The Dangerous Protectionism of Barack Obama?

I have a confession – I came close to voting for George H. W. Bush over William J. Clinton back in 1992. I did vote for Clinton but a libertarian friend and very good economist kept reminding me of what sounded like a protectionist tone to the Clinton campaign in 1992. At least Bush41 was essentially a free trader. President Clinton did not turn out so bad on this score either.

My title is how Willem Buiter and Anne Sibert title their review of the Patriot Employer Act. While I have a problem with the name – what this proposal would do is to give a tax credit to employers that do not decrease their ratio of full-time workers in the United States to full-time workers outside the United States. While there are other provisions in this act that a free market type might object to but does it deserve this tirade?

Sen. Barack Obama’s proposal is reactionary, populist, xenophobic and just plain silly. It is time for him to stop pandering and to show the world that hope and reason are not mutually exclusive. Instead of increased protectionism, the United States might increase its competitiveness by sensible investments in infrastructure and education.

OK – I’m not a big fan of this proposal and would love to see the nation increase investments in infrastructure and education. But I also agree with Free Exchange:

There is a case to be made that Mr Obama is the most economist-friendly candidate out there. One would hope that he’d use his growing popularity as an excuse to defend good but unpopular economic policies. He hasn’t done that with this Patriot Employer Act, and he deserves a dose of criticism. But the language used at VoxEU is odd. This bill is bad, but it’s not dangerous. It’s far less offensive than many of the anti-trade, anti-immigration proposals seen elsewhere in the campaign. Politicians are practically required to say silly and outrageous things. Economists shouldn’t volunteer to do so.

President Clinton didn’t turn out so bad because he was also “economist-friendly”. Besides, they are plenty of aspects of the current US tax code, regulations, and enforcement (or lack thereof) that encourage U.S. multinationals to invest abroad rather than at home. Perhaps the economic advisors to President Obama could persuade him to go after these tax breaks and forgot about the current proposal.