'This Week' Transcript: Economic Roundtable

And I want to bring this to you, Mr. Smith, because I know you're a strong opponent of these buy-America provisions. Yet when you've got the industrial Midwest at 45 percent capacity, 40 percent of the people working in steel companies and other manufacturers laid off, why isn't this the right thing to do?

SMITH: Well, the reason it's not the right thing to do is that the growth of global trade has been enormously beneficial to the United States. The problem with trade is that the benefits are diffused and the pain is localized. But the benefits of having a global economy have created an export sector in this country that provides our highest-paying jobs.

So you listed there the companies and the people that have been adversely affected. That's why I started off by saying the first thing that the Congress should do is take care of those people who are dislocated, but there are lots of people who are dislocated because of technology.

And I was growing up, there were a lot of people that were telephone operators. Those jobs all went away. You don't have the same argument about the loss of those kinds of jobs. It's only when it comes to trade.

If the Congress passes this buy-American provision, I can assure you -- and we operate in 220-some-odd countries around the world and are a huge part of the import-export infrastructure of the United States, we will get retaliation, and it will be American jobs at risk.

FRANK: Well, I -- I -- let me just say, by the way, on the tax code, if I could. I would very much like to see that. And I think you can do that in a revenue-neutral way.

I voted to raise the tax on so-called carried interest for hedge funds. And I think we have undertaxed some of the financial manipulation, and I would be for a package that would shift that. So I appreciate it, and I think it can be done in -- in a way that -- that is not going to increase the deficit and is stimulative.

FRANK: Beyond that, ideally, I agree with Mr. Smith, but people need to understand, I don't think there has ever been in American history -- certainly not in my memory -- a greater split between the opinion of people you would describe as the elites in the economy and the academy, et cetera, and the average American.

The fact is that the average American feels that, even when there was growth, he and she wasn't getting a piece of it. And I appreciate you saying, Fred, that we need to take care of the people dislocated, but you have to broaden it.

I will tell you, I believe, until you get a better social safety net, actions that you're not going to like are going to continue. And let me give you an example.

We were passing a bill in the House to say that we want very different rules on the TARP program, the -- the economic rescue program. And Congresswoman Sue Myrick, a Republican from North Carolina, offered an amendment that said no country -- no company receiving any financial help under this can do any outsourcing of customer service.

And that passed unanimously. Nobody wanted to vote on it; nobody wanted to vote against it.

I understand the logic there. And I just read in Great Britain there were riots now because the British workers are saying, "Don't have Italian workers," violating European Union rules.

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