Senate OKs retraining program key to trade deals

WASHINGTON Thu Sep 22, 2011 6:56pm EDT

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WASHINGTON (Reuters) - The Senate on Thursday handed President Barack Obama a victory by passing a program to help workers displaced by foreign competition, paving the way for action on three long-delayed trade deals.

The Senate voted to approve a bill containing a revamped Trade Adjustment Assistance (TAA) program, which Obama has demanded as his price for sending free trade pacts with South Korea, Colombia and Panama to Congress.

"Today's vote is a major victory for American workers and a key step forward in our efforts to approve the job-creating free trade agreements," Senate Finance Committee Chairman Max Baucus, a Democrat, said in a statement.

Senate Republican Leader Mitch McConnell urged Obama to now show some "trust" in Republicans by submitting the agreements to Congress before the House of Representatives has voted on the Trade Adjustment Assistance bill.

"The Senate today will have acted on trust in passing TAA even before we received the agreements. But the White House has refused to show the same trust in Congressional Republicans who've assured them that TAA will move along with the FTAs (Free Trade Agreements), McConnell said on the Senate floor.

The retraining and income assistance program dates back to 1962 and was expanded in the 2009 stimulus bill to cover more workers and provide more generous health insurance benefits.

However, the expanded provisions expired at the beginning of this year and Republicans bent on reducing government spending balked at renewing them, setting up a fight with Obama and congressional Democrats.

The National Association of Manufacturers, in a letter on Thursday, urged senators to approve the program, which they said "provides workers with the support, training and opportunity to learn new skills that help contribute to the 21st century manufacturing economy."

2009 REFORMS SCALED BACK

The revamped TAA bill passed by the Senate renews many of the 2009 reforms through 2013, such as covering service industry workers in addition to those in manufacturing.

But it reduces the number of weeks of income support to 117 from 156 in the 2009 law, with up to 13 additional weeks available only under certain circumstances.

It also scales back a tax credit to help unemployed workers pay for health insurance, and makes it harder for individuals to receive income assistance if not in a retraining program.

The package costs about $900 million over three years, compared to about $2.1 billion for the 2009 reforms.

During Senate action, Democrats defeated several Republican attempts to further reduce program costs or explicitly tie TAA to approval of the pending trade deals.

Republican Senator John McCain said he doubted the effectiveness of TAA but recognized it was needed to clear the way for the trade pacts.

"We should authorize it at pre-stimulus levels and not one dollar more," McCain said before offering an unsuccessful amendment to do just that.

Senator Orrin Hatch, the top Republican on the Senate Finance Committee, said he objected to the program on both fiscal and philosophical grounds.

"As the program is expanded to include more and more people and entities ... the myth that trade is bad for the American worker finds ready fodder and continues to build. Instead of helping build the case for trade, TAA certifications are used to show that trade is bad," Hatch said.

The Senate legislation also includes a renewal of the Generalized System of Preferences, which waives duties on thousands of goods from developing countries to help growth in those countries and reduce costs for U.S. manufacturers.

That program, which dates back to the early 1970s, expired at the end of 2010, forcing U.S. companies to pay taxes this year on goods that usually come in duty-free.

The bill goes next to the House of Representatives, where Speaker John Boehner has said it would be considered in tandem with the free trade agreements, which were each negotiated and signed more than four years ago.

(Editing by Mohammad Zargham and Eric Walsh)

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