Trade Rift Pits Obama vs. Progressives, Puts Hillary on Fence

Trade Rift Pits Obama vs. Progressives, Puts Hillary on Fence
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Harry Reid and Elizabeth Warren say they’re in the “hell, no!” camp of Democrats eager to defy President Obama over his support for a trade deal with Pacific Rim nations.

The president returned fire Tuesday, arguing that Warren “is wrong,” and that members of his party and advocacy groups that oppose the pending pact as a job killer are lobbing political objections not supported by “the facts.”

The Democratic Party’s trade rift, simmering for decades and fanned by economic angst and misgivings about the North American Free Trade Agreement, which was enacted in 1993 after a huge push at the outset of President Clinton’s administration, has drifted out of the Capitol and onto the 2016 campaign trail.

Republicans, whose votes Obama needs for a trade accord, are chortling over Democrats’ intraparty disagreements. They are also on alert to Hillary Clinton’s heightened caution about trade now that she’s seeking the presidency and is acutely conscious of her party’s progressive wing. On Friday, her campaign issued a statement saying she would wait and evaluate any trade pact when it was completed.

In her book, “Hard Choices,” highlighting her achievements as Obama’s secretary of state, Clinton conceded “costs as well as benefits” attached to international trade and globalization. But she concentrated on the benefits, noting that she and Obama as 2008 primary rivals each vowed to pursue “smarter, fairer” deals to benefit the U.S. economy.

The proposed Trans-Pacific Partnership, which is not finalized and would encompass more than a third of the world’s trade, served as “one of our most important tools for engaging with Vietnam” and other Asian nations, she wrote. That argument is intended to bolster the idea that a Pacific Rim pact can become a counterweight to China’s dominance in the region, even though China would not be a signatory.

“The TPP became the signature economic pillar of our strategy in Asia, demonstrating the benefits of a rules-based order and greater cooperation with the United States,” she wrote.

Clinton’s studied caution until a trade pact is finalized means Obama and administration officials, plus the GOP, are the prominent salesmen, and also targets for criticism.

Both Clinton and Obama referenced the needs of small businesses Tuesday, but in different ways. Small businesses are the economy’s job creators, and for that reason some Democratic pollsters, including Celinda Lake, have argued for months that the administration and congressional Democrats should work harder to win over that key segment of the electorate with policies that favor small entrepreneurs. Pollsters have found that most Americans believe the government extends many benefits to larger employers and plenty of support to low-income Americans, but hits small entrepreneurs with tax, health care, and regulatory requirements often perceived by the owners as burdensome or unfair.

While in New Hampshire Tuesday, Clinton put her concerns for that demographic on display, observing that the small business economy is being squeezed.

"I want to be sure we get small businesses starting and growing in America again,” she said. “We have stalled out. I was very surprised to see that when I began to dig into it. Because people were telling me this as I traveled around the country the last two years, but I didn't know what they were saying and it turns out that we are not producing as many small businesses as we used to."

Her bleak observation was perceived as a direct challenge to the administration’s more robust assessments of a rebounding economy – reinforced by increasingly upbeat Americans, according to recent polling. However, many small businesses are owned by women, and Iowa and New Hampshire are states filled with family-owned enterprises. For those reasons, Clinton’s remarks may have been strategic. As with her trade stance, her overall economic platform remains murky.

Obama, asked about Clinton’s “stalled out” comment, said growth in Europe had slowed. For that reason Clinton may be correct about the most recent economic quarter, he suggested, but he went on to defend TPP as a net positive for small businesses.  

Among the most outspoken detractors of the pending trade accord are Senate Minority Leader Reid, Warren of Massachusetts, Sherrod Brown of Ohio, a slew of House Democrats and Big Labor. Many eyes are focused on House Minority Leader Nancy Pelosi. She was among the 102 Democrats who voted for NAFTA in 1993 when 156 in her party went the other way. House Speaker John Boehner and White House officials believe they need 35 to 40 Democrats to vote with House Republicans to support fast-track authority and the Trans-Pacific pact.   

The president’s influence on his party on Capitol Hill thus far this year has been choppy, and alliances with the GOP majorities depend on shared political rewards – not easy leading into a presidential election year.

As Obama taped a discussion Tuesday about trade with MSNBC “Hardball” host Chris Matthews, Hillary Clinton dispatched her campaign chiefs to Capitol Hill to privately appeal to House and Senate Democrats to back her White House bid. (Her campaign advisers have been on a payroll for just a week while the former New York senator has traveled to visit with Iowa and New Hampshire voters.)

Obama said Democrats’ misgivings about the trade deal – including economic projections for more outsourcing of U.S. jobs – had less to do with international trade per se than the effects of globalization, automation, an economic slowdown in Europe, recovery from the global financial meltdown, and decades of stagnant U.S. wages.

“Some of the information that has been getting thrown out there plays into legitimate fears that Democratic voters have, and progressives have, but it's simply not true. It's simply not the facts,” the president said.

Obama insisted his aspirations to improve opportunities for the middle class meant that he would not sign an Asia-Pacific deal that was not clearly beneficial to workers, and strongly enforceable.

“I’ve spent the last six and half years yanking this economy out of the worst recession since the Great Depression,” Obama added. “Every single thing I’ve done – from the Affordable Care Act, to pushing to raise the minimum wage, to making sure that young people are able to go to college and get good job training, to what we’re pushing now in terms of sick pay leave – everything I do has been focused on how do we make sure the middle class is getting a fair deal,” he said.

“I would not be doing this trade deal if I did not think it was good for the middle class.”

Opponents Tuesday predicted many Democratic voters would stay home on Election Day next year if the party’s nominee embraced TPP.

“They may not have voted for the other party, but they may have not voted,” AFL-CIO President Richard Trumka, head of the largest group of labor unions, predicted during an interview on MSNBC’s “The Ed Show.”

That observation was intended to send shivers through House and Senate Democratic candidates who rely on presidential election coattails to turn out voters for down-ballot races every four years. Most Democratic candidates clamor for labor’s grassroots organizational assistance and fundraising prowess.

Earlier Tuesday, Trumka testified before the Senate Finance Committee, along with U.S. Chamber of Commerce President and CEO Thomas Donohue, noting that organized labor had worked for five years to try to propel favored provisions into TPP. Markup of bipartisan legislation is scheduled in the committee Wednesday.

One of the chief complaints from opponents is that currency manipulation in China and elsewhere – blamed by progressives for evaporation of 6 million jobs in the United States – is not directly addressed as part of the Pacific Rim deal. 

“Each one of the trade agreements that we have signed so far has encouraged outsourcing and increased that [trade] deficit,” Trumka complained. A trade deficit of “$500 billion a year takes jobs out of the country. I wish we could reverse that.”

New York Sen. Chuck Schumer, who is in line to succeed Reid as Democratic leader in 2017 and faces re-election before then, has often been allied with the New York financial community, and on Tuesday he found a way to lean towards the business community (China’s impact) as well toward progressives (on the vulnerabilities of the emerging pact).  In the process, Schumer also complained about Obama, as well as George W. Bush.

“Look, we know the administration, when they try to sell me on TPP, it's almost the geopolitics that prevails over the economics,” Schumer said. “My goal here is to do something about China, the most rapacious of our trading partners. And frankly, I'm disappointed. I was very disappointed in the efforts of President Bush and I'm disappointed in the efforts of President Obama.”

Asked to respond to the hand-wringing among Democrats, the president appeared to chalk it up to politics more than policy differences.

“Democrats aren't adverse to, you know, making political arguments that aren't always entirely accurate,” Obama told MSNBC with a shrug. “We do it less often than the other side.”

Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at  Follow her on Twitter @ASimendinger.

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