An Alternative Trade Policy

Presidential Hopeful Aims to Sustain a Middle Class

Sen. Barack Obama (D-Ill.) (Campaign Photo)

Related: McCain's Trade Deficit

Where is Sen. Barack Obama on trade and globalization? Few issues appear to so treacherously divide elite from majority opinion. Many middle-class and working-class Americans view globalization as destructive to the U.S. economy -- forcing down wages, shipping good jobs abroad and increasing inequality. Most elites, however, believe globalization’s benefits are apparent; they dismiss opponents as ignorant or sore losers or Neanderthals.

Sen. John McCain (R-Ariz.), the presumed GOP nominee, stands with the elites -- treating embrace of our current trade policies as a matter of honor. Last week, he even traveled to Canada to celebrate the North American Free Trade Agreement before a Canadian business club. There, he scorned Obama’s call for renegotiating it as “nothing more than retreating behind protectionist walls.”

Obama, on the other hand, often goes wobbly on the trade issue. In the primaries, he vied with Sen. Hillary Rodham Clinton in denouncing NAFTA, vowing to renegotiate it. Yet, one of his leading economic advisers, Austan Goolsbee, apparently told the Canadian consul general in Chicago that Obama’s rhetoric was “more reflective of political maneuvering than policy.” Obama himself reassured Fortune Magazine’s Nina Easton that “sometimes during campaigns the rhetoric gets overheated and amplified.”

The finagling hasn’t gone unnoticed in the industrial heartland, where Obama has had a hard time convincing workers that he stands with them. They have every reason to be skeptical. Bill Clinton, after all, campaigned in 1992 as an opponent of NAFTA and scourge of China. Then, under the tutelage of Robert Rubin, now Citibank chairman, Clinton earned the elite's praise by championing the Wall Street trade agenda –- supporting NAFTA, the World Trade Organization and trade with China.

Not surprisingly, labor leaders reacted negatively when Obama named Jason Furman as his economic coordinator. Furman had been director of the Rubin's Hamilton Project, which focused in part on what reforms were needed to mitigate opposition to the globalized trade agenda. Now that Clinton seems to have squandered his cachet as the first black president, many voters would find it sadly ironic if the first black president were another Bill Clinton.

But Obama’s gyrations may simply reflect the distortions of the infantilized political debate. The question isn’t, as McCain suggests, one between embracing the current trade regime and “retreating behind protectionist walls.” It’s not even really about NAFTA, much less the treaties with Colombia, Panama and South Korea now blocked in Congress.

The challenge is defining a sensible strategy to sustain a prosperous middle-class America in a global economy. Clearly, the current strategy isn’t working for a great many Americans. Many good jobs are getting shipped overseas. Many employers are using globalization as a club to bludgeon workers for wage and benefit cuts. Workers are increasingly insecure, and the low-priced goods available at Wal-Mart aren’t worth the squeeze produced by stagnant wages and soaring costs of basic essentials -– gas, food, health care. The country is running unsustainable trade deficits, borrowing or selling off assets at the rate of $2 billion a day.

Obama, for all of his mixed signals, seems to get this. He argues broadly that U.S. trade strategy has to be “good not just for Wall Street, but also for Main Street.” He criticizes trade accords for serving special -- read multinational corporations and banks -- interests and not working families.

In fact, Obama, in a piecemeal fashion, has laid out elements of a major alternative strategy.

It starts with a commitment to reviving U.S. manufacturing jobs -- with an strategy focused on capturing the green markets of the future. He supports launching a concerted drive on energy independence and global warming, investing in conservation and renewable energy, providing subsidies for research and development in the next generation of batteries and green machinery, promising to see the green cars of the future are built in America. This would not only generate millions of new jobs here in America, it would dramatically reduce the half of U.S. trade deficits that goes to paying for imported oil and gas.

Obama would complement this with a commitment to modernizing U.S. infrastructure in everything from high-speed broadband to mass transit to airports, bridges and sewer systems. He pledges to double federal spending on civilian research and development.

The question, of course, is whether the ideas generated will be developed and produced in the United States. The lower dollar and higher transport costs already help to make American costs more competitive. Obama would reinforce these by ending the tax breaks that subsidize multinationals to send jobs abroad.

Recognizing that the benefits of globalization have not been widely shared, Obama uses the state to adjust the scales. He’d increase taxes on the wealthy to pay for affordable health care for all.

He would end the war on unions to help insure the benefits of globalization and increased productivity are shared. His plans include putting government on the side of workers, passing the Employee Free Choice Act, reviving the National Labor Relations Board and raising the minimum wage.

In addition, Obama pledges increased investment in education, in everything from pre-school to affordable college and advanced training. He argues that America can only prosper in a global economy if its citizens are the best educated and its workers the highest skilled in the world.

This domestic agenda would be reinforced, according to Obama, by changing the U.S. posture on global standards and negotiations. The Illinois senator pledges to seek global rules that protect the concerns of workers and consumers and small investors – labor rights, environmental and consumer protections, greater financial transparency and limits on excessive speculation. He is talking about lifting standards up, not allowing multinationals to drive national standards down.

On China and the mercantilist countries that play by a different set of rules, Obama has been circumspect. But he joined Hillary Clinton in supporting legislation to sanction China if it continued to undervalue its currency. He argued that “Allowing subsidized and unfairly traded products to flood our markets is not free trade… We cannot stand by while countries manipulate currencies to promote exports, creating huge imbalances in the global economy. We cannot let foreign regulatory policies exclude American products….”

All the basic elements of a serious strategy are here. For progressives, the haunting question, derived from the Clinton years, concerns both scope and priority. Clinton advocated many of these same elements, but shortchanged or abandoned most of them, choosing instead to pay down the deficit and pursue Wall Street’s priorities on protecting investments abroad and creating surpluses at home. Inheriting a recession and rising deficits, Obama will face the same pressures from Wall Street, surrounded by many of the same advisers.

This is where the growing revolt against the current trade policies might be key. Blocking President George W. Bush’s bilateral trade strategy, torpedoing fast-track procedures for trade treaties, frustrating progress in the global negotiations isn’t a trade policy; it is a necessary spoke in the wheel. It forces Wall Street and global corporations to the table. Their influential lobbies can either support the new strategy, or face a growing revolt against globalization. That is why voters are sensible in wanting Obama to be clear about his opposition to continuing the current course.

The working-class opposition to current U.S. trade policies drove both Hillary Clinton and Obama to join the revolt against NAFTA and Wall Street’s trade policies. McCain’s purblind embrace of Washington's current course has not only put trade at the center of the presidential debate, it offers Obama an opportunity to be the voice of working people in championing a new national global strategy.

By laying out a sensible national strategy designed to sustain a prosperous middle class in a global economy, Obama may be able to use the trade debate as an example of the “change we can believe in.” He can attract workers, manufacturers and exporters to the new strategy, and reassure Wall Street that he understands the global economy is already here, while defining the new deal required to make it work for most Americans.

He might just begin to “turn the page” from the tired spats of “free trade” versus “protectionism,” to the much needed discussion of how this country sustains high wages in the global economy.

Bill Clinton understood that the central post-Cold War security challenge was economic, not military. But he got the mission wrong. He thought his job was to champion the global market, when multinational corporations and banks were already forging it. The challenge instead was to create rules around it and national policies that would insure globalization worked for working people.

This challenge now faces the next administration. McCain appears satisfied with repeating the homilies about free trade. Obama has laid out elements of an ambitious new course. The coming debate may enable him to address the concerns of the vast majority of Americans, while leading the country toward a strategic discussion it can no longer afford to ignore.

Robert L. Borosage is the president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America’s Future. He has contributed to The Washington Post, The Los Angeles Times and The American Prospect magazine.

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