To be fair, Oatley's theory would still be correct if it were true that the president believed his policy would be best for American consumers as a whole. However, this was clearly not the information he was getting from his advisors. While that Bush was arguing the American steel industry was under attack by a sudden influx of cheap foreign product, the International Trade Commission and the United States Trade Representative determined "that the surge tapered off after the 1998 Asian economic crisis" (9) , meaning that the President knew that the tariffs were coming years too late to save the steel industry. In addition, some advisors to the administration on the state of the steel industry contended that the tariffs would actually hurt American steel in the long term by removing incentives for the industry to reform its business practices as well as propping up "mini-mills" that prevented the U.S. from realizing returns to scale. (10) All this points to a general conclusion: tariffs would do more to get Bush re-elected than they would increase the overall welfare of the country. And fortunately for states with a large steel industry, they had a very large say in whether or not Mr. Bush was re-elected.
In November of 2002, the Republicans retook the Senate convincingly, in large part due to the re-elections of Arlen Specter and others that were helped by President Bush's decision to raise tariffs. Unfortunately for the president, that was not the only consequence of his policy choice. Just like classical economic theory would predict, industries that relied heavily upon steel as an input in producing their goods were hit hard, impacting employment in those industries negatively. Some estimates indicated that several states that went to the Democratic Party were hurt severely; with up to forty percent of New York Longshoremen joining the unemployment rolls and profit margins in steel intensive sectors such as construction decreasing by as much as twenty percent in California.(11) Even more interestingly, the tariffs caused U.S. grain exports to decrease because "high tariffs scare off freighters from which they normally unload 42 percent of U.S. steel imports. Once emptied, those same boats usually haul away 62 percent of U.S. grain exports. With fewer ships available to be loaded, grain overflows from silos and sits in storage on barges."(12) Not coincidentally, the states that were hurt the worst were ones that were either well out of the president's reach for the next election (New York and California) or were safe from a Democratic challenger (Kansas and Nebraska). In this manner the administration made a choice; they traded votes in "safe states" for votes in "swing states".
Contrary to the logic promoted by Oatley, the president was easily able to push the costs of protection onto less strategic states for clear political gain. This really highlights a feature of the American political system that the administration seems to have grasped very well: that not all votes are equal. More important than the actual votes is where those votes are located. This was probably driven home to the Bush presidency when they were able to take office in 2000 despite losing the popular vote and winning the Electoral College by only the narrowest of margins. In an effort to prevent a race being that close again, the president was making the informed decision to cement his lead in the critical states of West Virginia and Iowa as well as making big inroads to Michigan and Pennsylvania, which Al Gore won narrowly in 2000. Thus, rather than representing a national constituency, the president based his political decisions upon industries that were important to less than 15% of the American population.
Be Sure to Continue to Page 4 of "The Executive's Local Constituencies ".
