No Debate on Trade Jude Wanniski October 10, 1988

Apparently because of Jim Baker's belief that protectionism could be a winning issue for the Democrats, the Bush/Quayle campaign is purposely avoiding debate with Dukakis/Bentsen on the broad trade issue. Even worse, Bush is slumping into a protectionist posture as his campaign handlers shy from a ringing defense of free trade. In the first petition for protection under the new trade law, Bush has publicly endorsed the Rice Millers Association complaint against Japan's rice subsidies "so that we can maintain the pressure against barriers to our exports around the world." Prime Minister Takeshita has petitioned President Reagan urging the petition be rejected. There are complex sensitivities in Japan on the issue, especially given the imminent death of the Emperor and recollections of the role U.S. trade nationalism had in the 1930s in inviting WWII. A U.S. decision against Japan would have profound effects on our relationship with Japan, triggering an anti-American backlash that would take years to repair. It's dismaying that Bush apparently made his decision on the narrowest of grounds, that Texas and California, both rice-growing states, are big electoral college states. USTR Clayton Yeutter will make a decision about 10 days before Election Day.

It seems to make no difference to JBIII that the avowed protectionists of both parties were losers in the presidential primaries. Or that Bush demolished his opponents throughout the South after denouncing the protectionist textile bill. With the Congress split on party lines over the President's veto of the textile bill, here was a perfect opportunity for Bush to make noise about the Democrats becoming the party of protectionism! But not a word. When The New York Times reported October 5 that the President's veto of the bill had been sustained in the House by a narrow margin, it noted that "The Democratic Presidential candidate, Michael S. Dukakis, has not taken a public position on the measure. His running mate, Senator Lloyd Bentsen of Texas, has long expressed support for such legislation." Imagine that! Dukakis has not taken a position! A free pass from Bush.

In the Bentsen-Quayle debate October 5, Bentsen was blatantly protectionist, slugging away at Quayle with impunity in urging "protection of American workers" at the expense of "foreigners." Quayle bit his tongue and changed the subject. In the remainder of the campaign, the Democrats show every sign of pushing their hot buttons on trade, "mum's the word" for Bush. Not one dime has been allocated by Bush or the GOP for commercials to elevate the issue. A Dukakis victory would then be interpreted as a mandate for aggressive Democratic trade nationalism.

JBIII, who thinks of himself as a free trader, but who believes the unwashed masses are protectionist, has been the culprit throughout. It was these political fears that led Baker to compromise with the Democrats on trade last year that gave us the frightening new trade law. This and his zeal in driving down the dollar in hopes of reducing the trade deficit gave us the October 19 worldwide stock market crash, we believe.

There's no doubt of Bush's free trade predilections. Or of Dukakis's, for that matter. Or Herbert Hoover's. These count for very little, though, when the protectionist beast is allowed to run loose because of political miscalculations. The issue, we hope, will force itself into the open in this week's second debate between Bush and Dukakis. It's of considerably more importance than furloughs and flags.