- The Washington Times - Sunday, July 31, 2005

Last week’s House vote in favor of the Central American Free Trade Agreement (CAFTA) was a victory for the free market and a potentially huge defeat for the anticapitalist forces of protectionism, tariffs and quotas.

Though passed by a narrow margin (217-215), it showed the United States remained on the side of open markets, free of the anti-job, anti-growth tariff taxes and other big-government regulatory barriers to foreign investment and trade that have prevented poorer countries from climbing the economic ladder to growth and prosperity.

What struck me hardest about last week’s debate were the economic myths that permeated the rhetoric of CAFTA’s opponents. They made the same old charges they have hurled at previous free trade agreements: CAFTA would destroy jobs and hurt America’s economy.

House Democratic leader Nancy Pelosi of California made the most pernicious attack. She claims ending trade tariffs in Central America will help decimate U.S. manufacturing.

Mrs. Pelosi’s timing couldn’t have been worse — for her — because the day she made her charges, the Federal Reserve Board put out its business climate survey that said U.S. manufacturing is getting stronger.

The Fed reported most of its 12 regional districts showed “moderate to solid expansions in manufacturing activity and expectations for future factory activity were generally upbeat,” helping it soar out of a small soft patch it hit last spring.

The aircraft and high-tech manufacturing industries were singled out as especially strong in San Francisco and Boston. Oil refineries were doing quite well in Atlanta and Dallas because of the increased need for energy. Fueled by the building boom, manufacturers of key construction materials, including industrial equipment and cement, were particularly busy.

While Mrs. Pelosi made her charges on the House floor, the U.S. Commerce Department reported a strong manufacturing surge in June. Not only were American manufacturers producing more in response to increasing customers orders, they were selling more abroad — to the tune of $1.15 trillion a year.

In addition, new orders for big-ticket goods such as machinery, computers and appliances shot up by 1.4 percent, and Commerce revised its previous estimate for durable goods orders in May to show a 6.4 percent increase, helped by a lengthening list of new aircraft orders.

But how can Mrs. Pelosi, who has such information available to her almost daily, be so far off in her characterization of manufacturing? Was she listening to CNN’s Lou Dobbs, who keeps telling his viewers America doesn’t make much anymore?

The answer, unfortunately, is all about the politics of pessimism and denial, an illness that has long afflicted Mrs. Pelosi’s party — to its detriment.

In 1984, Democratic presidential nominee Walter Mondale repeatedly characterized the economy as virtually another Great Depression. In reality, it was bouncing back big time, a recovery attributed to the Reagan tax cuts. In 2004, Sen. John Kerry told voters the economy was the worst since Herbert Hoover when it was growing by more than 4 percent.

In fact, the Bush economy appears to be running on all-cylinders right now, according to a slew of new economic data in the past two weeks.

Despite the news media’s gloom-and-doom forecasts of a housing bubble bursting, the median sales price of existing homes rose 14.7 percent, to $219,000, over the last 12 months. This was the fastest rise in property values in nearly a quarter-century, the National Association of Realtors said.

The Commerce Department said sales of new single-family homes rose 4 percent last month alone. That’s an annual rate of 1.37 million homes, perhaps the strongest sign of the nation’s growing prosperity.

Mrs. Pelosi and her friends continue insisting there is a job shortage in America because of Mr. Bush’s policies. But the Fed business survey shot down that charge, too.

Most Fed districts reported an increasing demand for workers, both skilled and unskilled, along with much stronger demand for temporary workers. Skilled workers were in particularly short supply in some districts. Businesses said they could not find truck drivers in places like Cleveland, Richmond and Atlanta.

We’ve had 25 consecutive months of job gains that have produced 3.7 million new jobs — at all pay scale levels — that has pounded the jobless rate down to 5 percent, the lowest in almost four years.

A good part of this growth, in my opinion, is due to increased global trade. This is why, now that we’ve approved CAFTA, we should expand our trade reach, including a negotiated agreement with the next logical region: South America.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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