Fast Track to Income Inequality

By Lori Wallach

[Published February 4, 2014 by Campaign for America’s Future Blog] Corporate interests were fiercely lobbying for President Obama to dedicate serious time in this State of the Union speech to pushing fast track and the Trans-Pacific Partnership (TPP) in order to try to overcome growing congressional and public opposition to both, but instead he made only a brief passing reference.

No doubt one explanation is that there is no upside to generating public debate: Poll after poll shows that Democrats, GOP and Independents oppose TPP and fast track. With almost no House Democratic support for fast track, a bloc of GOP “no” votes and public opposition making congressional phones ring off the hook, we can expect much of the president’s push for fast track to occur under the radar.

But also the White House had come under considerable pressure from congressional Democrats and base groups not to raise these issues, given the stark conflict with the main theme of Obama’s speech. Implementing TPP – a NAFTA-on-steroids with 11 nations – would undermine Obama’s efforts to battle income inequality.

The day after the speech, Senate Majority Leader Harry Reid made public his opposition to fast track, sending an important signal to Democrats that preserving Congress’ constitutional trade authority is the right thing to do even when a Democratic is in the White House. And, his statement helped solidify the sense among U.S. TPP negotiating partners that the administration’s blithe promises that fast track was easy and forthcoming may not be quite accurate.

But the major fight over fast track is in the House. Fast track is a revenue measure and thus must start in the House. The GOP leaders are seeking the needed bloc of Democratic votes to ensure passage of the Rep. Dave Camp-Sen. Max Baucus fast track bill introduced two weeks ago.

That bill went in without a single House sponsor, but the corporate and White House pressure campaign is gearing up. Their goal is to find 40-50 Democrats votes to combine with GOP support. GOP votes alone cannot pass fast track because tea party opposition to fast track is peeling away some GOP votes. Bottom line: our goal is to ensure the House GOP leadership can never count anything close to 217 votes.

Increasing Income Inequality

A letter released last week signed by a stunning array of more than 550 Democratic base organizations reiterates the perverse situation. Despite widespread early opposition to fast track from many congressional Democrats and Democratic base groups, and consensus from economists that our trade policies increase income inequality, Obama is asking for Congress to delegate fast track authority to him.

The extraordinary trade authority, which Congress has refused to grant for 15 of the past 20 years, would suspend normal congressional procedures for consideration of the controversial TPP, which Obama hopes to sign soon. Who supports TPP and fast track? The corporate lobby that worked its butt off to defeat Obama’s re-election.

“Yup, the main theme of Obama’s State of the Union address has been widely advertised to be his battle against growing American income inequality. But economists of all stripes agree that U.S. trade policy has been a major contributor to growing inequality.”

Diverse Array of Opposed Voices

Meanwhile, last week’s letter was signed by a veritable who’s who of the organizations that worked their tails off to elect Obama and/or who provide his policy initiatives the support to pass: from MoveOn and CREDO to the AFL-CIO, Service Employees International Union; American Federation of State, County and Municipal Employees; United Auto Workers; Teamsters; Carpenters; United Steelworkers; American Federation of Teachers, and the Communications Workers of America to the Sierra Club,, and Greenpeace to the National Farmers Union, National Consumers League, Public Citizen and TransAfrica – and the policy shops of the Presbyterians, Methodists, Episcopalians and numerous Catholic orders. The letter is notable for the number of signatory organizations that have not been involved in past “trade” fights.

This gets to the major policy collision that only adds to the incongruity of the political situation: The TPP would worsen income inequality. Yup, the main theme of Obama’s State of the Union address has been widely advertised to be his battle against growing American income inequality. But economists of all stripes agree that U.S. trade policy has been a major contributor to growing inequality. A study by the Peterson Institute for International Economics, which supports the TPP, has estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends – and more recent studies put the figure higher.

A surprising addition to that chorus: Clinton Labor Secretary Robert Reich, who urged his massive Facebook following to battle fast track and TPP, which he called NAFTA-on-steroids. “[T]his massive deal [TPP] would further erode the jobs and wages of working and middle-class Americans while delivering its biggest gains to corporate executives and shareholders.”

The letter, organized by the Citizens Trade Campaign, shows the political muscle behind the campaign to make sure TPP is not fast-tracked: “After decades of devastating job loss, attacks on environmental and health laws and floods of unsafe imported food under our past trade agreements, America must chart a new course on trade policy. To accomplish this, a new form of trade authority is needed that ensures Congress and the public play a much more meaningful role in determining the contents of U.S. trade agreements…”

And, it was notable that not all of the congressional GOP stood and cheered the president’s State of the Union reference to fast track. Already several dozen Republican House members have announced their opposition to new fast track powers for Obama. A conservative grassroots campaign is gearing up against fast track and TPP.

Dismal Results of NAFTA and U.S.-Korea Free Trade Agreements

What could unite the A-Z of the Democratic base and conservative grassroots activists? Um, could be the 20 devastating years of damage by the North American Free-Trade Agreement experienced by American workers and communities across the political spectrum. Fast Tracking NAFTA-on-steroids is a hard sell after NAFTA fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. And it is not news that NAFTA increased income inequality by transforming the composition of jobs available to the 63 percent of American workers without college degrees from higher wage manufacturing to low-wage service sector.

And, then there is the inconvenient mess of Obama’s only major trade deal to date, the U.S.-Korea Free Trade Agreement. That deal was premised on the same NAFTA model as the TPP. In his 2011 State of the Union, Obama promised the pact would expand U.S. exports to Korea. In the pact’s first year, exports dropped 10 percent, imports soared and the U.S. trade deficit with Korea grew 37 percent, equating to a net loss of approximately 40,000 more U.S. jobs.

Will President Obama choose to mount what will need to be a massive campaign to overcome widespread opposition to fast track authority for the Trans-Pacific Partnership? And probably fail even so?

Or, will he choose to focus his efforts on reducing income inequality for millions of Americans?

It remains to be seen what his legacy will be. But one thing is clear: President Obama can’t have it both ways.Φ

Lori Wallach, director of Public Citizen’s Global Trade Watch division, is co-author of Whose Trade Organization? 

Leave a Reply