Obama's Trade Deals: A Test for Hillary Clinton

Opposition to the Administration's proposed major trade deals is getting firmer among Democrats in Congress. Both chambers must approve trade promotion authority, better known as fast-track, in order for the deals to move forward.

One Democrat who has avoided taking a position is Hillary Clinton. In the past, she has supported deals like the proposed Trans-Pacific Partnership (TPP), but lately she has tried to give herself some wiggle room without opposing fast-track, saying last Tuesday that any agreement has to create jobs, as well as increase prosperity, and improve security. That's pretty amorphous.
Clinton, of course, does not get to vote on the measure because she is no longer a senator. But pressure is increasing from the party base to take a stand.

Progressive leaders such as Senators Sherrod Brown, Elizabeth Warren and Bernie Sanders are adamantly opposed to the deal, which is less a trade agreement than a set of provisions that would weaken regulation of all kinds on the premise that regulation is a restraint of trade.

One likely Democratic primary opponent to Clinton, former Maryland Governor Martin O'Malley, is also strongly opposed to the deal. Even many of the usual free-trade suspects, such as Sen. Chuck Schumer of New York, now oppose negotiating authority on the ground that deals like these don't really help America and let trade predators off the hook with commitments that somehow don't get enforced.

Last week, in reporting fast-track authority to the floor, the Senate Finance Committee surprised many observers by adding a provision, 18-8, defining currency manipulation as a violation of the deal. The Administration opposes this amendment because it is reluctant to play hardball with the number one currency-manipulator, China.

Administration officials have made the bogus argument that if the provision stays in the bill, some other nation might try to brand the U.S. a currency manipulator when the Federal Reserve raised or lowered interest rates as part of domestic monetary policy, because interest rate levels affect the value of the dollar. This is total blarney, since China aggressively manipulates the value of its currency as part of its trade policy and the U.S. does not.

President Obama managed to further enrage progressives on Friday, with remarks to an Organizing for Action summit Thursday, in which he compared Democratic opponents of fast track legislation to Republican claims of "death panels" in the Affordable Care Act.

Mostly, the Administration's aggressive stance seems to be backfiring. Opposition among House Democrats is firming.

Fewer than a dozen House Democrats have said they will support fast track, and House Speaker John Boehner insists that Democratic Leader Nancy Pelosi produce a presentable number of Democrats before Boehner whips his own caucus to deliver President Obama a victory, especially with many right-wing Republicans opposed to a deal that undermines U.S. sovereignty. But Pelosi herself now flatly opposes the deal.

Meanwhile, the strategy of House Democrats is to insist on provisions like enforceable acceptance of core labor protections, as defined by the International Labor Organization, which supporters of the deal view a poison pill that would make the agreement unacceptable to its architects on Wall Street. Rep. Sandy Levin has offered a substitute measure that includes tough labor standards as well as enforceable provisions on currency manipulation. The Levin bill is now backed by the House Democratic leadership, from Pelosi on down.

Hillary Clinton is between a rock and a hard place. She was President Obama's secretary of state, and she is counting on him to provide tacit support for her candidacy. They share many of the same top advisers and Wall Street supporters.

At the same time, Clinton needs to distance herself from Obama, and is under pressure from party activists to demonstrate that her embrace of Elizabeth Warren style populist rhetoric is more than window-dressing. Nothing would make this clearer than strong opposition by Clinton to the trade deals. On trade policy, Clinton now finds herself to the right of Mr. Wall Street Democrat, Chuck Schumer.

And this is only the first of countless tests of where Clinton really stands -- tests that will keep coming up between now and primary season. If she is presenting herself as a forceful leader, it ill-becomes Clinton to duck.

Robert Kuttner is co-editor of The American Prospect and a visiting professor at Brandeis University's Heller School. His latest book is Debtors' Prison: The Politics of Austerity Versus Possibility.

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