President Obama generated some populist heat in his State of the Union address by calling for tax code reforms that would sock it to the rich in order to hand tax cuts to the middle class. He promoted affordable childcare, paid sick leave, and a higher minimum wage. Democrats shouldn’t get their hopes up.
In fact, the president’s best chance of a win from the remainder of his legislative to-do list is a priority that’s already alienating his base: International trade. Obama’s appeal for more authority to cut trade deals is far more likely to end in a White House signing ceremony for a simple reason: It represents a rare point of agreement between the administration, newly empowered Congressional Republicans, and the big business lobby.
Obama devoted a meager 192 words to the subject in his address – less than 3% of his speech. And he framed the issue in terms that acknowledge Democratic anxieties about the deals. After a cavalcade of red-meat items, it felt desultory.
“Look, I’m the first one to admit that past trade deals haven’t always lived up to the hype, and that’s why we’ve gone after countries that break the rules at our expense,” he said, as Democrats in the chamber held their applause. “But 95% of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities.”
He continued: “More than half of manufacturing executives have said they’re actively looking at bringing jobs back from China. Let’s give them one more reason to get it done.”
Administration officials have been quietly pressing Obama’s trade agenda on Capitol Hill for months, with a similarly low-boil assist from an array of corporate allies. The president’s speech didn’t seem to add much urgency to the mission. But business lobbyists nevertheless are taking it as an inflection point. One top business lobbyist says the State of the Union represents the “starting gun” in a sprint to securing approval of so-called fast-track authority, which would allow the president to submit trade deals for a simple up-or-down vote in Congress.
With that power in hand, the White House would hope to win passage of a massive, 12-nation free trade pact, the Trans-Pacific Partnership, linking markets from Peru and Chile to Japan and Vietnam. An agreement with the European Union also waits in the wings, though it is not as far along as the Asian deal.
The issue engenders rare common cause between an Obama administration and a corporate sector whose relationship has been defined by strife. But even as big business groups brace for battle against the White House on the tax and regulatory fronts, they say helping advance Obama’s trade initiatives is a top priority. US Chamber of Commerce President Tom Donohue – in his annual “State of American Business” address meant to bracket the President’s speech — said Obama can count on the business lobby’s “aggressive support” in pushing fast-track authority through Congress. Business leaders in the past have complained that the administration has been too complacent in recruiting free-trade fans on the Hill, and Donohue warned that Obama is “going to have to go out and really fight for it, especially with members of his own party.”
But other leading lobbyists say the White House has earned good marks lately — a tribute in part to an infusion of energy from Commerce Secretary Penny Pritzker. After a year and a half on the job, the coming fight will mark her first foray into a full-fledged trade debate, and she has pledged to mine her deep Rolodex of business contacts for help making the sale.
“We’ve had a lot of conversations with Penny Pritzker and [U.S. Trade Representative] Mike Froman,” says Jay Timmons, president of the National Association of Manufacturers, “and I can tell you they’re fully engaged, and I’m very pleased at their leadership on these issues.”
The Business Roundtable, the organization representing top CEOs in Washington, is quarterbacking the lobbying effort, a sprawling coalition called Trade Benefits America.
The free-traders’ task is complicated by how long the debate has laid dormant. Congress hasn’t adopted a new deal since a 2011 trifecta with Colombia, Panama, and South Korea. Strikingly, there’s been so much turnover in Congress since those pacts that roughly a third of current House members, and nearly the same proportion in the Senate, have never taken a vote on a trade deal. That poses a steep learning curve for deal promoters to help lawmakers scale, not to mention an opportunity for their opponents.
The Obama administration, after all, is in a potentially awkward spot. Free trade agreements are easy to demagogue as giveaways to multinationals that want to further hollow out the middle class by shipping jobs overseas. At a moment when the yawning wage and wealth gaps are dominating the national dialog, skeptics on both the left and right would seem to have plenty of ammo to aim at these deals. Labor opponents, for example, will argue freer trade exacerbates wage stagnation by encouraging big employers to hold benefits and pay down in the name of maintaining an edge against low-cost foreign competitors. And there’s hardly a roaring public demand for the agreements: Americans rank global trade dead-last among their 2015 priorities for Washington, according to a Pew Research Center poll released last week.
Nevertheless, AFL-CIO Deputy Chief of Staff Thea Lee, while pledging “an ambitious and aggressive grassroots effort” to sink fast-track authority, sounded a wary note. “We’ve had a series of trade battles and we know we’ve always lost,” she said.
That history is instructive. Bill Clinton, the last Democratic president, teamed up with an all-Republican Congress two decades ago to forge NAFTA, the mother of modern trade deals. Lee pointed to a more recent shift in thinking among some economists who are newly suspicious of the agreements as accelerators of wage inequality. But the joined forces of incumbency — those in elected office in the White House and the Capitol with those in business leading our corporate behemoths— appear unstoppable for now.
