Obama's Wheel and Deal

(AP Photo/Susan Walsh)
President Barack Obama stands after signing the Korean Free Trade Agreement in the Oval Office of the White House.

As he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments. Back on the campaign trail, Obama had committed to a new approach to trade deals that would protect the environment, boost manufacturing, and protect food safety.

That was then; this is now. On October 12, he shoved through three NAFTA-style trade deals with Colombia, Korea, and Panama that are officially projected to increase the U.S. trade deficit and cost tens of thousands of American jobs. These deals were negotiated and signed by George W. Bush in 2007, but had not been formally approved by Congress. While Wall Street and the Chamber of Commerce applauded the deals, Obama’s base and most congressional Democrats opposed them; the GOP provided almost all of the votes for passage.

Even the government’s own study, produced by the U.S. International Trade Commission (ITC), showed that these pacts would increase U.S. imports by more than exports. In contrast, when the ITC employed the same optimistic methodologies for its studies of NAFTA, it projected improved trade balances.

The Obama administration, along with many in Congress and corporations, chose to present only the raw export numbers, which became the basis for the oft-repeated line that the deals would “support” over 70,000 jobs. Excluded was how many jobs would be destroyed by new imports. A full accounting by the Economic Policy Institute projected net job losses of over 214,000. By excluding the import projections, they used this half-story to spin these deals as a source of job creation.

But the actual “trade” impact is only the beginning of the story. Since NAFTA, trade agreements have grown to encompass thousands of pages of text, and only a minority of the provisions deal with tariffs—trade policy’s historic remit. Today’s so-called “trade” deals set constraints on how governments can regulate inside their own borders. For instance, the recent pacts ban "Buy America" policies that ensure tax dollars are used to purchase American-made goods and allow corporations to challenge environmental policies for cash compensation. They include such severe limits on financial regulation that the financial services industry celebrated the Korea deal in particular as “the best financial services chapter negotiated in a free trade agreement to date,” according to Citigroup.

Instead of probing such matters, most mainstream press reports over the entire four-plus year debate simply parroted corporate and Obama-administration talking points.

The missed political storyline, too, was equally astounding. Two-thirds of Democratic House members opposed Obama on the Korea pact and 82 percent who opposed him on the Colombia pact. It's his biggest split with House Democrats thus far. The number who voted against the deal is even greater than the percentage of House Dems who opposed the Patriot Act (63 percent) or the war-funding bills (56 percent). And of course, Obama got nothing in return for the capitulation: Republicans advanced the trade pacts while blocking his second stimulus package. So much for negotiation.

It took Bill Clinton nearly eight years of NAFTA job losses, sellouts, and scandals to have about two-thirds of the House Democrats vote against China’s entry into the World Trade Organization in 2000. Obama managed to meet and beat that record with his first trade votes. The percentage of Democratic House votes against these deals even surpassed Democrats’ average level of opposition to Republican presidents’ trade initiatives.

These trade deals run exactly counter to Democrats’ efforts to channel the anger of the Occupy Wall Street movement, and the contradiction was noticed. Demonstrators nearly shut down the Democratic-run Senate Finance Committee hearing on the trade pacts, railing against Obama’s flip-flop. Protestors were out in front of congressional offices in Portland, Manhattan, Long Island, Pasadena, Van Nuys, downtown Los Angeles, and Pittsburgh demanding "no" votes on these deals.

How these deals played out in the GOP was also news. Historically, 25 percent of Republicans have voted against a Democratic president's trade deals; under a Republican president, that number drops to 10 percent. But this time around, only five percent or Republicans opposed Obama on the trade pact. In other words, the virulently anti-Obama Tea Party—which won in swing states by campaigning against job offshoring and for protecting U.S. sovereignty—was even more supportive of the president's trade agenda than the GOP was under Bush. These Republican flip-flops will likely provide fodder for many Democratic challengers in the upcoming congressional elections.

Nonetheless, Obama seems to be playing perfectly into Republicans’ script. In an interview just before the 2010 elections, Mitch McConnell stated that “The single most important thing we want to achieve is for President Obama to be a one-term president.” The senator noted, however, that “if President Obama does a Clintonian backflip, if he’s willing to meet us halfway on some of the biggest issues, it’s not inappropriate for us to do business with him.” One of the top items McConnell mentioned over the following days was the trade deals. The two goals (replacing Democrats and passing controversial trade deals) are in fact connected. Clinton’s advocacy of NAFTA was a major factor in Democrats’ loss of Congress in 1994.

These trade votes could have played out very differently. After the 2008 election, Sen. Sherrod Brown (D-Ohio) and Rep. Mike Michaud (D-Maine) introduced legislation that outlined a pro-environment, pro-labor, pro-consumer-safety model for trade policy. The 2009 Trade Reform Accountability Development and Employment Act was based on Obama’s campaign commitments and garnered the support of the majority of House Democrats and committee chairs. If the president had renegotiated the trade deals with that new model in mind, he could have sealed a legacy of creating a new consensus on trade policy.

Instead, the total absence of honest public debate shields the continuation of trade policies that do not serve most Americans and creates a public understanding that our current policies are the only way to trade. This in turn builds the public opposition to trade that polling now shows [PDF] is a majority view among Democrats, Independents and GOP alike.

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