(What’s Left of) Our Economy: Which Democrats are Serious and Un-Serious About Trade Overhaul?

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AFL-CIO, Bernie Sanders, Canada, Charles Schumer, currency manipulation, Debbie Dingell, Democrats, dispute resolution, Elizabeth Warren, environmental standards, labor standards, Mexico, NAFTA, North American Free Trade Agreement, Politico, Richard Neal, Robert Lighthizer, Rosa deLauro, rules of origin, Thea Lee, Trade, Trump, U.S. Trade Representative, unions, Wilbur Ross, William Pascrell, {What's Left of) Our Economy

Usually, paying attention to instances of politicians and other public figures getting up on their soapboxes is a waste of time. Yesterday served up an exception: a press conference held by House Democrats in reaction to President Trump’s official decision to open talks to renegotiate the North American Free Trade Agreement (NAFTA). The statements recorded in this Politico account offer some evidence as to which leaders on America’s Left are willing to work with the administration on trade policies that can help the working class voters Democrats still profess to champion, and those who will remain content to sit on the sidelines and take partisan potshots.

Reportedly, all of the House members who spoke at the event “said…they feared Trump would make only modest changes to NAFTA after blasting it as an economic disaster throughout last year’s presidential campaign.” The basis for these worries? The letter sent yesterday by new U.S. Trade Representative Robert Lighthizer to Congressional leaders announcing the administration’s intention to open NAFTA talks with the two other signatories, Canada and Mexico. According to these House Democrats and some other trade critics, the document apparently was “short on details,” which many claimed indicated Trump’s intention simply to “tweak” rather than comprehensively overhaul the agreement.

All else equal, wondering about the president’s real intentions is anything but unreasonable. His personality, after all, is mercurial, and one of his major trade initiatives to date – the negotiations begun with Beijing following February’s summit with Chinese leader XiJinping – has legitimately disappointed advocates of the major course change he pledged during the campaign. (The other major trade initiative, scrapping the Trans-Pacific Partnership trade agreement, kept a leading campaign promise to the letter.) Moreover, the Lighthizer letter is indeed short on specifics.

But none of the participants in the press conference seems to have noticed that in previous statements –including reportedly to leading Democratic lawmakers, top Trump officials have emphasized the need for dramatic NAFTA changes.

For example, Commerce Secretary Wilbur Ross has described as high NAFTA-related priorities greatly tightening the pact’s rules of origin in order to incentivize more non-NAFTA manufacturing investment inside the free trade zone, and restructuring a dispute-resolution system that gives each signatory an equal vote even though the United States represents more than 85 percent of North America’s total economic output. Reinforcing this point was the Lighthizer letter’s contention that “establishing effective implementation and aggressive enforcement of the commitments made by our trading partners under our trade agreements is vital to the success of these agreements and should be improved in the context of NAFTA.”

Meanwhile, Lighthizer reportedly has told Senators that the administration is thinking of adding to NAFTA rules that would prohibit currency manipulation – a move that would set a valuable precedent for future trade deals. In addition, his letter mentioned the need to improve NAFTA’s labor and environmental protections. In my view, they’re largely unenforceable. But they’ve been a prime focus of Democratic Party trade policy positions for decades.

So given that background, it seems fair at this point to finger Connecticut’s Rosa deLauro, New Jersey’s Bill Pascrell, and Massachusetts’ Richard Neal as grandstanders. The former stressed the “tweaking” allegation. The latter two charged that “It was clear from the start that the administration was only interested in working with the Congressional Republican leadership in drafting this notice [the Lighthizer letter].”

I’d also include in this group several key Senate Democrats, including Leader Charles Schumer of New York, former presidential candidate Bernie Sanders of New York, and Elizabeth Warren of Massachusetts. They voted against Lighthizer’s confirmation despite his decades-long record of fighting predatory foreign trade practices both as Deputy U.S. Trade Representative during the Reagan administration, and as a trade lawyer representing domestic American producers.

More temperate in their judgments were Michigan’s Debbie Dingell, and the AFL-CIO’s Thea Lee. The former stated that she was “investing the time to understand where the consensus is.” The latter said, “We enter every negotiation in a good faith state of mind and we expect a lot from our government. Certainly candidate Trump made a lot of promises about fixing flawed trade agreements and looking out for American workers and good jobs, so we will hold him and his administration to that promise.”

I can’t think of a more reasonable position for politicians and other supporters of a movement that still styles itself as the “party of the common man [and woman].”

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Making News: Podcast of Last Night’s John Batchelor Radio Interview on U.S.-China Relations

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2016 elections, AFL-CIO, China, Gordon Chang, Joe Biden, Making News, Richard Trumka, The John Batchelor Show, Trade, unions, Xi JInPing

I’m pleased to present the link to the podcast of my appearance last night on John Batchelor’s nationally syndicated radio show.  Click here for a great discussion among John, me, and co-host Gordon Chang on the politics of U.S.-China trade relations in the context of Chinese President Xi Jinping’s current visit to the United States.  Our segment starts at the top of the hour.

(What’s Left of) Our Economy: With Fast Track Done, Where We Stand

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2016 elections, AFL-CIO, Asia, China, Congress, Democrats, fast track, Hillary Clinton, House of Representatives, Lincoln Chafee, national security, Obama, Senate, technology transfer, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, unions, {What's Left of) Our Economy

President Obama hasn’t signed the bill yet, but the Senate’s passage of fast track legislation yesterday ensures that the nation is entering a new phase in trade policymaking. So here are some first thoughts about where we stand economically and politically right now.

>It’s crucial to remember that Congressional approval of fast track doesn’t automatically mean approval of the Trans-Pacific Partnership (TPP) when (and if?) negotiations on this trade deal are completed. The odds of passage have certainly soared, since Congress has never rejected a trade deal that it’s considered under fast track procedures.

But thanks to the almost entirely unbinding, loophole-filled presidential negotiating instructions Congress has included in the legislation, the final TPP is nearly a lock to lack meaningful disciplines on currency manipulation and the discriminatory activities of state-owned enterprises. It will also extend trade benefits to a country that’s a major violator of global human trafficking norms (Malaysia) and one that’s recently instituted Islam’s often brutal Sharia as the law of the land (Brunei). Moreover, it looks likely that even the most obtuse American lawmaker will see that TPP contains a “docking” provision that will permit its ranks to be expanded beyond the current initial group of members – for example, to China.

>As I’ve written previously, organized labor still needs to take the political scalps of lots of the Senate and especially House Democrats who defied its heatedly expressed wishes and supported the fast track bill. I distinguish between the Senate and House because members of the former inevitably have broader political bases in their (almost always) larger jurisdictions, and therefore are much harder for any particular interest group to unseat. But an age-old rule of politics still holds: If you’re going to strike at your enemies, make sure (figuratively!) to kill them.

Making good on its threats will be particularly important for labor, since Democratic politicians have been feeling free for decades to ignore its wishes on a raft of other priority issues, like the so-called “card check” legislation that would have changed the laws governing unionization elections.

>The not-trivial levels of Congressional Democratic support for fast track will create an especially interesting situation for the party’s presidential politics during the rest of this national election cycle. All but one of its main presidential hopefuls – including Hillary Clinton – declared their opposition to the bill. (Former Rhode Island Governor and U.S. Senator Lincoln Chafee has been the exception.) So assuming that Chafee or another fast track supporter is not its nominee, the party’s 2016 standard-bearer will find him or herself running alongside (and thus endorsing) a number of House and Senate candidates who have backed a measure detested by many of the party’s major constituencies (not just unions, but environmental organizations as well).

>Finally, for now, I’ll be waiting breathlessly for signs that impending American approval of fast track will shore up the nation’s position in East Asia versus China’s encroachment – in line with TPP supporters’ repeated claims that the agreement is vitally needed to contain or counterbalance China. So I’ll continue to keep a close eye on China’s activities in the region – as well as the actions of U.S. allies, who have shown every sign of hedging their bets regarding Asia’s future kingpin and will undoubtedly maintain such postures whether TPP is created or not.

For as I’ve explained, unchangeable geopolitical realities, a rapidly evolving military balance, and the longtime massive, reckless, ongoing U.S. corporate transfers of defense-related technologies to Beijing (not to mention trillions of dollars’ worth of trade profits) all mean that although the United States is anything but destined to remain a “Pacific power,” an ever stronger China unmistakably is.

Im-Politic: On Liberals, Trusting Presidents, and Trade

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1990s expansion, 2000s recession, AFL-CIO, Asian financial crisis, Bill Clinton, China, Congress, Democrats, fast track, House of Representatives, Im-Politic, Jobs, liberals, manufacturing, Obama, stock market bubble, tech bubble, TPA, Trade, Trade Promotion Authority, unions, wages, World Trade Organization

Given the pronounced leftward shift evident recently in the ranks of Democrats in the House of Representatives, last Thursday’s “final” (for now) vote for “fast track” trade negotiating authority for President Obama makes clear that at least 28 of these Congress Members believe that current trade strategies are entirely compatible with their stated aims of boosting MainStreet America’s fortunes. I hope they’ll read over this speech given in 1997 by President Bill Clinton to an AFL-CIO convention. It explains clearly why these beliefs are delusional, and why presidents who try to reinforce them don’t deserve their trust.

Mr. Obama knows he needs at least a sliver of House Democrats to ensure passage of fast track – which would prevent Congress from amending any trade agreements he brings before it, as well as sharply curb debate. So he’s repeatedly sent progressive groups the message that such agreements will actually benefit working class and middle class Americans, and that, further, he’s proved his progressive bona fides beyond reasonable doubt by championing any number of domestic programs to enable the “99 percent” to take full advantage. In the president’s words:

“Smart, new, 21st century trade agreements are as important to helping the middle class get ahead in this new economy as things like job training, and higher education, and affordable health care.  They’re all part of a package.”

And he continued, in this April 23 speech, “I mean, think about it.  I’ve got some of these folks who are friends of mine, allies of mine saying this trade deal would destroy the American working families, despite the fact that I’ve done everything in my power to make sure that working families are empowered.  And, by the way, they’ve been with me on everything.”

Now flash back 18 years. In 1997, President Clinton was seeking fast track, too, and realized he needed at least some backing from his biggest constituencies to the left of center. He was also clearly just as worried as Mr. Obama about threats by unions in particular to work to unseat Congressional Democrats who supported the trade measures that labor detested.

So he told AFL delegates that his trade policies – including NAFTA – were “about how we can best seize our opportunities in the economy that is emerging, and how 4 percent of the world’s people can continue to maintain 20 to 22 percent of the world’s wealth, and continue to grow the economy so incomes can rise and new jobs can be created.”

Clinton went on to insist that “we share too many values and priorities to let this disagreement damage our partnership. You just think of all of the things that I reeled off that we’ve done together and all of the things we’ve stood against in the last five years. I have worked to make this economy work for middle-class Americans. I care about making sure everybody has a chance and making sure nobody is left behind. But I can’t build a better future without the tools to do the job, and America can’t lead if it’s bringing up the rear.

“At the moment of our greatest economic success in an entire generation, we shouldn’t be reluctant about the future; we ought to seize it and shape it. And I think I also have to say to you that there are a lot of good members of Congress who agree with me about our trade policy who also stood for the minimum wage. They agree with me about our trade policy, but they fought to provide health care for 5 million more kids. They support open trade, but they also fought to protect Medicare and Medicaid and education and the environment, and to open the doors of college to all Americans.

“And when the majority in Congress wanted to do so, they stood against them and fought with you against the Contract on America. They fought with you against attempts to repeal the prevailing wage laws, to weaken unions and workplace health and safety laws. They did so in the face of intense pressure. They have fought for you and for all working people, and they deserve our support. If they were to lose their positions because they stood up for what they believe was right for America’s future, who would replace them, and how much harder would it be to get the necessary votes in Congress to back the President when he stands by you [emphasis added] against the majority?”

Clinton, it must be remembered, lost the fast track vote that year, and was denied the authority in 1998 as well. But this avowed champion of working class Americans went on to press (successfully) for admitting China into the World Trade Organization, and when the Asian financial crisis struck in the late-1990s, kept U.S. markets wide open to Asian exports. Both these policies added powerfully to downward pressures on middle class manufacturing jobs and their high wages. Clinton escaped much blame back then because the interlocking technology and stock market bubbles created enough growth and employment to mask these more enduring losses.

When the ’90s high came to an abrupt end with the early 2000s recession, the middle class and especially manufacturing workers were hit especially hard, and the historic (for an expansion) employment and pay hits the latter kept suffering showed how greatly,and structurally, the Clinton trade policies damaged their fortunes.

Since hope springs eternal, and should never be dismissed out of hand, what would be understandable would be for House Democratic supporters of fast track to acknowledge the recent past, but to hold that This Time it’s Different. What would not be understandable would be for them to fail to explain exactly why.

(What’s Left of) Our Economy: More Thoughts on the Fast Track Trade Vote – Including Where Hillary Now Stands

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2016 elections, AFL-CIO, African Americans, boardroom liberalism, CBC, Congressional Black Caucus, fast track, Gregory Meeks, Hillary Clinton, House of Representatives, labor, manufacturing, Nancy Pelosi, Obama, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, {What's Left of) Our Economy

Yesterday, I posted some observations about the big vote in the House of Representatives on Friday that dealt a body blow to President Obama’s hopes for fast track authority to negotiate trade agreements like his proposed Pacific Rim deal. Today, let’s focus on three of some of the domestic political implications.

>The trade-related political issue of the moment seems to be why Hillary Clinton has failed to either endorse or oppose the White House’s request for fast track, which would prevent Congress from making any changes to trade deals brought before it. Therefore, it greatly increases the odds of their passage, since Congress historically has been reluctant to hand presidents outright foreign policy-related defeats.

Now, just as I’ve been finishing this post, news has come out that Clinton has made the following statement on trade policy: “The president should listen to and work with his allies in Congress starting with Nancy Pelosi, who have expressed their concerns about the impact that a weak agreement would have on our workers to make sure we get the best strongest deal possible. And if we don’t get it, there should be no deal.”

This position contains some significant changes, but still looks like an exercise in political needle-threading. On the one hand, Clinton has already – vaguely – insisted that the Pacific Rim trade agreement (the Trans-Pacific Partnership, or TPP) “must increase jobs, must increase wages, must give us more economic competitive power.” She has added that the TPP must contain strong health and environmental rules, and “address” currency manipulation. That sounds pretty critical, though she’s claimed that she can’t make a final decision since the negotiations are still ongoing.

On the other hand, as noted above, support for fast track will greatly increase TPP’s eventual chances of Congressional passage. And although her new reference to House Democratic leader Pelosi suggests opposition to this measure – given the latter’s crucial “No” vote Friday on a politically related worker assistance program – lots of political wiggle-room remains.

Clinton’s reluctance to take a definitive fast track position is especially striking given her evident desire to shore up her support with the increasingly left-of-center Democratic party base, which of course punches above its weight during primary season, and whose enthusiasm is usually crucial for general election success. It would be easy to conclude, therefore, that the former Secretary of State and New York Senator actually supports the president’s trade agenda, and simply doesn’t want to alienate the faithful.

Yet there’s still room for doubt as to her views. After all, everything else about Clinton’s campaign strategy points to confidence that her strong front-runner status will last, and that the party has no real alternative for the nomination. If so, how difficult would it be for her to frankly acknowledge the difference with the base over trade policy, and ask Democrats to focus on all the areas of agreement?

Perhaps she’s worried about the enthusiasm factor in the fall of 2016? That concern, however, seems to overlook the reality that much of the strong partisanship developed in the Democratic base for so long has been based on demonizing most Republicans. (The opposite is of course true as well.) So it wouldn’t seem to be inordinately difficult for skilled political operatives like Clinton and her advisers to stoke those partisan emotions during the general campaign.

Even if her strategy is to win in November by tacking toward the middle after winning the nomination (which is pretty standard operating procedure for most presidential hopefuls), it’s still hard to believe that committed Democrats are going to stay home in significant numbers and risk electing a Republican who no doubt will strongly oppose most of their other economic and hot-button social policy goals (e.g., at least maintaining the national abortion status quo).

Finally, whatever the fate of fast track this week or next, it’s certain that trade issues will remain campaign issues through the next presidential election. If Mr. Obama’s trade agenda dies, the next president will need to explain what he or she would replace it with. If it survives, then it’s likely that the talks TPP negotiations will continue, and that a deal will either be concluded sometime in the next few months, or continue approaching. So Clinton can’t duck this issue forever.

My bottom line (based on zero inside information!) is that Clinton does in fact favor fast track and something very close to the current trade agenda, and that she’s trying to temporize as long possible to attract as much campaign funding as she can from social and partly economically liberal Wall Street-ers and Silicon Valley executives who nonetheless strongly favor offshoring-focused trade policies. In other words, she’s trying to run as what New York Times reporter Noam Scheiber has insightfully called a “boardroom liberal.”

>The AFL-CIO’s role in crippling hopes for fast track was decisive, and the labor federation has won (so far) in large part because it started playing hard ball. In particular, earlier this year, the AFL threatened to fund primary challenges to Democratic lawmakers who supported fast track and the rest of the Obama trade agenda. This decision was especially important given labor’s previous record in trade policy battles.

The union movement has strongly and rightly opposed the longstanding trade policy status quo, and lobbied energetically and often effectively against it. Indeed, labor has always been able to provide the lion’s share of the money and ground troops needed by any successful advocacy effort. But when it came to trying to force Democrats to pay a political price for dissenting, the AFL and others typically demurred – and precisely due to the kinds of extreme partisan beliefs alluded to above. Labor, moreover, has had good reason for such partisanship, given the strongly anti-union turn taken by Republicans for the last quarter century. Nonetheless, the price labor paid was marginalization on trade issues. Democratic politicians who favored trade agreements knew they could ignore the unions with impunity.

You can tell how dramatic labor’s shift this year has been by checking out the whining it occasioned from Democratic Members of Congress. (By the way, when’s the last time you heard an American politician complain about the heat he or she has taken from the business-dominated offshoring lobby on trade or any other issues?)

But win or lose, now that the actual crucial trade votes are being taken, and the record is becoming clear, it’s up to labor to take the next step and follow through on its threats. Unless the legislation changes qualitatively, members of the House and Senate who have supported the fast track bill need to be challenged by generously funded, labor-backed candidates who promise to support major changes in U.S. trade policy.

As Machiavelli and many other great political thinkers have written, anyone who attacks the king had better kill him. The only exceptions that arguably might be made are lawmakers whose states or districts have been clear winners from trade. You can get a pretty good idea of who they are by comparing the Wall Street Journal and Economic Policy Institute data sets on which I based this recent post.

>It was very encouraging to see only six legislators in the Congressional Black Caucus (which numbers 45 House Members and one Senator) vote for renewal of the TAA program – and thus for the Obama trade agenda. As you might recall from this post, one of those six – New York Democrat Gregory Meeks tried to make the argument that much opposition to the president on trade, especially from Republicans, was race based. How great to see the vast majority of his CBC colleagues reject this demagoguery, and instead vote the economics. They have made abundantly clear how African-American workers in the trade-heavy manufacturing sector have been victimized along with the rest of the nation and economy by today’s fatally flawed U.S. approach to international commerce.

Finally, for your convenience, here’s the official roll call for that crucial worker assistance (Trade Adjustment Assistance, or TAA) vote on Friday that put President Obama’s trade agenda on life support.  

 

Im-Politic: A Trade Gimmick That’s (Finally!) Backfiring?

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AFL-CIO, Congress, Democrats, fast track, Im-Politic, Jobs, Obama, reeducation, Republicans, retraining, TAA, TPA, TPP, Trade, Trade Adjustment Assistance, Trade Promotion Authority, Trans-Pacific Partnership, wages

As must be clear to anyone following the issue, the final twists and turns of the Congressional fight over President Obama’s fast track trade bill are so inane that they make the sausage-making process often compared to legislating look pretty. At this point, no one can know the final fate of the bill, which would among other provisions prevent Congress from amending any of the president’s new trade deals, like the Trans-Pacific Partnership (TPP). But one especially noteworthy feature of this climactic phase is how the chronically cynical use of a program called Trade Adjustment Assistance (TAA) is being hoisted on its own petard – and may actually sink the president’s trade agenda.

TAA aims at providing government-sponsored re-education and retraining for workers whose jobs are displaced for trade-related reasons. The first and most important thing to know about it is that it’s a proven failure. As made clear in numerous studies, the intended beneficiaries only rarely find new jobs that pay as well as the ones they’ve lost. Moreover, no one would should be surprised by this. As economist Ricardo Hausmann has once again reminded us, the evidence is clear that the best kind of job training is that provided by the private sector – on the job to start with.

The program is up for renewal, and Republicans generally oppose it because of their deeply held skepticism about government’s competence in any area outside national security and law enforcement. But many often vote for it for the same reason as some Democrats who tend to support trade agreements: They think it provides them with political cover for backing the trade policies that have wiped out these jobs and crushed their industries’ wage structures in the first place.

But despite the program’s proven ineffectiveness, many trade policy critics in Democratic and liberal ranks favor it as well for substantive reasons. Their rationale seems to follow “half a loaf” reasoning: TAA is far from perfect, but it’s better than nothing. And largely as a result, backers of offshoring-friendly trade deals have sometimes been able in effect to buy enough Democratic votes to secure their passage.

It’s clear that the White House and Congress’ Republican leadership were banking on this tactic this time out, too. But then something extraordinary happened. To simplify just a bit, very late in the game, large numbers of Democratic trade critics seem to have decided not to be played any more. Even the AFL-CIO, which has always supported TAA as strongly as it has opposed flawed trade agreements, has now evidently decided that it’s much more important to save large numbers of jobs by defeating trade policies that have destroyed them than to help an at-best-tiny number of workers with TAA. (Its stated rationale, to be sure, concerns allegedly inadequate funding levels and other specific shortcomings.)  And because of possibly too-clever-by-half tactical decisions by House Republican leaders, the scheduled sequence of votes today could enable the trade critics to kill the fast track bill with an anti-TAA vote.

In fact, fast track’s advocates have become so desperate that they’re now making the logically absurd argument that if fast track is defeated, TAA will go down as well. In other words, if you scuttle the trade policies responsible for job destruction, programs that respond with a few flimsy band-aids for wounded labor markets will come to an end. As my father would have asked, “Is that a threat or a promise?”

Defeating fast track won’t swiftly cure all the trade woes ailing American workers. It doesn’t even guarantee defeating the TPP. But fast track’s demise certainly makes that outcome much more likely, and therefore at least reduces the odds of Washington doing further harm. These stakes explain why the offshoring lobby and its White House and Congressional supporters are tying common sense – not to mention themselves – up in knots. Therefore they explain why it would be so delicious, as well as economically encouraging, to see the fast track supporters fail. But however this trade saga ends, it’s great to see so many trade policy critics finally realize that threadbare handouts can’t possibly compensate for destructive trade policies.