Annapolis Institute Overview


NAFTA foes play with the numbers

by Phil Burgess, Unabridged from the Rocky Mountain News, November 2, 1993

As President Clinton fights to win approval of the North American Free Trade Agreement, the most vocal and effective opposition comes from the president’s own party — led by House Majority Leader Richard Gephardt of Missouri and House Whip David Bonior of Michigan — and organized labor, which is pouring millions of dollars of union dues into the back pockets of Washington lawyers and Madison Avenue flacks to try to defeat NAFTA in Congress this month.

Gephardt has lost his bearings on this issue. He says that NAFTA will cost too many U.S. jobs. Facts: Trade with Mexico now supports more than 700,000 jobs in the U.S., and NAFTA is likely to add 200,000 new, higher-paying jobs between now and 1995.

Gephardt says NAFTA will cost too much money. In his Sept. 21, 1993, National Press Club speech, Gephardt said that NAFTA will cost “between $30 billion and 40 billion over the next 10 years, of which $6 billion must come from the federal budget over the next five years.” On McLaughlin One-on-One during the week of Oct. 18, Gephardt said that fixing the border would cost “more than $15 billion.” His numbers are moving downward, but they are still wrong.>>>

Gephardt seems to have pulled his numbers out of thin air, like so many numbers tossed around in the media these days. My review of border clean-up cost studies tells a different story. Here are the facts:

There are 37 U.S.-Mexico border crossings — from San Diego and San Ysidro, California to Brownsville, Texas. Most of these border areas work. Some do not. Most problems are in the transportation and environmental sectors — but no estimates even approach Gephardt’s $40 billion price-tag.

For example, no single independent assessment of the cost of fixing problems at the border exceeds $4.5 billion over ten years. Specifics:

  • Last February, the Border Trade Alliance — which includes civic leaders and leaders of government and business on both sides of the U.S.-Mexico border — provided a list of border-area projects that were ready to go. Total cost: $2.5 billion. About $1.6 billion was targeted to transportation projects. About $1 billion ($866 million) was for public health, the environment, education and housing.
  • A recently completed study by the Center for the New West reviewed planned and desired improvements by border state departments of transportation. Totals: $1.3 billion for the first 5 years and another $1.2 for the next 5 years. Total cost: $2.5 billion over 10 years. And, remember, many of these are of the “wish list” variety.
  • Border state transportation departments also did needs assessments — projects they would like to see. Totals: $2.7 billion for the first five years and another $1.8 for the next five years. Total cost: $4.5 billion over 10 years.

It is also important to remember that many of these costs are shared costs. Some are paid by the federal government; others by state and local governments; and some by the private sector. Bottom line: The federal government needs a small fraction of $15 -$40 billion some claim is needed to fix problems at the border — problems that have to be fixed anyway, NAFTA or no NAFTA.

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