Onward to Slow Track Jude Wanniski November 12, 1997

Memo To: Newt Gingrich
From: Jude Wanniski
Re: The Defeat of 'Fast Track'

You may know I've publicly said I would have voted against fast-track trade authority and that I did not consider it to be an act of protectionism to oppose it. I also said that I would have voted for it if we were on a gold standard, with the Fed pegging the dollar/gold price at $350 by buying or selling bonds from its portfolio to add or subtract liquidity from the banking system. You may not see a connection, but if you would like I would explain it to you, in person or by telephone. Suffice to say that at the current deflated gold price of $310, the problems of Americans displaced by a lower tariff wall would be far greater than if gold were nailed down at $350. The net effect of ending the deflation and removing risk of future inflation/deflation would be to make capital more n abundant here relative to labor, which would mean labor otherwise displaced would be able to compete against Chileans or Argentineans or Bolivians even without a tariff wall.

Fast-track is an anti-democratic concept, devised by the multi-national corporations who prefer to ignore dissenting voices from minorities. It is antithetical to the spirit of our Constitution in that it asks Congress by majority vote to agree to a process that will not permit minority dissent at the stage where a trade agreement is negotiated. This is a loophole the Founding Fathers did not anticipate. I myself supported the NAFTA fast track only because I believed it was almost certain to produce enough good to offset any conceivable minority concerns. Some of this optimism lay in a belief that Alan Greenspan and the Bank of Mexico could work out an arrangement that would prevent the kind of y problem about which Ross Perot and Pat Buchanan warned. I was wrong about that, Newt. Perot and Buchanan were right. The elites decided to make a fast buck on peso devaluation, and it set back the Mexican economy by several years while hurting ours as well. Greenspan subsequently said Mexico's disastrous peso devaluation would not have happened if we were on a gold standard. Rep. David Bonior is absolutely right when he says NAFTA failed. He doesn't know why, although I've offered to explain it to him, but his opposition looks good with hindsight. Whatever good NAFTA did in lowering already-low tariffs, it failed by not dealing with the monetary side of the partnership. Rep. John LaFalce [D-NY], on House Banking, had anticipated the problem as I did, but we were practically alone.

Slow-track is the answer. The idea that Chile will not negotiate with us without fast-track - the argument the administration has made - is absolute baloney. Our trade representative need only snap her fingers and the Chileans will show up at any table we set. We will tell them what is required for them to get into NAFTA. They will agree. The agreement will go to Congress. The minorities will present amendments to change the agreement. Some will pass the Senate, where the minorities are most likely to find redress of a grievance. These will be taken back to the Chileans and the Chileans will say okay, or say okay as long as they get something else that we can give. It will then go to the President for his signature, and because the democratic process was served, the deal will stand up.

Bonior is right when he says fast-track is a recent idea, which began in the Ford Administration. That was not a populist administration, but so thoroughly in the embrace of the multinationals that it came within a few votes of losing at the OOP nominating level, to Ronald Reagan. The Big Guys are always trying to find out how to neutralize the votes of the masses. Fast track is one of them. I'm happy to see it defeated. In this case, the tortoise will beat the hare.