WPost Blasts WH for Misleading on Think Tank Book on TPP

Glenn Kessler of Washington Post's Fact Checker has called out the Obama Administration for making what is says are false claims from a book by a well-known economic think tank.

The claim?  Well, Glenn Kessler wanted to test the statement being used by the White House that completing the Trans-Pacific Partnership (TPP) trade deal would increase US exports by $123 billion and help support an additional 650,000 jobs.  Here is more:

The Peterson Institute in 2012 published a book titled “The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment,” by Peter A. Petri, Michael G. Plummer and Fan Zhai. The book does include an estimate that, by 2025, the United States would experience a gain of $77.5 billion in income from TPP, as well as a $124 billion increase in exports. (More on those numbers, which are expressed in 2007 dollars, below.) But nowhere in the book does it says 650,000 jobs would be created.

Asked about the statistic on 650,000 jobs, the White House referred us to the Office of the U.S. Trade Representative. USTR spokesman Matthew McAlvanah directed us to page 58 of the book. “They do not provide an estimate on jobs,” he acknowledged. “However they do provide a methodology that one could use.”

Essentially, the book suggests that an income gain of $121,000 would be “roughly equivalent to creating an extra job.” So the Obama administration took the figure of $77.5 billion and divided it by $121,000, which yields 640,000. Rounded up, that becomes 650,000.

There’s just one problem: This is the incorrect way to use Petri’s research, especially when officials such as Kerry combine the jobs figure in the same sentence as the income prediction: “The TPP could provide $77 billion a year in real income and support 650,000 new jobs in the US alone.”

 That’s because the calculation on jobs can only be done if one assumes that wages have been frozen and there is no income gain. So it’s completely misleading to suggest there would be both a gain in income and a gain in jobs.

It looks like others at the Washington Post (e.g. David Ignatius) are paying attention to Mr. Kessler's column...

More can be read here.  The Peterson Institute for International Economics (PIIE) was just ranked as the 15th best think tank in the world by the annual University of Pennsylvania think tank rankings for 2014.  It was also ranked as the 4th best domestic economic policy think tank, and the #1 international economic policy think tank.