Global Economic
Trend Analysis

Recent Posts

Tuesday, May 12, 2015 5:21 PM

Senate Democrats Throw Obama Under the Bus: Fast Track Trade Bill Stalls; Right For Wrong Reasons

Mish Moved to MishTalk.Com Click to Visit.

Democrats Throw Obama Under the Bus

In rare political reverse alignment, Senate republicans voted for Obama's Fast Track proposal while Sen. Tom Carper, D-Del., was the only Democrat to vote with Republicans.

To proceed, the bill needed a super-majority of 60 votes. In a vote likely to shock president Obama, Fast Track Failed 52-45

Senate Republicans have been working with the Obama administration to reauthorize fast track negotiating authority aimed at assisting Obama in finalizing a trade pact with 11 Asia-Pacific nations. Fast track authority authorizes the president to submit to Congress negotiated trade deals that can only be approved or rejected, not amended, on an expedited basis.

The Senate Finance Committee approved the bill, 20-6, in a bipartisan vote last month. Chairman Orrin Hatch, R-Utah, and Senate GOP leaders believed they had reached an agreement with the panel's top Democrat, Sen. Ron Wyden, D-Ore., to begin debate this week on the fast track legislation, with assurances that it would move in tandem with a trade adjustment assistance package to aid American workers negatively affected by trade deals.

However, Democrats en masse demanded Tuesday that Republicans include in the deal two additional, committee-approved bills: a non-controversial measure supporting African economies and a customs enforcement measure that includes controversial language aimed at cracking down on China for currency manipulation.

Wyden announced Democrats could not move forward unless there was assurances that "all four of the measures I've described are actually enacted."

Republicans balked. "What I'm not going to put up with is the minority trying to craft a bill before we even get on it. That's just simply unacceptable," said Senate Majority Leader Mitch McConnell, R-Ky.

Democrats' maneuvering also puts them at odds with the White House, which opposes the currency manipulation language because it says it could threaten the underlying Trans-Pacific Partnership the administration is trying to finalize. The White House has also raised concerns that the measure would fray diplomatic relations with China and potentially undermine the Federal Reserve.

"If it were part of (trade promotion authority), we all know it would kill it," McConnell said.

"What the Democrats are doing today by trying to block us from even getting on this legislation is throwing their own president under the bus," added Sen. John Thune, R-S.D.
Democrats Gang Up on Obama

Also consider Senate Democrats gang up to delay fast-track trade bill.
"What we just saw here is pretty shocking," said Senate Majority Leader Mitch McConnell, a Republican, after the Senate voted 52-45 - short of the 60 votes needed - to pave the way for debate on "fast-track" trade authority for Obama.

The vote marked a victory for Senate Democratic leader Harry Reid, an outspoken opponent of fast-track, after weeks of speculation that the toughest fight would be in the House of Representatives and not the Senate.

Under fast track, Congress can either approve or reject trade deals negotiated by the administration but not amend deals like the TPP, a potential legacy-defining achievement for Obama.

The failure to garner the necessary votes came after pro-trade Democrats, including Senator Ron Wyden of Oregon, insisted that fast track be bundled together with three other trade bills, including one that would impose import duties on countries that manipulate their currencies for unfair trade advantage.

Wyden said the four bills together were a package that would "throw out the 1990s NAFTA playbook on trade" and provided an opportunity to create jobs.

As Democratic support for the measure melted away, Senate Finance Committee Chairman Orrin Hatch, a Republican who was a major force for fast track, declared to reporters that the measure "may be dead."

But following the vote, Democrats predicted it would come back.

Negotiations on the TPP are nearly complete, but trading partners have said they want to see fast-track legislation enacted before finalizing the pact, which will stretch from Japan to Chile.

The TPP would create a free trade zone covering 40 percent of the world economy - making it the biggest trade deal since the North American Free Trade Agreement liberalized trade between the United States, Canada and Mexico.
Democrats Right For Wrong Reasons

Currency manipulation charges at this point are rather silly. The Wall Street Journal reported on May 3, the IMF close to declaring the Yuan fairly valued for the first time in a decade.

More importantly, whether or not the yuan is fairly valued is moot. The trade imbalance problem is not the yuan or pegs, the problem is the trashing of the gold standard by Nixon. For discussion, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold's Honest Discipline Revisited.

TPP Not a Free Trade Agreement

My big objection to this mess is that the Trans-Pacific Partnership (TPP) has little to do with free trade. Only 5 of 29 chapters in the bill discuss trade. The rest is global warming nonsense and other items. And we do not even know what is in the proposal because negotiations were secret for 5 years.

Moreover, the New York Times says Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S..

I discussed the above and more in Obama's Trans-Pacific Partnership Fiasco vs. Mish's Proposed Free Trade Alternative; How Will TPP Function in Practice?

An Excellent Free Trade Agreement in One Sentence

I am in favor of free trade. An excellent free trade agreement would consist of precisely one line of text. I propose the following agreement:

"All tariffs and all government subsidies on all goods and services will be eliminated effective June 1, 2015."

For still more on the foolishness of TPP please see

Democrats want to add to the bloated agreement with still more nonsensical madness.

Ironically, that's a good thing. The best hope now is Democrats succeed in adding so much garbage to the bill that even Republicans won't vote for it.

Mike "Mish" Shedlock

Last 10 Posts

Copyright 2009 Mike Shedlock. All Rights Reserved.
View My Stats