationships with other countries, and the president observed that it's not at all unusual for world leaders to ask questions about comments that were uttered on the campaign
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trail. so it cleary is having an impact. i'll let the president add the next opportunity that he has to take questions choose to describe what impact he believes electing mr. trump would have on our national security. >> for yourself, do you see him as a threat to national security? >> i'll let the -- i try to choose mew spots. i don't think i'm going to choose this one. go ahead. >> donald trump has met with republican leaders throughout the day here in washington. reince priebus and speaker ryan. they have come out of these meetings and described them as productive and that they really are uniting around their core principles. at least that's what they're saying publicly. to deny what they say is a third obama administration. is there any concern at the white house that democrats are now falling behind now that it seems some of the republicans are trying to coalesce around trump? >> i -- you certainly have
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better informed, more experienced, and surely higher paid analysts who can examine the fault lines of the republican party. but even as a novice, i suspect th that, well, look. even the joint statement that i read with some amoussement today from speaker ryan and the republican nominee, presumptive nominee, indicate that this was merely their first meeting. so i'm not certainly surprised to hear that. i think what i find to be interesting about this process is that speaker ryan has described his view that the entire republican party including the presidential presumptive presidential nominee, should rally behind the agenda that speaker ryan has put forward. i think the reason that he may be encountering some difficulty
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is that he's the speaker of the house. he should already be using the responsibility that he has to implement that agenda. and that is not at all what republicans have done. that certainly is not what leader mcconnell has done on the senate side and not what speaker ryan has done on the house side. there are any number of important critical priorities that republicans could be focus on in the house of representatives right now, and in the united states senate, that are important part of the job they have right now. unfortunately, the republicans seem much more focused on the elections than they do on embracing the responsibility to deal with the results of the last elections that gave them a majority in the united states congress. but right now, we see republicans much more focused on their relationship with the presumptive nominee than they are on things like passing a budget or passing funding for the zika virus to avert a public health disaster or funding to
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relieve the financial turmoil on puerto rico having an impact on 3 million americans who live there. we haven't see any action on either house of congress on funding programs to fightope yod addiction. we try to see the house try to take victory laps on legislation that doesn't provide money to insure that any more people can get access to treatment. so if republicans had much conviction about their agenda, they would be trying to implement it now as opposed to trying to convince other members of the republican party or the presumptive republican nominee that what they propose is the right thing to do. if they thought it was the right thing to do, why wouldn't they be trying to implement it right now? all of the things i have just outlined are things that republicans at one point or another have indicated is a priority to them, and all of those are things i have said president obama believes are a priority. we have been working hard to try to cajole congress to woact on budget, on zika, on puerto rico,
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ono opioids, but they haven't. there might be skepticism inside the republican party and outside the republican party that they have a governing agenda because they had an opportunity to present it and implement it and they haven't done it. in fact, on this scorecard i laid out, they haven't done anything. >> do you think it's a show, a show of unity? do you think it's genuine, and if it is, a single something that is dangerous from the administration's point of view? >> i'm not going to -- i don't know anybody here who is going to lose any sleep over that. okay, kenneth. >> thank you. going back to the zika funding. we have talked about brazil. with the summer games, in light of what's happening in brazil with the impeachment proceedings starting, with the outgoing zika crisis, outbreak in brazil, will that impact the president's potential decision to attend the summer games, and also, does the
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president and white house believe the olympics should be moved or delayed from brazil? >> no. the white house doesn't have that view. we're going to be strongly supportive of our friends in brazil as they tackle the significant challenges they're facing right now. we have talked about the support we have offered in terms of confronting this public health challenge related to the zika virus. and there is some assistance the u.s. has already provided and we stand ready to provide additional assistance as needed to help brazil fight zika. we do that because as we learned from ebola, our investments in the capacity that other countries have to confront public health challenges ultimately has an impact on the public health and wellbeing and safety of the american people. so we know that the preponderance of the zika virus is much more intense in brazil, and so we certainly stand ready
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to help them confront that challenge. as it relates to the olympics, i think -- hosting the summer olympics is a significant undertaking for any country that chooses to assume that challenge. and the truth is, the world is rooting for brazil to succeed in hosting a games that go off without a hitch. you know, ultimately, we want to be supportive of the effort of the brazilians to host the games where the venues are ready, where the games take place safely and securely, and where we get to see the world's best athletes compete. so we're certainly rooting for brazil to succeed. until it comes down to the actual competition, in which case we're going to be cheering for the americans. >> josh, obviously, the
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president has been outspoken about gun violence. and he was -- he spoke out when the incident with trayvon martin happened. i'm curious of the white house's reaction to george zimmerman, the killer of trayvon martin, auctioning off or trying to auction off the gun that was used to kill trayvon martin online. that since has been taken down, it appears, but any reaction to hearing that zimmerman was using the gun to try to profit off that notoriety? >> i don't have a reaction to it. >> one last follow-up, i'm pretty sure you're going to give more details on the state dinner. what's curious is the white house feels that it was given a five for one deal with the agreement. when it comes to state dinners, there's one-on-one attention. for those who perceive this could be a snub or perceive it
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as a snub, your thoughts or reaction to the fact that you're giving this five for one deal. >> this merely is an opportunity for the president to repay the hospitality he enjoyed when he traveled to europe a year or two ago and met with the nordic leaders in europe. the united states obviously has an important relationship with these five countries. for those of you scoring along at home, this is sweden, norway, finland, iceland, and denmark. these are all countries that the united states has important working relationships with. so there are a range of issues related to the economy and national security that we'll surely discuss, that the president will surely discuss with his counterparts. an opportunity to talk about climate change. these countries in some cases are dealing with more persistent and severe impacts than we are here in the lower 48. and demonstrating our ongoing commitment to implementing the international agreement to fight
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carbon pollution is -- will also be a subject of some discussion. so the president and first lady are quite proud to host the leaders of these countries here at the white house tomorrow. and it will be filled with all the pomp and circumstance that we typically reserve for countries with whom the united states has important relationships. and the united states certainly has important relationships that are worth investing in with these five countries. okay. ron. >> to follow up on the trump question. when you answered questions about donald trump, you sounded perhaps a bit dismissive of him, and you were emphasizing the problems within the republican party and so on and so forth. the fact remains he has won more republican votes during the primary process than anyone else. and are you -- >> as he frequently repeats on tev. >> well, it's true. again, are you taking him serious ly enough? is the white house taking him
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seriously enough? are you being too dismissive of him? >> first of all, i think that's a question that can primarily be posed to the democratic candidates for president because they are the one whose are competing in the election. and based on the robust, competitive primary process that has been -- that has unfolded over the last several months on the democratic side, it seems quite clear that both democratic candidates take their potential republican opponent quite seriously. and the president himself stood at this podium last friday and talked about how the stakes of this election were quite significant, and it shouldn't be reduced to a reality television program. but rather it should be subject to an intense debate around the issues. and around the challenges that the next president will have to confront on behalf of the country. so the president certainly takes this quite seriously. and as i mentioned in response to james' question, the president's principle concern here is we have worked really
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hard to dig ourselves out of a terrible economic hole over the last seven years. the president has worked hard to rebuild our relationships with our allies and partners around the world in a way that advances our interests and strengthens our national security. and the president doesn't want to see that eroded. in fact, he wants to make sure that he's succeeded by a president who recognizes that progress and is committed to building on it. and so the president is going to be engaged in the campaign for that reason. he understands the stakes of the election and that means everyone participating in the election should be taken seriously. >> this day of unity, whatever you want to call it, you have said -- >> i wouldn't want that job, either. >> you did complain about your salary a minute ago. >> discussing that, you know, double-edged sword, you don't take that seriously, that these leaders have come together, that they do have and it's perhaps an
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advantage because their nominee has been determined before the democr democrats. six months from now if we're talking about this, there's a lot -- it could be a whole bit of evidence to suggest that the white house didn't take this seriously enough. >> the people who primary should take this seriously are the competitors in the election. and president obama is keenly aware of the significant stakes of the outcome of the next election. and i assure you that over the next six months, the president will be actively engaged in that debate. he looks forward to his opportunity to engage more deeply. i think my point is, again, you guys have far more experienced, far better sourced, and far better paid analysts who can offer up their own insight about the disruption within the republican party, but i would just point out that even in the supposed statement of unity, there's an observation that we
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will be having additional discussions, and the statement closes by indicating this was our first meeting. and so, again, i don't think that -- there's more work to be done there. that's evidenced by the statement the two men issued. >> on the president's schedule, there's not anything really public about what he's doing. the schedule this week feels with the national security meeting and the bill signing, it feels like, again, in my limited experience here, that it's relatively light. while you were very critical of what the republicans aren't doing on zika and garland and other things, can you give us any more insight as to today what exactly the president is doing with any of these issues? there is nothing being said publicly about what it is he's doing. you talk about the issue brought up about policing, but what is he doing? >> he has a little bit of a
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lighter day than usual today. principally because he has a very busy day tomorrow with five world leaders who he will be hosting here at the white house. the president is going to this is the 250th commencement exercise of that fine institution. he has a speech he has to work on. he is going to spend time working on that on sunday. as april noted, the present president takes these quite personally. he is being ably assisted by a couple of members of the team and he is putting a lot of his time and energy into this. >> when it comes to this being propertied, he is not being less transparent or slowing down or as he said, leaveing it all on
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the floor on the final months. the schedule doesn't reveal as much. >> the president's speech was a little bit quieter, but he has a full day tomorrow and again on sunday. >> does the president intend to sign the senate bill that authorizes the women air force service pilots to be buried at arlington. >> he does intend to. >> do you have a time frame on that? >> i don't know that we received it from congress, but we will keep you posted. >> and on china or the country unnamed last night with turnbull and obama -- >> really subtle. >> a little passive progressive. >> that's the essence of diplomacy sometimes. >> i appreciate that, but can you give us a little bit more there? there was this pretty overt
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action, this maritime operation near the chinese occupied reef in the south china sea in the u.s. and australia coming quite close. the president is headed to asia next week and they were named in the head out and china is getting a lot of blame. would you say that tensions are on the rise? >> i would not describe it that way. there concerns about china's activities in the south china sea. they are well oumted and our concerns that we have raised publicly and privately chinese officials. the navigation carried out by u.s. forces earlier this week is relatively routine.
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we have done that a couple of times in the last four or five months. it is not intended to be a provocative act. it is merely a demonstration that the president laid out on a number of occasions. the united states will fly, operate, and sail anywhere that international law allows. this was undertaken with that principal. the concerns and attentions that exist around the south china sea don't involve the united states. they are not a claimant to the features. our concern lies with the need for those parties to resolve them through diplomacy. we do not want to see the tensions increase because of the risk that that could pose to the
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extensive commerce. so i think this also underscores the complexity of the relationship with australia. this is one of our closest allies. we work with him on a range of issues. i will let them describe the concerns or the impact on their national security. the tensions in the south chine sea, but the economy is affected by the glut of capacity in the same way the u.s. is as well. the prime minister indicated his own priority for ensuring that international trade is conducted fairly and that is the basis for the conversations that pop and
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he have on a recular basis. the thing that underlie says all of this is we have been able to work with china in pursuit of other priorities. we have been able to influence what north korea has with korea. the sanctions that were impossessed that went further against north korea than any set of previous sanctions. they were only possible because the united states and china were able to cooperate in implementing them. we worked with china to complete the iran deal. that would not have been possible without the discussions. but also china had to be helpful in terms of imposing and enforcing the ankzs. i think this illustrates that there difference of opinion and i am not downplaying them. they have importance and they have not prevented the united
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states and china from working together to pursue other areas where we are in better agreement. are why go out of your way to not name china. that's what we were talking about and that's where the point of tension is. having it enjoy or go near that is you don't want to say china. it seems like a concerted effort.
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>> vietnam has concerns about competing claims in the south china sea. we know that vietnam is a sig tori to the partnership and we are looking to broaden our economic relationship with vietnam. there is a rapidly growing middle class and companies can benefit from the opportunity to do business. that would be good for the u.s. economy and good for u.s. workers and they are committed to pursuing that priority as he travels overseas. and look, we know that china sees the same benefit if they can increase the ability to do business. that's the essence of the argument that the president has made with regard to the partnership. if the u.s. and the rest of the community doesn't go in and
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write the rules of the road for doing business in vietnam, china will. the united states being part of those rules means we will have higher labor and human rights standards. china has not made those a priority. no denying that at least when it comes to our relationship with vietnam, there significant consequences. we never want to create a scenario in which we can't pursue the common interest with china. in a way it had positive
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benefits. that's why the other thing that we often say in dribing our relationship with china is that we welcome that. that's the reason we are hopeful that they can be when you are an economy a& you benefit from the ability of disputes to be resolved without going to war. they are resolved with the expectation that they will follow the rules. that's the case we make to china and how we are able to work with china and how we welcome a rise in china. we will have our differences and not shy away from that. >> on iran from the secretary of state with your meeting, does
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the white house want to see doing business with iran? >> what the white house wants is to fulfill our responsibility to international financial institutions. to describe to them exactly what is allowed and what's not allowed when it comes to doing business with iran. that's something that has been part of not just the secretary's job distribution, but secretary kerry has gone to great lengths to describe the rules of the road to international financial intrusions as well. there a couple of things that are relevant to point out. one of the things that these large heads of banks say is that the united states has been forceful in enforcing the sanctions which is why we want to make sure we are on the right side of the law here. that's validation of


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