Politics

01.27.14

Obama Wants to Fight Income Inequality…With More Free Trade?

The president is expected to call for more liberalization agreements in the State of the Union. The only thing that will stimulate is liberal and conservative opposition to what looks like a plan for offshoring.

On Saturday, the World Economic Forum’s annual meeting, a.k.a. Davos, came to an end.  But its spirit of transnational and bipartisan cooperation among the rich will live on—at least for a few more days: on Tuesday night, President Obama will deliver his fifth State of the Union Address. 

Left unmentioned by the administration is that its expected proposals on trade stand to pit the Democratic and Republican bases against their respective parties’ elites.  In addition to strenuously, repeatedly and regularly denouncing inequality, the president is expected to use the State of the Union to call for trade liberalization with 11 Asian and Latin American nations, and to seek Trade Promotion Authority (TPA).  TPA is a congressional mechanism which would enable finalized trade deals to be considered on a legislative “fast track,” on a closed, as is, take it-or leave-it basis.

Without Republican crossover votes TPA is as good as dead.  On the Democratic side of the ledger antipathy towards free trade is presumed and, by now, historic. It is pretty much baked into the Democrats’ DNA.  For instance, in 1993 President Clinton was forced to work in tandem with congressional Republicans to secure passage of the North American Free Trade Agreement (NAFTA) because a majority of congressional Democrats opposed its enactment. 

Fast forward to the 2008 Democratic primaries, where Obama expressed his hostility to NAFTA because it favored Wall Street over Main Street—his words, not mine.  In a debate held in the pivotal rust-belt swing state of Ohio and hosted by MSNBC, Obama announced that NAFTA “did not have the labor standards and environmental standards that were required in order to not just be good for Wall Street but also be good for Main Street.” For good measure, Obama added that, “I will make sure that we renegotiate, in the same way that Senator Clinton talked about.”

Did Obama really believe what he was saying?  Well, while the candidate was decrying NAFTA in front of the cameras, Austan Goolsbee, Obama’s senior economic policy adviser, was secretly offering verbal succor to Canadian diplomats. According to Joseph De Mora, a Canadian political and economic affairs consular officer, Goolsbee admitted that Obama’s stated position was “more reflective of political maneuvering than policy.”

Suffice to say, NAFTA hasn’t been renegotiated.  Suffice to say, details of the now-pending trade deals were being hammered out with Obama in the White House and Hillary Rodham Clinton ensconced in Foggy Bottom. 

Still, TPA’s fate is very much in doubt.  Already, 17 Democratic senators and a majority of House Democrats have expressed their opposition to granting Obama legal authority to conclude trade negotiations and make them law.  Significantly, Senator Elizabeth Warren is one of the seventeen and that spells trouble for the president. Her stance will be used to highlight the nexus between globalization and inequality, which presumably Obama abhors, at least the latter anyway.   

The word ‘recovery’ is taken by most Americans to be a cruel oxymoron.

According to Gary Hufbauer of the Peterson Institute for International Economics, “you need three-quarters of the Republicans, because you’re going to have at least half of Democrats voting against it.” But unlike NAFTA, where conservative opposition was limited to the province of Ross Perot and Pat Buchanan, this latest round of trade legislation will face flak from the broader Republican base.

Of course, this should come as no surprise.  Nowadays, the GOP trends working- and middle-class voters, and the word “recovery” is taken by most Americans to be a cruel oxymoron. Nearly three-quarters of the country view the U.S. as still being in the midst of a recession.

Clearly, Obama is no Bill Clinton, which makes the task of selling TPA that much more difficult.  Indeed, Obama has gone out of his way to needlessly antagonize the very Republicans whose support he would need to get TPA through Congress. 

Still, there are a few promising signs for the president.  Earlier this month, the House Republican leadership issued a joint statement which lauded TPA, but left the burden of persuasion to the Obama.  They also hinted that Republican support will come with a price, particularly as the Tea Party opposes TPA:  “While we are encouraged by today’s bill introduction, it is critically important that the President make the case to the American people about the benefits of free trade and work with Congress to secure significant bipartisan support that will be needed to pass both Houses.”

At this juncture, Obama’s capacity to govern effectively is questioned by most, and a possible Democratic loss of the Senate looms in November.  Right now, a majority of Americans gives Obama failing grades for his handling of the economy, while 53 percent find him incompetent, and a plurality holds him to be untrustworthy.

Thus, while the president bandies about “inequality” as a rallying cry for his base, and as a cudgel to bash Republicans about, he ought to at least explain how trade liberalization will result in more jobs with good wages.  As sometime Davos attendee Bill Clinton once said, “Explanation is eloquence.”