From President Obama on down, a number of leading Democrats extol free-trade agreements as central to America’s economic growth. There’s only one problem: They like the votes they hope to extract from labor unions in November even more.
With control of the Senate hanging in the balance — and polls showing an enthusiasm gap favoring Republicans — Democrats need the get-out-the-vote muscle of their union allies. And union leaders are predictably using their inside-the-Beltway muscle to block passage of so-called fast-track trade promotion authority, which enables trade deals, delicately negotiated with foreign governments, to travel through Congress on an up-or-down vote without being amended to death.
” ‘No’ on fast track … out of the question,” House Democratic leader Nancy Pelosi recently told cheering United Steelworkers. A month earlier, Senate Majority Leader Harry Reid threw cold water on President Obama’s State of the Union endorsement of fast track by saying he would refuse to let it come to a vote.
At risk are two major trade deals being negotiated by the Obama team, one with Asia and the other with the European Union. The Trans-Pacific Partnership — the centerpiece of Obama’s 2011 “pivot” toward Asia — would be the largest U.S. trade deal ever. It would also impose new environmental rules and labor protections that will help level the field for U.S. workers. Across the pond, the Transatlantic Trade and Investment Partnership, TTIP, would remove such trade barriers as tariffs, unnecessary regulations, and restrictions on investment.
Union leaders and their Democratic allies have mobilized to oppose these deals, blaming the 1994 NAFTA deal with Mexico and Canada for U.S. job losses, especially in manufacturing. And while trade deals always produce some losses, the overall economic benefits to the U.S. can be considerable: The nonpartisan Peterson Institute estimates that the Asia deal would add $78 billion to the U.S. economy annually by opening new markets. And the independent, London-based Centre for Economic Policy Research estimates that the transatlantic deal would boost the U.S. economy by some $130 billion and add $164 billion in gains for Europe. For seven years, while other regions of the globe have shaken hands on trade deals, the U.S. has been in a trade drought. That can be turned around only if Congress gives the President fast-track authority.
Top Democrats tell me they are confident those deals will get done. “It’s a national security issue” because free trade integrates nations and their economies, says Chicago Mayor Rahm Emanuel, credited with helping President Clinton push NAFTA through Congress two decades ago. Obama senior adviser Valerie Jarrett acknowledges the “inherent tension” within her party over trade but insists that her boss remains committed. “We’re going to balance protections for workers and opportunities for business,” she says.
But business leaders are waiting for Obama to stand up to the fierce opposition from inside his own party. “The President is going to have to do more,” says John Engler, the former Michigan governor who heads up CEO group Business Roundtable.
True, some Republicans also oppose trade deals. But they remain a powerless minority: A letter to Pelosi opposing fast track was signed by 151 Democrats and just 23 Republicans. And leading Republican senators applauded Obama’s State of the Union declaration of support for fast track.
Sadly, it looks as though there is little chance of the President getting such trade authority before the 2014 midterm election. Election Day will either hand the Senate to Republicans who will support fast track or at least leave Obama as a lame-duck President who no longer needs to cater to the Reid-Pelosi crowd and their labor allies. As with the Keystone Pipeline — the approval of which would upset Obama’s environmental constituency — this administration is showing blurred vision on the economy but a cold, clear-eyed strategy on what it thinks it takes to win elections.
This story is from the May 19, 2014 issue of Fortune.
