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Cox: Grover Cleveland offers timely trade lesson
April 11, 2017 / 2:27 PM / 7 months ago

Cox: Grover Cleveland offers timely trade lesson

NEW YORK (Reuters Breakingviews) - If Americans know anything at all about Grover Cleveland, it is the fact that he’s the only person to have served two non-consecutive terms as U.S. president. The reason why the New York politician managed an unsurpassed round-trip to the Oval Office is what matters today: free trade.

Grover Cleveland delivers his inaugural address on the east portico of the Capitol in Washington, D.C., U.S. in March 1885. Library of Congress/Handout

As President Donald Trump takes the country closer to an economic nationalism that calls for tearing up agreements like NAFTA and the Trans-Pacific Partnership, potentially enacting higher tariffs on imports and obsessing over trade deficits, it is worth reflecting on a similar debate that inflamed the electorate 130 years ago.

Flash back to Cleveland’s third State of the Union address to Congress on Dec. 6, 1887. In a classic speech of the Gilded Age, Cleveland laid out a compelling case against protectionism that is as relevant today as it was when the portly former mayor of Buffalo lifted himself up the steps of the Capitol.

More importantly for today’s Republican leaders of the House and Senate, Paul Ryan and Mitch McConnell, respectively, the story of how Cleveland winged himself back into office presents a cautionary tale that should dissuade their embrace of the current president’s more protectionist proclivities.

Cleveland’s third joint address to lawmakers is remarkable in other ways, too. For starters, consider the circumstances under which he made his plea for reducing trade barriers. Cleveland, the first Democrat to become president since before the Civil War, was incensed that the federal government was taking in more than it spent.

It bears pausing on that notion. A Democrat in the executive mansion (it wasn’t called the White House until Teddy Roosevelt came along) considered it unfair that Uncle Sam was taxing its people and squirreling away the excess.

In fact, Cleveland felt even more strongly than that. He told the assembled representatives from the then 38 states of the Union that “it is indefensible extortion and a culpable betrayal of American fairness and justice” for the government to run a budget surplus, and “multiplies a brood of evil consequences.”

The Treasury has become “a hoarding place for money needlessly withdrawn from trade and the people’s use,” Cleveland thundered, “thus crippling our national energies, suspending our country’s development, preventing investment in productive enterprise, threatening financial disturbance, and inviting schemes of public plunder.”

He may have been the most conservative Democrat – or Bourbon Democrat, as members of the ideology were derisively called – to occupy the office. Today, under Republican leadership, the U.S. government is spending some half a trillion dollars more than it receives, a gap bound to increase if Trump successfully cuts taxes and increases infrastructure investment.

Government profligacy, however, is not the most important message for politicians nowadays to extract from Cleveland’s speech. Rather, it is the remedy he endorsed for reaching a balanced budget.

At the time, the U.S. government had three sources of revenue. One was a tax on alcohol and spirits. The second was one on tobacco. Cleveland liked to chew his, which no doubt led to the mouth cancer which needed treatment in a clandestine surgery aboard a rich friend’s yacht during his second term.

The biggest, though, was tariffs on foreign imports. Cleveland exhorted legislators to reduce, if not abolish, them. He argued that they only served to protect the interests of the 1 percent of his day – rich factory owners in the East, primarily, at the expense of the working man and farmer, who comprised nearly a quarter of the American workforce.

“When it must be conceded that the increase of the cost of living caused by such tariff becomes a burden upon those with moderate means and the poor, the employed and unemployed, the sick and well, and the young and old, and that it constitutes a tax which with relentless grasp is fastened upon the clothing of every man, woman, and child in the land, reasons are suggested why the removal or reduction of this duty should be included in a revision of our tariff laws,” he said in his address.

Needless to say, Cleveland did not manage to win over Congress. Worse still, a year later he lost his bid for re-election to Republican Benjamin Harrison. The tariff debate allowed the Grand Old Party – who argued for protectionism, just as Trump does today – to take control of the Senate and the House.

And in keeping with their campaign promises, in 1890, the Republican-led Congress raised duties on imports from 38 percent to nearly 50 percent. The act was named for its champion, Representative William McKinley of Ohio.

This is where it gets interesting. The steep increase in tariffs did what Cleveland said it would. Rather than help make American industry more competitive, it coddled the monopolists and hurt the poor and the working class hardest. Like today’s lower-income laborers, a larger percentage of their paychecks went toward purchasing goods manufactured elsewhere.

Two years later, Cleveland swept back into the presidency – becoming the only man ever to do so. Moreover, Republicans were crushed in 1892, losing majorities in both the Senate and the House, thus giving Democrats control of Congress for the first time since before the Civil War. McConnell and Ryan are in danger of condemning their party to the same fate. And at 70 years old, Trump is too old to repeat Cleveland’s non-consecutive feat.

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