In January's State of the Union address, President Obama did something rare for his administration: He proposed a policy that Republicans agreed with.
“Twenty-first century businesses, including small businesses, need to sell more American products overseas,” Obama said, making the case for the Trans-Pacific Partnership, the controversial free trade agreement with 12 Asian and Pacific countries designed to boost United States exports and and loosen restrictions on overseas business. “Our businesses export more than ever, and exporters tend to pay their workers higher wages. But as we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and our businesses at a disadvantage.”
Obama has been taking heat about the TPP ever since, most notably from the de facto leader of the Democratic left, Senator Elizabeth Warren. “Giving foreign corporations special rights to challenge our laws outside of our legal system would be a bad deal,” she wrote in a scathing Washington Post op-ed in February, warning that a provision governing investor disputes would undermine U.S. sovereignty with the TPP. “If a final TPP agreement includes Investor-State Dispute Settlement, the only winners will be multinational corporations.”
The unusual partisan role reversal is just one odd aspect of a bill that may on its face seem arcane, but is actually an economic and political moment of truth, the most substantial trade proposal since the controversial North American Free Trade Agreement (NAFTA) of the 1990s. To an even greater extent than NAFTA, the TPP would impact everything from tariff rates to patent protections to labor rights. Proponents argue that free trade will boost economic growth by some $77 billion in real income to U.S. companies. And a solid majority of Congress agrees: In April, top congressional Democrats and Republican reached a deal to fast-track a vote on the legislation, which would give President Obama authority to make trade agreements with a simple up-or-down vote in Congress—a marked change from the usual partisan gridlock (the Senate will vote this week on the legislation).
The good old days of American manufacturing dominance aren’t coming back, goes the argument; “free” global trade is here to stay, and Obama insists he can surf that wave with “progressive” principles in mind.
But critics claim the TPP's economic benefits will primarily accrue for corporate interests while companies will send jobs overseas in search of cheap labor. That’s what happened with NAFTA: the Economic Policy Institute found in 2011 that the U.S. economy had shed 700,000 jobs directly because of the agreement, while in 2015, the Federation for American Scientists concluded that the trade agreement had a negligible effect on GDP growth.
So why is the most liberal president in decades—one who ran on bolstering the middle class rather than providing more benefits for Wall Street and the global economic elite—not only backing TPP, but picking an increasingly bitter fight with a key part of his own political base over it? The answer resurrects an old question about the Democratic Party some had thought buried by the tactical brilliance of both Bill Clinton’s and Obama’s campaigns: Do the Democrats have a political death wish?
Last week, in the middle of an in-your-face TPP marketing trip to the Nike's Oregon headquarters, Obama talked with Yahoo's Matt Bai about the TPP. In the interview, Obama lashed out at his critics—particularly Elizabeth Warren, by name—with a history lesson. “I had a conversation with all the labor leaders before this started,” he told Bai. “I’ve had a conversation with some of the more progressive members of Congress before. And I’ve listened to their arguments. And, as I said before, generally speaking, their arguments are based on fears. Or they’re fighting NAFTA, the trade deal that was passed 25 years ago.... But I’m not going to shrink the overall economic pie just because we’re mad about some things that have happened in the past.”
Warren fired back. "I understand that we want to be a nation that trades, that trade creates many benefits for us," she told the Washington Post's Greg Sargent. "But only if done on terms that strengthen the American economy and American worker. I should say the American family, because that’s what this is really about."
Obama has significant facts on his side. As Labor Secretary Tom Perez notes, U.S. export sales have soared in the post-NAFTA era, and “the jobs they support pay, on average, up to 18 percent more than jobs in non-exporting intensive industries.” The good old days of American manufacturing dominance aren’t coming back, goes the argument; “free” global trade is here to stay, and Obama insists he can surf that wave with “progressive” principles in mind, and protect American jobs better than if the U.S. ceded influence over international trade to China by refusing to participate in the trade negotiations.
But as Bai notes, progressives have made trade policies like NAFTA and the TPP “a powerful symbol of political callousness to those Americans on both ends of the political spectrum who have lived through de-industrialization. And that symbolism is what’s most central in the fight Obama has taken on.” It’s an argument that Obama himself rode to two electoral victories: The narrative wrote itself in 2008 after the economy collapsed, and Mitt Romney offered a wealth of opportunities to recycle it in 2012.
While resistance to free trade is embedded in the political DNA of the U.S. and other countries, the steady march of technological innovation has rendered it a fringe position.
Now, with no more races to run, Obama is both conceding and embracing the point—“de-industrialization” is irreversible. “Since the 1980s, financial market pressures have driven companies to hive off activities that sustained manufacturing,” writes MIT political science professor Suzanne Berger in the Boston Review. “This process has been fostered by great technological advances in digitization, which have allowed companies to outsource and offshore many of the functions they previously had to carry out themselves.”
In other words, while resistance to free trade is embedded in the political DNA of the U.S. and other countries, the steady march of technological innovation has rendered it a fringe position that doesn’t “stand the test of fact and scrutiny,” as Obama put it in the Bai interview.
The political dilemma TPP poses for many Democrats is evident in the anguished deliberations of Representative Joe Kennedy III of Massachusetts, whose staunchly Democratic south-of-Boston district is seeing its local garment-industry manufacturing being replaced by high-tech businesses eager to boost overseas exports. Kennedy told the Boston Globe he was moved by the sight of one factory where the workers had hung a T-shirt over the American flag with the word NAFTA inside a circle with a line through it. "When we say the administration has to make a case, that’s why," Kennedy told the Globe, describing one group of women bent over sewing machines. The White House, Kennedy said, "still has lots of us who have to be convinced."
Political analysts would be wise to turn their gaze from the Hillary hype to Kennedy, if only for a second. Kennedy claims the Obama administration hasn’t done enough to retrain displaced workers for new, specialized jobs so they can compete on a global scale. But when even a safe-seat liberal from Massachusetts like Kennedy (who's also a former Harvard Law School student of Elizabeth Warren) is so hesitant to side with the anti-TPP wing of the party, that’s a sign the Generation X politics of trade-deal resistance isn’t any more potent than it was in the 1990s, when Bill Clinton muscled NAFTA through.
There’s reason to wonder if a bloody battle over the TPP might undercut the Democratic ticket next fall if Obama’s aggressive advocacy for the partnership winds up in sharp contrast with the party nominee. Writing in the context of the Conservative victory in last week's British elections, the Washington Post’s Dan Balz reported some Republicans see the Warren-led resistance as an opportunity to trump voter anxiety over stagnant wages and global competition with a pragmatic growth agenda.
“The message attacking rising economic inequality and insensitive Conservative policies proved less effective with voters than [Conservative leader David] Cameron’s emphasis on rising overall growth,” Balz writes. “The Conservative victory here should be read by Democrats as evidence that their own economic messaging will need work heading into 2016, that it might not be as simple as claiming the deck is stacked, calling for an increase in the minimum wage and expecting voters to follow.”
The left’s exasperation with Obama is understandable. Many of his showcase campaign promises, such as closing Guantanamo or reforming campaign finance, melted away under pressure from political reality. But by trying to turn back a seemingly unstoppable march toward global trade, is Warren risking more—GOP control of both executive and legislative branches, for instance—than she and her allies stand to gain?