Obama on Middle Class Economics: the Dangers of Bipartisanship

In general, progressives were happy with Obama's State of the Union address. And with good reason. He defended increasing the minimum wage, hiking capital-gains tax on the wealthy, slapping a new levy on big banks and closing a loophole which allows capital-gains tax to be avoided. All good stuff. Until he got to trade issues. From the transcripts:

"21st century businesses, including small businesses, need to sell more American products overseas. Today, 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 businesses at a disadvantage. Why would we let that happen? We should write those rules. We should level the playing field. That's why I'm asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren't just free, but fair.

Look, I'm the first one to admit that past trade deals haven't always lived up to the hype, and that's why we've gone after countries that break the rules at our expense. But ninety-five percent of the world's customers live outside our borders, and we can't close ourselves off from those opportunities. More than half of manufacturing executives have said they're actively looking at bringing jobs back from China. Let's give them one more reason to get it done."

The push for trade promotion authority is essential if the Trans Pacific Partnership (TPP) is to be approved. I have written on the issue before, specifically on the TPP and how it has made strange bedfellows (see here). This is one of the issues in which he may actually find common ground with the new Republican Senate. And it's a cautionary tale for those that think that bipartisanship is always good.

Trans-Pacific Partnership creating strange bedfellows

Nowhere is the national political divide more evident than on Capitol Hill. One topic, however, has had fairly consistent bipartisan support: free trade agreements. Since President Barack Obama took office, a few FTAs have been signed with approval by the Senate. That has been essentially true since the 1990s, when Bill Clinton and the New Democrats abandoned the traditional organized labor stance against free trade and signed the North American Free Trade Agreement, commonly known as NAFTA, with Canada and Mexico.

The current talk revolves around a proposed pact that has created some surprising partnerships. More about that in a minute. First, some background.

The Trans-Pacific Partnership, or TPP, the latest deal under discussion, is a free trade agreement between 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam. These countries, for the most part, already have low tariffs and trade agreements among themselves. In fact, the U.S. already has trade agreements in place with six of the 11 nations included in the TPP.

More importantly, the TPP also excludes China, one the most important trade partners to the 12 possible partners. That's why the agreement should be seen more as part of the U.S. economic diplomacy rather than a traditional trade agreement. The U.S. is trying to increase the influence of U.S. corporations in the region at the expense of Chinese economic interests.

Read the rest here. Originally published in the Reading Eagle (you need to register for free to read the whole piece).