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Caterpillar’s influence pushing dumb trade/trade deficits

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Caterpillar is making a lot of money on exports.  The company is a beneficiary of U.S. trade policy which causes our trade deficit, but provides Caterpillar a surplus of exports.

Their lobbying and media relations might is immense, and paying dividends.

The latest example is a NY Times article in which reporterAndrew Kramer is shilling for them.  Entitled “U.S. Companies Worry About Effect of Russia Joining W.T.O.,” Kramer takes dictation from those companies, (rather than committing an act of journalism)…

Major American exporters to Russia, like Caterpillar, Deere and General Electric, are worried about the potential impact on their business from the Congressional inaction [on Permanent Normalize Trade Relations for Russia]. … Exporting companies in Europe, Asia and the United States eagerly await open access to a population of 142 million people with growing incomes and an expanding middle class.

Caterpillar sells heavy equipment around the world.  They apparently have “worries”.  I have worries, but the NY Times does not report on them.  Caterpillar wanted the Peru trade agreement really badly, to sell mining equipment to Peru.  They got it.  Russia is a big natural resources state, which is again a big market for the company selling equipment to harvest those natural resources.  But America suffers with a massive trade deficit, which looks like this.

According to OpenSecrets.org, Caterpillar has massively increased its political contributions in recent years.  (See chart below).

But Caterpillar’s bigger influence is through trade associations that push these “export market opening” deals regardless of trade deficit effects.  The company is on the Executive Committee of the Business Roundtable, the Board of Directors of the U.S. Chamber of Commerce, and their CEO is Vice Chairman of the National Association of Manufacturers.  Those three organizations spent $146.1 million on lobbying in 2009.

I can assure you that CPA did not spend that much money on lobbying.  Imagine if we had…

I’m happy if companies like Caterpillar make money, but not at the expense of our country.

7 Responses to “Caterpillar’s influence pushing dumb trade/trade deficits”

  1. Miklt Heft says:

    Michael, I do not understand. The problem is “trade deficit”. Doesn’t Caterpillar’s exports reduce the deficit? The idea is to export more and import less, so how do Cat’s exports hurt our economy?

    • Milt: We should never let the beneficiaries of a policy dictate the policy if its bad for the country at large. This is true whether its Wall Street or Caterpillar. Eliminating the trade deficit should be the national goal. Exports are growing each year and some companies benefit individually, but imports grow more than exports, and the result is trade deficits, job loss, debt and wealth destruction.

  2. Dan says:

    Caterpillar lobbies for free trade agreements in order to export more to other countries,but the United States suffers from a flood of imports as a result of the approval of free trade agreements.

    Caterpillar has no loyalty to the United States and American workers.

  3. Frank Shannon says:

    Milt,

    The trade deficit is the root cause of outsourcing. Eliminate the trade deficit and outsourcing would be stopped and reversed.

    Focusing on the trade deficit places the blame correctly on policies, Congress and the administration. Focusing on outsourcing places the blame on trans-national corporations.

    It is hard for me to blame a corporation for serving their stakeholders by taking advantage of stupidity by the US Congress and the adminstration.

    • Milt Heft says:

      “The trade deficit is the root cause of outsourcing.” Frank: I think it’s the other way around. It’s the outsourcing that has created the deficit. Reverse the outsourcing and the deficit disappears.

      Milt

  4. Bruce Bishop says:

    Frank,

    I think you might be too generous in assuming that our government is “stupid.” An alternative might be that they are allowing this to happen on purpose. As more and more Americans lose their jobs to outsourcing, they become dependent on the government for unemployment benefits, food stamps and welfare. People who are dependent on the government vote, overwhelmingly, for the Democrats.

    • TomT. says:

      Bruce, I wish it were so simple as I could take your view. I don’t think the democrats wish the economy so dysfunctional as to provide a voting class.

      As the benefits of the economy are siphoned away, the populace will pay the price in lower wages and lower standard of living. Facts tell us that the beneficiaries have been the oligarchs in China and the businessmen in the U.S. who arbitraged the difference in wages/standard of living in this country vs. the rest of the world. As Frank suggests, this is a direct result of the current and past policies of the politico elite and businesses can only do what is necessary under the rules that are given to them. Both political parties cater to the wealth generated by these policies as the economy as a whole suffers.

      A more ideal economy would have a more even distribution of wealth generation. As we have allowed companies to offshore production, the economic pressures on the working class and mid income American’s wages has been strong. Much of this was masked under the Bush administration as the economy leveraged itself to maintain the decreasing standard.

      While I would agree with you that our politicians were probably not smart enough to see it, and neither was the Fed or the other political management put in place, I just don’t think they were smart enough to see what was happening as their self interests and delusions honestly got in the way. The businesses who had to compete with these forces had to adapt or be put at serious disadvantage in the market place. China was buying the middle class’s economic engine and growing at exceptional rates. They did not create the wealth to create demand but instead the government captured the wealth created to use for geopolitical advantage and undermine the U.S. economy.

      I would say that both parties catered to the wealth generated because of these bad policies and we have very little debate over these issues because they both drank the corporate Kool-aid. We don’t have more of a debate on the financial system’s generous bail out because BOTH parties have been on the take from these sources, for example. If one party was blameless, there would be more of a political debate over these issues instead of debates over other emotional issues while catering to these forces.

      The wealthy are able to buy get out of jail free cards because our system and both parties see this wealth as their ticket to the next election. Meanwhile, the corporations who have behaved badly buy our democracy with their influence and economic power. If one party tries to do anything about it, the opposing party plays their cards for the wealthy elite. We have seen exactly this with the financial industry and there are other examples from other industries.

      The answer, of course, is to change the rules of the game so that these forces do not take over our democracy to the detriment, and yes, even the extinction, of our world power. Everyone on this group is striving for those changes even as the corporations receiving the greatest benefit fight them with their resources. The Supreme Court has allowed them the advantage because of their resources. It is principals over principles.

      We have seen the contrite actions that would show this to be the case with Judge Posner, Alan Greenspan, and an ever increasing voice of others. This while the republican party continues to cater to the principals over the principles (no, the democrats are not blameless in this as their members are not able to muster a majority to the principles).

      The equation of the GDP is such that as demand is sucked out of the economy from these bad policies, government spending to the victims (the middle class and those that fall out of it) will not create inflation. Thus, we have overspending with little cost as seen in inflation or higher interest rates. Quantitative easing is one of the answers to getting us out of China’s mercantilism and essentially this is what China does by manipulating their currency and exploiting their own low cost inputs. The unfortunate thing is that quantitative easing is a blunt instrument and will have collateral damage. It alone is not the best answer but the best answer is not even considered because the balance of power of the political elite has sold out through incompetence or corruption. It is the reason the Glass-Steagal Act was replaced with overwhelming majorities of BOTH parties. Much of this was incompetence at the time but because both parties were involved, the corruption is able to maintain their wealth generating activities at the expense of the economy even as incompetence gives way to the reality of their major policy mistakes. Examples can be seen in our trade policy and in our financial industries policy.

      The reaction to blame the victims of the rape of these policies is to be expected as a tactic of corruption veiled in party ideology of BOTH parties as they invariably cater to the power sources in the nation–money and a manipulation of the votes it can buy with simplistic appeals to the electorate’s natural human emotional weaknesses (thanks a lot, Supreme Court!). Examples are the abortion issue (what did republicans do when they were in complete control of the government on these issues?—Almost nothing!). Other examples are a catering to “success” of the beneficiaries of bad policy because they were “successful”, latent racism, or the undermining of legitimacy as in the “birther” appeal. As a side note, if the “birther” issue is valid, then the swearing in by Justice Roberts is an admission of the Judiciary’s complete failure to our democracy.

      All of these tactics are used to emotionally manipulate the electorate and get them to avert attention from the failures of BOTH parties in the major policies that have brought our nation to the brink of failure. They garnish enough votes to allow the corruption of policy on trade, the rule of law, and a catering to the interests of the elite while not talking about how their influence corrupts policy decisions as politicians peddle their influence for personal gain. Phil Gramm’s undermining of good policy of the financial industry and Bill Clinton going along with the money is an example. I bet most members of Congress were too incompetent to judge whether or not this was good policy honestly. The corruption came from the management team these parties employed as top bureaucrats and people like Phil Gramm who would have known the consequences of these policies (I would put Bill Clinton in this category too).

      Let us face it. Most members of Congress are way too incompetent at this time to make good policy. They continue to maintain their electoral success by selling policy to the elite while giving the electorate and the media the ready made excuses by their think groups like the Heritage Foundation, their plants in industry like Larry Sumners or the now discredited but not held accountable Franklin Raines or Wall Street titans, and even their little industry spokespeople like the National Chicken Council or the NCBA (National Cattleman’s Beef Association– widely known to have been taken over by the meat packers).

      We have a government largely on the take and most people know it. It is why we have the situation we have today and why we are likely not to fix the problems we face or even debate them as central issues.

      Tom T.

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