Washington Post business columnist Steven Pearlstein was online Wednesday, March 28 at 11 a.m. ET to discuss a possible trade deal taking shape in Congress.

Read today's column: An Opportunity On Trade.

The transcript follows.

About Pearlstein: Steven Pearlstein writes about business and the economy for The Washington Post. His journalism career includes editing roles at The Post and Inc. magazine. He was founding publisher and editor of The Boston Observer, a monthly journal of liberal opinion. He got his start in journalism reporting for two New Hampshire newspapers -- the Concord Monitor and the Foster's Daily Democrat. Pearlstein has also worked as a television news reporter and a congressional staffer.

His column archive is online here.

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Arlington, Va.: If TPA gets extended, do you think countries would be willing to undertake negotiations with the US in the last year and months of Bush administration? Or would they prefer waiting for new administration, be it Rep or Dem?

Steven Pearlstein: Obviously, they would prefer continuity, but I think it is important for us to reestablish trade as having bipartisan support, so that these changes in power don't make it difficult for other countries to deal with us. By bipartisan, I don't mean that all people in all parties need to be in favor of more trade treaties. It means that there is a bipartisan working majority in the center that is robust enough to survive changes in administration.

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Sigh...once again: Steven, you are not arguing for the policy being offered, you are creating your imaginary best policy, pretending its what is being offered, and then acting outraged the Dems oppose the _actual_ offer. Added bonus points for developing psychic abilities to know motivations of opponents as well!

This whole thing is nothing new. The trade opponents are offered faboo agreements to get them to agree to a trade deal. Then the agreements vanish once the deal is done. That's how we ended up with the token worker protections you correctly note are worthless. So why should this be any different?

In the future, could you actually tell us what the _actual_ concessions are, instead of pretending your imaginary wish is what they will be?

Also, even your imaginary set of agreements are way off... Pay for it by increasing unemployment taxes? Great...so the working and middle class get to pay up more to cover the working and middle class? How exactly is that a "concession"? Next up, Steven offers to take me out to lunch, as long as I pay! Oh, and tariffs? You mean the ones that decline with every trade deal?

Try again. The most basic Hecksher-Olin Factors Analysis says that _Capital Gains_ should be taxed more (disproportionate deadwood gains to capital) for this. That's Econ 202.

But the big thing remains...it would be nice if you would lay out the _actual_ offers, rather than substituting your pretends deals and impugning anyone who doesn't agree with the real world offer.

Steven Pearlstein: Well, I'm a columnist, not a scrivner. The last offer sent back channel to Rangel & Co. was to use International Labor Organization standards with a carve out for the United States, so that its current law and practice would be considered sufficient. That is what was rejected, as I understand it.

Don't know about Econ 202 but tariffs strike me as a reasonable pool of money for reducing the negative impacts from trade. Since they are paid by people who buy imports, and presumably are winners, I don't see why that is bad fiscal policy. Capital gains is a political hornet's nest and involves huge sums. You are right that tariff revenues are declining, however. We'd need to address that in the long run. As for raising the income limit on the unemployment tax, the way to do it is to exempt the first 15,000 or so, tax the next 30, and lower the rate a bit. It could raise more money while making the tax less regressive than it already is. And, by the way, the income limit, if it were inflation adjusted from the level of 1939, when the program began, would be $45,000.

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Dayton, Ohio: Wow - there's a piece of data in your column today that I never realized. Unemployment insurance is paid for by a dedicated tax - and it's a regressive one! How stupid is that? Shouldn't we be doing something to flip that around, or to fund unemployment out of general revenues? Or even - gasp - at the Federal level? I think this subject is deserving of a column or two all on its own!

Steven Pearlstein: The logic for unemployment insurance is that it is actually an insurance program paid for by the people who are covered by it (indirectly through their employers, who presumably reduce wages accordingly). I like the concept, if it can be made more progressive. It also means there is a group of people, meaning employers, making sure the program is well administered, since it is subject to some fraud and abuse, as you probably know. What would be good now is that we expand the coverage and the concept about what unemployment insurance is about, so that it includes something for medical care and maybe mortgage insurance and wage insurance.

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Capitol Hill: Given the growing believe that our trade theory is fundamentally flawed (see the front page of the Wall Street Journal today - and the Gossman-Hansberg paper delivered at the Fed's Jackson Hole symposium last summer "Its not Wine for Cloth Anymore"), why is there still a grand bargain to be had based on the old model of buying off the losers (trade adjustment assistance, etc.)? Shouldn't we use this as an opportunity to be looking for new approaches that help the "losers" become "winners" rather than pay them off after the fact? And hint: re-training isn't the answer -- many of the programs are for either jobs in the non-traded sector like health care (which doesn't help our trade position) or in areas already under wage pressure because, as you put it "the best-paid workers in many of the best-behaved countries earn a faction of the wages of American workers."

Steven Pearlstein: Not sure what your point is really. There will be winners and losers from trade, that's unavoidable. And obviously we should focus policy on helping the losers. If your point is that we should take action to prevent there from being losers, that would, by definition, mean foregoing trade opportunity. The losers, however, don't have to be permanent losers. They can get new jobs in new industries and maybe have a better potential for upward mobility than in protecting them in jobs in declining industries.

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Washington, D.C.: Hi Steve, Wouldn't your proposal to expand unemployment benefits simply subsidize unemployment, thus creating more of it? I know that last spring-summer when I was unemployed for 3.5 months I spent the first two months as a taxpayer-subsidized vacation. I'm not going to lie, it was great being able to spend May and June outside taking advantage of the weather, reading, watching the World Cup etc. but making such behavior even more attractive doesn't strike me as great public policy. Other friends of mine that have lost their jobs have similarly taken their time finding jobs by taking advantage of unemployment checks.

With unemployment currently at 4.5 percent getting a job shouldn't be too hard. Seems to me the best form of unemployment insurance is just creating the most dynamic and growth-oriented economy possible.

Steven Pearlstein: Look, this is always a tradeoff. Europeans give too much protection, and as a result people live off unemployment for years. Not a good model. But there's no way to design a policy so that people who really can't get a job get help while people who can but chose to loaf a bit are denied. There is no way to effectively administer such a program. So you have to use next best approaches. Give people enough money so, when combined with some savings and some part-time work and help from family, people can get by while they look for an appropriate job. But don't give them so much that they don't have plenty of incentive to find that job. And with wage insurance, you take away some of the sting of finding a job where you start out a bit lower on the ladder than your last job. Again, the insurance doesn't last forever, but covers, say, half the income loss for two years. None of it is perfect. But it takes some of the sting out of things. And its a start.

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Nashville, Tenn.: We keep focusing on "trade" solely in terms of trade agreements, tariffs and non-tariff barriers relating to imports, but never mention that the dark side of the Dept. of Commerce and the Dept. of Treasury impose our own restrictions on our own exports of the American-made products in which we are most competitive which negate the removal of barriers in foreign markets, i.e., while we open our market to imports, we impose restrictions on our own exports. Does any one in Congress care about export control reform? Does anyone understand it?

Steven Pearlstein: If you are referring to technology export controls, yes, there are people who understand that. Its not a big issue politically, and I haven't heard as much grumbling about that in recent years as I did a decade ago. But this is one of those issues where you have to weigh up apples and oranges -- the cost is economic, the benefit is in national security. There's obviously a tradeoff, but to decide whether it is right or wrong or not, you have to have a pretty good idea of the national security threat to selling some technology. That's a factual question. But the right tradeoff obviously isn't: let Americans sell everything because all that matters is economics.

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New York, N.Y.: Steve, Thanks for taking my question. From the little I've heard about this issue, it appears that this is just one permutation of a major issue we're trying to address as a society: How do we encourage and reward risk-takers and entrepreneurs while at the same time trying to make sure as few people as possible fall through the cracks in society?

In recent years it seems like we've gone way overboard in rewarding the fortunate (e.g. lower capital gains/dividend taxes, 50+ million bonuses). It seems like the pendulum is swinging the other way. Any thoughts? Thanks!!

Steven Pearlstein: Yes, we have scrimped on the losers, while the market (and tax code) have tiled in favor of the winners. One good thing is that it has encouraged risk-taking. But, once again, there are tradeoffs. I think there is a consensus now in the country that we'd be willing to give up a bit of risk-taking, even a bit of economic growth, to buy some more income equality and economic security. That's a political choice, not an economic choice. We should make it with full knowledge of what the tradeoffs are, rather than denying there are tradeoffs. But the question doesn't answer itself -- again, it is weighing up apples and oranges.

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Washington, D.C.: Why do you call the trade pacts with Peru and other countries "free trade"? Chapter 16 of the Peru trade pact spells out a long list of protectionist measures for the benefit of pharmaceutical companies. Why should corporate profits be protected when U.S. workers' income has scarcely risen in three decades, thanks in part to trade policy?

Steven Pearlstein: There is a provision in these treaties having to do with a five-year waiting period between when a drug patent expires and when the generic drug can be introduced. It seems to me that is a bad provision and should be taken out, or greatly modified. It is simply a reflection of the piggishness of the pharmaceutical industry, and the willingness of the U.s. Trade Representative's office to be used, and viewed, as an extension of the U.S. pharmaceutical industry. Ms. Schwab should be embarrassed about that.

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"inflation adjusted from the level of 1939": Wowie. $45K. So, as I said, this big fabulous concession is to allow the working and middle class to tax itself more to pay benefits to itself, while the top 1 percent (who get the vast majority of the gains from trade, in the form of gains to capital) skate.

Again, huge "concession". AS to "202"...if you are going to write on this, please try to cover the basic econ first. A Hecksher-Olin factors analysis is standard accepted econ. It demonstrates that the more capital intensive country gets disproportionate returns to capital, while the labor intensive one gets the reverse. The former is a proven case, while the latter isn't so clear (but that leads to Dependencia Theory...tooo much to get into here).

So...the constant taken from that is that you tax capital gains. Tariffs aren't equivalent. That nails so called "winners" like poor people buying an imported winter apple.

But riddle me this Batman... Why are capital gains taxes in you opinion a "Hornet's Nest" which can't be touched, but the stinky working class slobs object to exporting their jobs are a "problem" to be solved? When the rich get piggy, you prefer to defer. When the lowly get hosed, they are a "problem" that inspires a column? You might want to think about your assumptions and biases, eh?

Steven Pearlstein: Sticks and stones will break my bones but names will never hurt me. First of all, a lot of the gains from trade come in the form of lower prices for imported goods consumed by middle and working class Americans. Who do you think shops at Wal-mart? Steve Schwartzman? Obviously, globalization has also been a boon to holders of capital, and I'm in favor of raising income taxes on them, and keeping the inheritance tax. I'm of two minds on capital gains taxes -- I'm not sure the loss in economic efficiency and growth that it may cause is worth the revenue. The literature is sort of divided on that.

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Alexandria, Va.: So, the USA does not meet minimum labor standards under the ILO? Shouldn't we be more concerned that we don't meet such minimum standards rather than worrying that the trade deal is a back door approach to getting us up to such minimum standards? And which standards do we not specifically meet? I thought as the richest nation we would exceed all international labor standards?

Steven Pearlstein: Yes, we should be concerned. The labor law needs reforming, as I've written in several columns. But doing it through the backdoor, through trade treaties, is silly.

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"better potential for upward mobility": Yeah, try telling that to a 40+ something who's tech job went to India. I'm sure some six month re-training will get him right back into the upward mobility track. Riiiight.

Steven Pearlstein: Why do you think a 40 something computer programmer who loses his job is finished for life? That's a ridiculously static view -- also patronizing. Things happen. People change. Situations change. People adapt. People can still learn at 45. They can start new careers, start new companies. I hear they can even have sex!

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Washington, D.C.: What's to suggest TAA is an effective tool to help workers? The problem with the program is not just that it has long been under funded, but that it has been poorly managed with a complicated certification process that workers are rarely informed about. People often lose health insurance, or pay higher premiums, just in waiting for the certification process to be completed, which hits workers who need it most, the hardest. Further, wouldn't a wage insurance program just encourage people to take worst jobs?

Steven Pearlstein: There is no doubt the program has to be expanded, reconceived, reformed. So let's get to it, rather than complaining about the past. Wage insurance works. Community colleges work. But let's not limit this only to manufacturing workers whose jobs can be proven to have been lost due to trade -- those are silly distinctions. This should be available to anyone who loses a job involuntarily, for whatever reason, in whatever industry. If we want people not to oppose trade or new technology or corporate reorganizations, they need to feel some comfort that its not going to be the end of their worklife, not going to leave their family without health insurance, that they're not going to lose their home while they find a new job. Our labor markets are wonderful at allowing people to move from one job to another -- best in the world in that respect. Huge numbers of people change jobs each year, voluntarily and involuntarily. We can make it even more flexible, however, by providing a safety net.

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Washington, D.C.: Trade agreements will always be distorted as long as immigration policies are so restricted. Agree?

Steven Pearlstein: no. don't' agree.

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Sharon, Pa.: People wake up our nation is being combined with mexico and canada while we sleep. Our so called president is giving the store to china by allowing them to finance our trillion dollar mistake in the middle east. His big business friends profit and evade taxes off the same chinese loans! prepare to learn chinese and be a slave to chairman hu when China decides to collect on the loans! The only things we sell to china are our industrial tooling and trade secrets.Tour what used to be our industrial base. Not only are the businesses closed the tooling has either been sold as scrap or sold for pennies on the dollar to china. We now import chinese steel to what used to be the steel making areas of the U.S. Locally the manufacturing plants that aren't totally closed are warehouses for chinese steel being used to make armor and ships all tooling except cranes are gone!

Steven Pearlstein: Without agreeing to the whole of what you say, it is true that China subsidizes its steel exports and we should stop that now. There are mechanisms for doing that, which have already been put in motion. And others are just waiting to be used.

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Washington, D.C.: I'm sorry your tech job "went to India". I really am. But I don't understand why you think you're entitled to the same job for your entire life. I believe it is reasonable to have some sort of guarantee of a job, but it isn't reasonable to expect a guarantee of what that job will be. If that were the case, could my job be to read Post Chats all day, please?

Steven Pearlstein: Well put.

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Washington, D.C.: Why is it that unions attack American businesses like Wal-Mart that simply deliver low prices, and then fail to influence trade policy that allows the low-priced goods into the country? America, Europe, and Japan have paid their workers extremely well (comparatively speaking), but their trade unions will not set foot into a developing country. Are they so afraid of being called Communists that they will not organize anywhere outside the industrialized world?

Steven Pearlstein: That's all for today folks. See you next week.

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