“President Bush, who I don’t quote that much — the first President Bush said a billion dollars in trade surplus or deficit turns into 13,000 jobs. So, if you have a billion dollar trade deficit, it means 13,000 lost jobs. Multiply that times 5 and 600, and you get a huge number of lost jobs.”
— Sen. Sherrod Brown (D-Ohio), interview on MSNBC, April 21, 2015
President Obama’s request for enhanced congressional authority to negotiate the Trans-Pacific Partnership, a 12-nation trade deal for the Pacific Rim, has divided Democrats in Congress. Appearing on MSNBC, Sen. Sherrod Brown argued the case against the deal by quoting a Republican, former president George H.W. Bush, as saying that a $1 billion trade deficit would mean 13,000 lost jobs.
Given that Bush was an avid promoter of free-trade deals, that did not sound like anything that George H.W. Bush would say. So we decided to investigate.
The Facts
In our research, we found no evidence that Bush had ever made this remark. In fact, we found that there was only one person who ever quoted Bush as saying this — and that was Sherrod Brown. His language was inconsistent on the number of jobs, and whether he was talking about trade deficits or surpluses. But it was certainly a favorite talking point.
Here are some examples, most taken from floor speeches when he was a member of the House or since he joined the Senate in 2007.
July 23, 2003: “President Bush Sr. used to say that $1 billion of trade turned into 18,000 jobs. If we have a $1 billion trade surplus, we have a net gain of 18,000 jobs. If we have a trade deficit of $1 billion, we have a net loss of 18,000 jobs.”
October 1, 2004 (in Brown’s book “Myth of Free Trade”): “Economists in the first Bush administration calculated that one billion dollars in trade represented 13,000 jobs, most of them high-caliber export jobs; a one billion trade surplus created 13,000 jobs; conversely, a one billion dollar trade deficit lost 13,000 jobs for the nation.”
May 19, 2005: “President Bush Sr., back in 1992 when we had a trade deficit of $38 billion, he said $1 billion in trade deficit translates into 12,000 lost jobs.”
May 10, 2007: “When I first ran for Congress, our trade deficit in 1992 was $38 billion. Even in those days, President Bush—the first President Bush—said a $1 billion trade deficit represented about 13,000 jobs, mostly manufacturing jobs, many manufacturing jobs.”
April 23, 2008 (in a Wall Street Journal opinion article): “President George H.W. Bush once estimated that a $1 billion trade deficit represents 13,000 lost jobs. Do the math.”
April 29, 2009: “The first President Bush said a billion dollar trade surplus or a billion dollar trade deficit translates into some 13,000 jobs gained or lost. A $1 billion trade surplus means you are manufacturing and selling $1 billion more out of the country than you are importing. That is a 13,000 job gain. A $1 billion trade deficit is the reverse, is a 13,000 job loss. That is according to President Bush the first. So you can do the math.”
Anyway, you get the idea. What’s strange about this is that there is a recurring Commerce Department report that estimates the number of jobs created by exports. In 1993, that number was 12,086 per $1 billion of exports.
More recently, as of 2014, the number is 5,796 jobs per $1 billion of exports. The number keeps going down because of increases in labor productivity and export prices.
But note that these figures are about exports, not trade surpluses. Some economists will say that $1 billion in imports will result in a similar number of lost jobs, but again one cannot easily apply that metric to trade deficits. A nation might import products that it does not produce, so it’s unclear how that directly leads to job losses. (The Fact Checker is wary of most political claims about jobs gains and losses from trade deals; it is best to assume, as most economists do, that trade changes the types of jobs in an economy, not necessarily the overall number. We obviously have no opinion on the TPP.)
Brown spokeswoman Rachel Petri initially sidestepped our question about the Bush quote and provided The Fact Checker with a quote from economist Dean Baker of the Center for Economic and Policy Research from 1999:
“While the statement ‘that exports create jobs’ is true, the statement that ‘imports cost jobs’ is true in exactly the same way. If 13,000 workers are typically employed to produce $1 billion in exports (the number the Commerce Department has used, adjusted for inflation), then $1 billion of imports represents 13,000 jobs that were lost in the United States.”
Baker is one of the most authoritative critics of free-trade agreements, but again, this is not what Brown quoted Bush as saying. Moreover, Baker goes on to say that this is a rather simplistic view of trade. “More honest and knowledgeable individuals don’t rely on this exports create jobs line to make the case for expanding trade,” he wrote. “The more serious argument relies on either an economies of scale view, that by expanding the size of the market production costs fall, or the traditional comparative advantage view, that nations can gain by specializing in the goods they produce best.”
Then Petri came back and noted that Brown, in his 1994 book, had cited the book “NAFTA: An Assessment,” by Gary C. Hufbauer and Jeffrey J. Schott, as a source for the 13,000 statistic. We could not find that figure in the book, but we did find that this book predicted that NAFTA would create 316,000 jobs and lose (“dislocate”) 145,000 jobs, for a net gain of 171,000 jobs. This is a good example of how many trade economists believe that with trade deficits and surpluses, there is not a simple 1:1 ratio of jobs lost and gained. (Hufbauer later repudiated the 171,000 prediction, saying the practical result of NAFTA was zero jobs.)
Petri also pointed us to this statement by Bush, made on April 8, 1991:
“Just 4 years ago, we had a $4.9 billion trade deficit with Mexico. Since then, we’ve cut that deficit by two-thirds, to $1.8 billion. This turnaround took place in part because Mexico’s President believes in free trade. He’s slashed tariff rates for some goods from 100 percent to 10 percent. One result: our exports to Mexico have increased 130 percent in the past 4 years. This export boom has created more than 300,000 new jobs here in the United States of America. And each additional billion dollars in exports creates 20,000 new jobs here in the United States.”
Again, this is about exports, not trade surpluses. By Bush’s math, there was a gain of $15 billion in exports — and yet there was still a trade deficit. If you used Brown’s rhetoric about trade deficits, he appears to think Bush was suggesting that a $3.1 billion decline in the trade deficit resulted in 300,000 jobs — or nearly 100,000 per $1 billion. Of course, that would be absurd.
(We should note that every president since Bush — Bill Clinton, George W. Bush, Barack Obama — has made similar assertions about the number of jobs per $1 billion of exports, using Commerce Department calculations, so it’s not particularly noteworthy in the first place.)
The Pinocchio Test
Economists can argue forever about the impact of trade deals; certainly economists agree that trade deficits can result in a loss of jobs. But it is pretty clear here that Brown for years has placed words in Bush’s mouth. Moreover, for a self-proclaimed expert on trade, he doesn’t seem to know the difference between exports and trade surpluses.
This is an excellent example of how Washington politicians live in their own invented reality, with a self-perpetuating feedback loop. Even if Brown had quoted Bush accurately on exports, rather than trade surpluses, the numbers would have been woefully out of date. Given that Bush was president about a quarter-century ago, you’d think Brown would have checked to see if the ratio of jobs to exports had remained the same. You can’t “do the math” with ancient information.
Brown earns Four Pinocchios.
Four Pinocchios
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