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As the White House mounts an increasingly harsh rhetorical war on Democratic opponents of President Obama’s trade agenda, a treasured talking point has emerged: The public actually supports the administration.
In a Wednesday Politico piece titled “Barack Obama’s war on the left,” we have this:
West Wing aides point to last week’s NBC News/Wall Street Journal poll that showed deep and wide Democratic support for trade. Obama’s own poll numbers are up. And so a president who views his left-wing detractors as knee-jerk ninnies (as opposed to his view of himself as a true progressive who never acts out of politics, only taking positions because he’s thought things through more thoroughly than his opponents) has decided to let loose, they say.
In another Politico piece from last week, in which White House aides anonymously suggested Warren was just trying to hype the Draft Warren movement, the polls came up again:
“Are [Warren’s] arguments a sign of desperation given the tide shifting among the public, particularly Democrats?” one person close to the White House said, citing recent poll numbers showing the public growing less wary of possible negative effects of international trade accords.
If one actually looks up the NBC/Wall Street Journal poll in question, however, it is hard to find the peg the White House is hanging its hat upon.
The first shows a 37-31 split between, respectively, those who believe free trade has helped the United States and those who believe it has hurt, with 25 percent saying there’s been no difference and 7 percent unsure. The trend lines are towards a more positive view on trade, but the split is still pretty close. (I’m not sure where the White House aide got “deep and wide;” there are no party crosstabs in the public version of the poll. Perhaps they have another.) It still doesn’t seem like anything that would drive Warren or Sherrod Brown to desperation.
But most importantly, it doesn’t actually ask about TPP—just the idea of free trade in general. The next question doesn’t either, but rather asks about NAFTA, where there is a rather uninspiring 29-26 split in favor of the position that the trade deal had a positive impact. (That’s within the margin of error for the poll.)
Polling on the specifics of TPP can be hard to find. Many surveys are over a year out of date, and almost useless given how much information has come out about fast track and TPP since then. That said, this Hart Research poll from January 2014 shows the public opposed fast-tracking TPP by a wide 62-28 margin. It was conducted on behalf of groups that oppose TPP, though I think the description of fast track in the question was pretty accurate and fair.
Somewhat more recent results, from Pew in September of last year, found 20 percent of Americans think trade has led to job creation, while 50 percent disagree.
Other polls have clearly slanted questions, in either direction, and aren’t very indicative. But the bottom line is there’s no clear measure of public support for fast track nor the TPP. So what is the White House talking about?
Read Next: George Zornick on whether fast track could destroy Dodd-Frank
Senator Elizabeth Warren opened up a new battle in the war against the Obama administration’s trade policy last week, when she charged that the fast-track trade authority now being considered by Congress could ultimately allow a Republican president to gut many of the Dodd-Frank financial reforms.
This provoked a heated response from the White House and its allies, who not only disputed Warren’s claim but bizarrely (and under the cover of anonymity) suggested she was just trying to juice up the Draft Warren presidential movement.
So who’s right? This is an important question to litigate, as the Senate prepares to vote on fast-track authority Tuesday.
The short answer: Warren. All it would take is a Republican president and Congress (or any president and Congress inclined to weaken financial regulations), and indeed fast-track authority could be used as a glide path to dismantle not only Dodd-Frank but potentially other important regulations as well.
First, what is fast track?
Presidents generally want to negotiate trade pacts with a promise to other countries that the US Congress won’t later change what they agreed upon, and so they ask Congress to pre-approve Trade Promotion Authority (TPA), colloquially known as a fast track. The fast-track legislation now up for a vote in Congress says that for the next six years, any trade deal proposed by an administration cannot be amended. The deals also cannot be filibustered in the Senate, and would pass with a simple-majority vote.
In exchange for ceding this authority, Congress writes into the fast-track bill all kinds of requirements about what it wants to see in future trade deals: This version of the legislation, worked out between Senators Orrin Hatch and Ron Wyden and Representative Paul Ryan, has a number of guidelines on environmental, labor, and regulatory standards.
Democrats complain that in the case of the Trans-Pacific Partnership, the fast-track guidelines come too late—much of the deal has already been agreed upon. In fact, when I spoke with Representative Sander Levin last week, he said that when he raised concerns recently with the US Trade Representative about TPP’s highly controversial investor-state dispute process, he was told that the TPP chapter on it is already “closed.” (A representative for USTR declined to comment on the record.)
There is also a near-universal belief among congressional Democrats that guidelines in the fast-track bill are far too soft—that they are much more suggestion than requirement. This is of great concern since fast-track authority will almost certainly be in effect for six years, spanning not only the rest of Obama’s term but the first term of the next president, and some of the following president’s term as well, if Obama’s successor is voted out after four years.
It’s that unease Warren is speaking to when she raises concerns about fast track and a Republican president. “[H]e wants us to vote on a six-year, grease-the-skids deal,” she told NPR this week. Congress is making a blind promise of faith here, particularly if you believe—as most Democrats do—that this fast-track bill doesn’t really force the White House to adhere to very much. And beyond TPP, Senator Orrin Hatch said there are 43 different trade bills that could pass in this six-year window.
The final thing to understand about fast-track authority is how unique it is during this era of gridlocked American legislating. Over the past several years, spending on lobbying has actually decreased as Congress routinely fails to agree on much beyond basic funding of the government and naming some post offices. Trade deals contain vast amounts of regulation and economic rulemaking, and fast-track authority is like a magic-carpet ride through the deadlocked Congress.
How specifically could Dodd-Frank be changed?
Warren pointed to the Transatlantic Trade and Investment Partnership (TTIP), a proposed trade deal between the United States and the European Union that’s been under negotiation for several years.
Major financial institutions have been lobbying heavily on this deal—which is not surprising, since the major financial centers in the United States and Europe would be affected. JPMorgan Chase, MasterCard, Citigroup, Wells Fargo, and VISA have all lobbied Congress on fast track and TTIP, along with TPP, in the past six months, according to company disclosure forms.
What might they want? Like with TPP, we don’t know all the details of TTIP yet, but advocates have many fears. One is that the Federal Reserve’s plan to impose separate liquidity requirements on foreign banks might be scotched; Inside US Trade reported in 2013 that the EU wanted to address that rule, which it thinks is “discriminatory.” Liquidity requirements were a crucial part of Dodd-Frank and force banks to have a certain level of assets they can sell off in the event of a crisis. European regulators have traditionally taken a lighter touch on such requirements. That same report suggested that compliance rules on derivatives—another key part of Dodd-Frank—were under negotiation.
Relatedly, there is a fear common to many trade deals: If TTIP is enacted with lower financial regulations than what exist under Dodd-Frank, and with exemptions for foreign banks, American banks could reincorporate in signatory countries to sidestep US regulations.
And it’s not just Dodd-Frank: the leaked EU proposal for TTIP has a provision that new regulations first be “analyzed” to determine if they have an unacceptable impact on trade. Americans for Financial Reform (AFR) worries that this could “impose a presumption that regulations must be judged on the basis of their trade impact rather than their effectiveness as public interest policies promoting financial stability.”
Reported talks on “regulatory cooperation” would mean regulators in different countries have to consult each other on new rules before respective legislative bodies are presented with a reform. AFR has said, “At best, this mechanism would delay implementation of needed financial reforms. At worst, it would result in a watering down or outright blockage of said reforms.”
So why does Obama think Warren is wrong?
I reached out to the US Trade Representative’s office, and was directed to a statement from the Treasury Department that “The Dodd-Frank Act is a signature achievement of the Obama Administration that the President fought long and hard to pass into law. Nothing we’re doing in any of our trade agreements would weaken our ability to implement Wall Street Reform now or in the future.”
I was also guided to a quote from Obama, when he told members of Organizing for American that “every single thing we’ve done—from Obamacare, to Wall Street reform, to student loan reform, to credit card reform, to fighting for a fairer tax code, to higher minimum wages, to a smarter workplace—all it’s focused on making sure it’s a good deal for middle-class families and folks who are working hard to get into the middle class.”
Let’s file that response under “not detailed nor convincing.”
It is true, however, that the Obama administration has drawn a hard line on gutting Dodd-Frank through TTIP; Treasury Secretary Jack Lew said in late 2013 that he opposes including financial services in TTIP because “Normally in a trade agreement, the pressure is to lower standards on things like that and that’s something that we just think is not acceptable.”
That’s comforting, but also a frank admission that TTIP could indeed weaken financial regulations. Warren’s point isn’t that Obama might do it, but that President Scott Walker would decline to take the same hard line against deregulation.
There’s one other rebuttal made by administration allies. Here’s Politico’s Ben White: “The problem, White House and pro-trade officials on the Hill say, is that the fast-track bill currently before Congress includes language that expressly forbids changing U.S. law without congressional action.”
That claim is highly misleading, and has unfortunately been repeated in several other outlets. Trade deals, by their very nature, change US law—that’s the whole point.
Specifically, this happens when Congress passes the implementing legislation of the trade deal. The fast-track legislation makes clear that “if changes in existing laws or new statutory authority are required to implement” a trade deal, then the implementing legislation will include provisions “either repealing or amending existing laws or providing new statutory authority.” When Congress passes a trade deal, it changes US law at the same time, and it should be noted that those changes to the law are inherently also on a fast track.
Therefore the provision cited by the administration—that says trade deals can’t change US law without congressional action—is a total misdirection and one White House officials should be embarrassed to advance. It’s a relevant point, right up until it becomes completely irrelevant.
That provision exists just in case the implementing language doesn’t sufficiently change US law, though it almost surely would. But it still only applies to domestic law, meaning that people couldn’t challenge an American bank in a US federal court for violating a trade deal.
Ben Beachy of Public Citizen pointed out to me, however, that international law still very much applies—and that trade agreement partners could use international tribunals to sanction the United States until it changed its laws to conform to the trade deal it signed onto.
But would President Walker actually do it?
The fairest critiques of Warren’s allegation acknowledge that fast track and future trade deals could indeed weaken Dodd-Frank, but that a Republican president might not choose that route. That came up in some of my conversations with pro-trade officials, and can be found in other media accounts as well.
“[T]he new president would likely just choose to roll back Dodd-Frank directly through changes to U.S. law, with ordinary legislation through the Republican-controlled Congress, assuming the GOP maintains control of both the House and Senate after 2016. No trade deal or fast track would be needed to take that route,” wrote William Mauldin in The Wall Street Journal. Matthew Yglesias made a similar point at Vox, and added that the hypothetical Republican president could also weaken or undermine Dodd-Frank through regulatory discretion.
That’s true enough, but remember that fast track is a much easier glide path for changes than a simple congressional bill to repeal all or part of Dodd-Frank, which would presumably go through the normal committee and amendment process in Congress, and face a 60-vote threshold in the Senate. The only advantage to the congressional route is that it (might) be quicker, if President Walker feels he has the votes, as opposed to concluding TTIP negotiations and waiting for Congress’s 90-day review under fast-track.
President Walker might also choose to weaken financial reform through lax regulation, but that isn’t mutually exclusive to seeking changes through TTIP—particularly because lax enforcement only lasts as long as Walker is in office, whereas the trade deal would be binding in perpetuity.
Moreover, many of the ways TTIP would weaken financial reforms are oblique. Regulatory cooperation and rules that encourage US banks to reincorporate in lesser-regulated countries aren’t labeled with bright-red “REPEAL DODD-FRANK” language. They are also attached to a trade bill, which generally would generate more overall, bipartisan support than a simple measure to repeal Dodd-Frank.
One final point: It’s not just Dodd-Frank. Remember those 43 trade deals Hatch spoke about. Important environmental and labor regulations could be at risk through this same fast-track process as well. Warren is focused on financial reform because it’s her wheelhouse—and if I had one major critique of her comments, it would be not that they are overstated but that they are not broad enough.
Read Next: George Zornick on Bernie Sanders’s bill to break up the big banks
Senator Bernie Sanders announced legislation Wednesday that would break up the country’s largest financial institutions. It’s the third time he’s introduced such a measure, but this time around he wields the large microphone of a presidential candidate.
The bill, titled the “Too Big to Fail, Too Big to Exist Act,” will also be introduced in the House by Representatives Brad Sherman and Alan Grayson. If passed, it would require regulators at the Financial Stability Oversight Council to come up with a list of too-big-to-fail institutions whose failure would threaten the economy. One year later, those banks would be broken up by the secretary of the Treasury.
Sure to be included on that list, based on the standards outlined in the legislation, would be JPMorgan Chase, Citigroup, Goldman Sachs, Bank of America, and Morgan Stanley.
The theory, according to Sherman, is that with an assured government-led breakup on the horizon, the banks would divide themselves into smaller companies by themselves during that year so as to set their own terms for winding down.
The bill would also prohibit banks on the list from using insured deposits for any kind of speculative activities or hedging. “The function of banking should be boring,” Sanders said during a press conference in the US Capitol.
The prospects of this bill passing in a Republican-controlled Congress approach absolute zero. Sanders acknowledged that reality, but said the legislation presents a basic test for legislators.
“When Wall Street tells members of the Congress not to do anything that will damage their interests, most members of Congress adhere to that,” he said. “Can we pass legislation in the United States Congress that Wall Street opposes?”
It also unavoidably poses a test for Hillary Clinton, the other declared Democratic candidate. Much of the Draft Warren movement launched by progressive activists focused on the Massachusetts senator’s advocacy for combating the financial sector’s power generally, and breaking up the big banks in particular—and Clinton’s perceived weakness on that front.
Sanders swatted away questions about the presidential race, saying he was “not here to talk about Hillary Clinton.” But he did sideswipe Bill Clinton’s record on Wall Street at one point. “I was one of the leading opponents of Alan Greenspan, Robert Rubin, and Larry Summers, who all told us how wonderful it would be if we deregulated Wall Street back in the 1990s,” Sanders noted.
Another likely Democratic candidate, former Maryland governor Martin O’Malley, wrote an op-ed in The Des Moines Register in March that also called for the biggest financial institutions to be broken up.
Elsewhere, Senators Sherrod Brown and David Vitter have introduced similar legislation in the past, and the Federal Deposit Insurance Corporation’s Tom Hoenig also favors break-ups.
Sanders and Sherman cited the danger posed to the economy by big banks, many of which are dramatically larger than they were before the 2008 financial crisis. JPMorgan Chase, for example, has increased its assets by $1.1 trillion since 2007.
“In 2008 we learned that if Wall Street calls and says ‘bail us out or we’re going to take the economy down with us,’ that even if there is no statutory provision for bailouts, which there really isn’t today, Congress will pass as we did in 2008 a bill mandating the bailout,” said Sherman. “So ‘too big to fail’ means you will be bailed. That isn’t capitalism. That is socialism for the wealthy.”
Sanders noted the large fines and settlement paid by big financial institutions since 2009, totaling $176 billion, and referenced former attorney general Eric Holder’s frank admission in 2013 that some banks are “too big to jail.” (Holder later walked back that comment, though no high-level executives have gone to prison for anything related to the financial crisis.)
The duo also described their belief that big Wall Street banks are crushing smaller and medium-sized banks. Sherman cited research from the International Monetary Fund that when big banks have implicit taxpayer backing, their access to capital is so much easier that it amounts to an extra $83 billion annually—something he argued was an unfair advantage over smaller banks that would be allowed to fail.
The Independent Community Bankers of America, which represents 6,000 smaller banks, has endorsed the Sanders-Sherman legislation.
Beyond just small banks, Sanders argued that enormous financial institutions harm the broader economy because those smaller banks are key sources of capital for small businesses. “Wall Street cannot be an island unto itself separate from the productive economy,” he said.
Read Next: George Zornick on the Dems challenging Obama to release the TPP text
President Obama this week stepped up pressure on his fellow Democrats to approve fast-track trade authority that would ease passage of the Trans-Pacific Partnership, at times strongly criticizing what he deemed “dishonest” claims—and Saturday, two leading Senate liberals responded.
Senators Elizabeth Warren and Sherrod Brown sent Obama a letter demanding that he release the bracketed negotiating text of TPP before Congress votes on fast-track authority. The duo noted that even George W. Bush released the texts of the Free Trade Agreement of the Americas “several months” before congressional action was required, and asked Obama to do the same.
In comments to reporters Friday, Obama said “The one that gets on my nerves the most is the notion that this is a ‘secret’ deal.” In a shot widely interpreted as directed at Warren, he said: “Every single one of the critics who I hear saying, ‘this is a secret deal,’ or send out emails to their fundraising base saying they’re working to prevent this secret deal, can walk over today and read the text of the agreement. There’s nothing secret about it.”
Warren and Brown took this claim on directly in their letter:
In recent remarks, you suggested that critics of the TPP are “dishonest” when we claim that TPP is a “secret deal.” Even though negotiations over TPP are largely complete, your Administration has deemed the draft text of the agreement classified and kept it hidden from public view, thereby making it a secret deal.
As a result of your administration’s decision, it is currently illegal for the press, experts, advocates, or the general public to review the text of this agreement. And while you noted that members of Congress may “walk over…and read the text of the agreement”—as we have done—you neglected to mention that we are prohibited by law from discussing the specifics of that text in public.
While experts, the public, and the press are not allowed to review the latest draft of the TPP, executives of the country’s biggest corporations and their lobbyists already have had significant opportunities not only to read it, but to shape its terms. The Administration’s 28 trade advisory committees on different aspects of the TPP have a combined 566 members, and 480 of those members, or 85%, are senior corporate executives or industry lobbyists. Many of the advisory committees—including those on chemicals and pharmaceuticals, textiles and clothing, and services and finance—are made up entirely of industry representatives.
They went on to call for the bracketed negotiating texts to be released before fast-track approval is granted. “The American people should be allowed to weigh in on the facts of the TPP before Members of Congress are asked to voluntarily reduce our ability to amend, shape, or block any trade deal,” they wrote.
Warren and Brown also noted that the fast-track bill being considered in Congress now could be in effect until 2021, meaning future presidents (i.e., President Scott Walker) could use the authority it grants to ram through even worse trade deals with no amendments possible, and a low vote threshold.
The fast-track legislation has passed both the House Ways & Means Committee and the Senate Finance Committee, and awaits full floor action in the coming days.
Warren and Brown’s letter can be seen in full here:
Read Next: George Zornick on President Obama’s unusual phone conference about TPP.
President Obama took the inter-Democratic party debate over trade up a notch Friday morning, when he joined a White House conference call with Labor Secretary Tom Perez and a small group of reporters as a surprise guest and mounted a vigorous, and at times testy, defense of his administration’s trade policy. Obama spoke for 31 minutes straight, and became almost the fact-checker-in-chief: pushing back on several specific points raised by Democrats about the deal, ranging from labor standards to fast-track to the secrecy of the process.
At the end of the call, Obama offered a warning: “What I am averse to is a bunch of ad hominem attacks and misinformation that stirs up the base but ultimately doesn’t serve them well. And I’m going to be pushing back very hard if I keep on hearing that stuff.”
Many of Obama’s claims, however, don’t match up to what we know about the deal so far. Others are impossible to fact-check, as the final language of the deal remains a secret to the public and even many congressional staffers.
The members of Congress who have seen the deal can’t disclose what’s in it, but their public statements reveal a deep unease about the text. This was illustrated clearly in an anecdote Obama told about Representative Sandy Levin, the ranking member of the House Ways & Means Committee. “I sat down with Sandy Levin. He gave me a list of probably 20 things that he wanted to see in the trade deal,” Obama said. “And I spent an hour walking through one by one, showing him how on 18 of the 20, we had addressed either 100 percent or 80 percent of his concerns.”
Levin’s office declined to comment on whether that was a fair characterization of the meeting. But incidentally Levin did release a statement one hour after the call, about the passage of fast track through the Ways & Means Committee. It didn’t sound like the words of a man who had a vast majority of his concerns assuaged.
“The negotiating objectives included in the Hatch-Wyden-Ryan TPA legislation are primarily so vague or flexible that the Trans-Pacific Partnership is being negotiated without strict guidelines in many areas,” Levin said. “Workers in Vietnam and Mexico have no assurance that labor laws in those countries would be brought into compliance with International Labor Organization standards. Foreign investors could challenge an American law or health regulation in an arbitration panel without clear guidelines, instead of U.S. courts with clear rules of law. Countries will be able to manipulate their currencies—harming American businesses and workers—without any clear recourse except consultations. Or take agricultural market access. The negotiating objective is simply to ‘reducing or eliminating’ duties on agricultural products. Japan’s opening offer met that objective, because they agreed to ‘reduce’ but not ‘eliminate’ agricultural tariffs on hundreds of products.”
The labor standards in the trade pact, and the extent they will be enforceable, are a huge point of contention between the White House and Democrats. If TPP adopts weak or unenforceable labor requirements, American jobs and production capacity would flow even more quickly towards other countries in the trade pact.
As Levin’s comments relay, Democrats and organized labor want the pact to force compliance with the International Labor Organization standards, which apparently won’t be the case. Past trade deals with Jordan and Cambodia adopted those standards, and were endorsed by labor groups. This would make Obama’s contention during the call that TPP would be “the most progressive trade deal in our history” pretty debatable.
Many union organizers assume, with good reason, the labor standards in TPP will fall somewhere below the ILO rules. Perez didn’t do much to assuage these fears in a recent interview with The Washington Post’s Greg Sargent, where he said that Vietnam—which has essentially zero labor rights—would only have to make “significant changes” in labor laws in order to enter TPP.
Obama also strongly disputed that the bill was being fast-tracked: “there’s nothing fast about it,” he said, adding that Congress has 90 days to review the deal before it votes.
That is true—but Democrats and advocates have raised serious concerns about how hard it would be to remove TPP or any future pact from the fast track if there were concerns about the final text.
Once the current fast-track legislation is enacted, only the Senate Finance Committee or House Ways & Means Committee can derail fast track (meaning, revert to a 60-vote requirement with amendments possible) before the final vote, by negatively reporting out the implementing language of TPP. But the resolution to stop fast track generated by that committee vote would then need a full congressional vote, and that resolution would not be privileged—meaning House Speaker John Boehner or Senate majority leader Mitch McConnell could simply decline to bring it for a floor vote, thus keeping fast track in place. Both men strongly favor TPP.
Moreover, this whole process can only happen after the president signs the trade bill and sends the implementing language to Congress. Even if Congress somehow derailed fast track and amended TPP, all the signatory countries would have to agree to back out and renegotiate.
What’s especially notable about this is that, under the fast-track legislation passed in 1988, either committee could stop fast track immediately with a simple majority vote—no wider floor vote would even be needed. This could also happen before the president entered into the trade pact. In this way, as Public Citizen has noted, the TPP process is a significant a step back from NAFTA when it comes to fast-tracking.
Obama also blasted critics who call TPP secret, and said “When I keep on hearing people repeating this notion that it’s ‘secret,’ I gotta say, it’s dishonest.” He added that members of Congress have been offered 1,700 briefings on the pact and can see the text whenever they like.
But Obama also admitted that some parts that are being negotiated—and there are a lot of them—remain secret. This is also a case where Obama and some TPP critics are talking past each other; Elizabeth Warren says not that TPP is secret from her but, in an e-mail to supporters this week, said it was secret to them. The AFL-CIO’s Eric Hauser told The Nation in a statement that “the best way to regain workers’ confidence is to release the text, not scold the critics.”
During other parts of the call, Obama did some exercises in partisan identification. His message to the Democratic base in recent days has been: You know me. “My overarching priority in everything I do, since I was elected and until I am done with my last day of the presidency, is figuring out how we can create greater opportunity for the middle class and people who are working hard to get into the middle class,” he said, before reciting a litany of administration accomplishments from the stimulus act to rescuing the auto industry.
It’s a good political strategy, though one that may be hard to advance. No major environmental or labor groups have backed the deal—and many are fighting it tooth-and-nail. As David Dayen noted Friday, many of the TPP endorsements listed on the White House website from smaller-scale environmental groups aren’t endorsements at all—they are letters requesting better terms in the TPP and even in some cases offering concerns the the hoped-for terms won’t be met.
The difficulties facing the White House here were evident in Perez’s response to a question from MSNBC’s Chris Hayes on this topic. Perez went on to list three progressive backers of the deal: former Massachusetts governor Deval Patrick (who just joined Bain Capital), Ben Cardin, and former Washington governor Christine Gregoire. With respect to those politicians, Perez was reaching pretty far into the barrel of high-profile liberals.
And perhaps the biggest obstacle to Obama’s party-identification gambit: all those Republicans boosting the deal. Also on Friday afternoon, Republicans announced that Representative Paul Ryan—who Democrats spent much of 2012 vilifying as a budget-slashing pawn of Wall Street—would give the weekly address on the topic of TPP.
Read Next: George Zornick on the increasing intensity of the TPP debate in the Democratic Party.
A bill to give fast-track approval of the Trans-Pacific Partnership trade agreement cleared the Senate Finance Committee on Wednesday evening, and the legislation will hit Senate floor for a full vote in the coming days.
It’s the biggest stage yet for a showdown between (most) congressional Democrats and the president they helped elect. Thursday morning, two Senate Democrats from the Finance Committee who voted against the fast-track bill called out the White House in strong terms for its hard sell on the corporate-friendly trade pact.
In a meeting with reporters in the US Capitol, Senator Sherrod Brown of Ohio said his caucus has been “talked to, approached, lobbied, and maybe cajoled by more cabinet members on this issue than any [other] issue since Barack Obama has been president. And that’s just sad.”
Brown continued: “I wish they had put the same effort into the minimum wage. I wish they had put the same effort into Medicare at [age] fifty-five. I wish they had put the same effort into some consumer strengthening on Dodd-Frank.”
Senator Bob Casey of Pennsylvania agreed. “What I would hope is that we could take of that same, as Sherrod mentioned, that intensity to lobby folks on trade—it’d be nice if we all came together as a party…to have a much more concerted focus on a strategy for the middle class. A strategy to get wages higher.”
The duo’s remarks obviously demonstrate the increasing intensity of the TPP debate. But they also illustrate how the fight over TPP is yet another vehicle for the even more serious debate within the party about being less beholden to corporate interests and more invested in populist economic policies.
On MSNBC’s Rachel Maddow Show Tuesday night, Senator Elizabeth Warren said the deal had been negotiated by corporate lobbyists and that the process has been too secretive. “When the process is rigged, then the outcome is likely to be rigged,” she said.
Brown offered dozens of amendments to the fast-track bill during the committee mark-up—88, to be exact—and will no doubt be a key player in the floor debates, where he will try again to attach some of those measures. He predicted he will have “well, well over half” of Democrats with him, though without some Republican votes that obviously won’t be enough.
One key objection to the bill among both Senate and House Democrats: how weak the negotiating objectives are in the legislation. Fast track is a basic deal between Congress and Obama (or any future president negotiating a trade deal before fast track expires) where legislators lay out a series of objectives for the president to include in his negotiations, which he promises to abide by, and in exchange Congress agrees to fast-track the final trade deal: a vote has to happen within ninety days, cannot be amended, and only needs a simple majority in the Senate.
But the strength of the president’s promise is seriously questionable in the legislation passed by the Senate Finance committee, which demands only that the president “makes progress in achieving” the various negotiating objectives. So the president—who negotiated the deal in the first place—just has to deem that progress was made, and that’s that. In the eyes of many Democrats, this language actually means the president is free to ignore whatever Congress has asked him to negotiate.
Brown introduced an amendment that would strengthen these obligations, and it’s a major feature of the counter-proposal to fast track offered by House Ways & Means ranking member Sandy Levin. More than any issue, this could decide the fate of fast track and ultimately TPP: Congressional demands on labor, intellectual property, human rights and the highly sought-after currency manipulation prohibitions are meaningless if they can’t be enforced.
The Senate Finance bill will hit the floor sometime after the body deals with the Iran nuclear deal legislation and other matters, and Democratic opponents are clearly ready to fight—even if it causes huge public inter-party rifts.
“I think it’s important to have a debate inside the Democratic Party. I know some people don’t like to hear that,” said Casey. “But this issue is too important and too consequential for workers in states like ours not to have a fulsome debate.”
Read Next: George Zornick on two resolutions calling for debt-free higher education
Several top congressional Democrats will embrace on Tuesday a loose plan to make public colleges a debt-free proposition—and will receive an immediate boost from progressive activists who are hoping to shape the 2016 Democratic agenda.
In the House and Senate, legislators will simultaneously introduce two resolutions calling for “all students [to] have access to debt-free higher education.” In the Senate, Brian Schatz, Chuck Schumer, and Elizabeth Warren will attach their names to the resolution. Representatives Keith Ellison and Raul Grijalva, co-chairs of the Congressional Progressive Caucus, are leading the House effort along with several members, including Representatives Chris Van Hollen, Steve Israel, Donna Edwards, Katherine Clark, and Alan Grayson.
The Progressive Change Campaign Committee is helping to organize the push, and released a short paper along with the think tank Demos about how to make public higher education achievable without debt. It briefly outlines how increased federal aid to states for higher education and expanded Pell Grants, along with other smaller reforms, might eliminate the debt burden at public institutions.
Non-binding resolutions and a three-page policy paper don’t (yet) represent a serious legislative push to eliminate student debt at public universities and colleges, but it’s a fairly remarkable idea to embrace, particularly for more moderate Democrats like Schumer, who is likely to become Senate majority or minority leader in 2017. The point of the movement now is to insert the premise that college could be debt-free into the political discussion.
“When it comes to making college affordable, I’m hopeful that debt-free college is the next big idea,” Schumer said in a release. “We need to do more to make college more affordable for all students so that they can graduate without debt holding them back,” said Schatz.
The PCCC will immediately organize rallies at ten college campuses this week, including four in the early-primary states of Iowa and New Hampshire. The students at these rallies will explicitly call on presidential candidates to embrace the debt-free college plan. Hillary Clinton and her advisers are no doubt the primary intended audience here, since she leads Democratic polls by such a wide margin. “Students, families, and progressive leaders are working together to make a national goal of debt-free college central to the 2016 debate,” said PCCC co-founder Adam Green.
In her tour of Iowa and New Hampshire last week, Clinton repeatedly brought up college tuition costs, but did not say it should be debt-free specifically, but rather “affordable.” She did embrace the idea outlined by President Obama in his State of the Union address that community-college education should be free.
As the student-debt crisis metastasizes. it’s becoming increasingly hard for presidential candidates to ignore. On the Republican side, Marco Rubio is advancing honest, if very limited, proposals to reduce the cost of higher education through college credits for workforce experience and more transparency about potential earnings of a given college degree versus its cost.
Many other plans, like one released by Warren last year, focus more on relieving the existing debt load of students. Warren’s bill would allow students to re-finance federal loans at lower rates, and would pay for it by closing tax loopholes for the wealthy.
Read Next: George Zornick on the Democrats who are backing Fight for 15
After months of back-room negotiations, key congressional negotiators are finally ready to unveil legislation that would fast-track approval for the Trans-Pacific Partnership. The bill would prohibit Congress from amending the trade deal, and would require a simple-majority vote for passage, but would in exchange set a variety of negotiating parameters.
If the architects of the legislation—Senators Ron Wyden and Orrin Hatch and Representative Paul Ryan—are at all worried that members of Congress will feel fast-track leaves them out of the process, they are doing a pretty terrible job of addressing those concerns.
A Senate Finance Committee hearing Thursday morning featured top US trade officials—but occurred before the legislation was even unveiled, and was called with almost no notice. This drew some unusual and strong rebukes from Democrats on the Finance Committee over an unfair process.
Hatch and Wyden, the chairman and ranking member of Senate Finance respectively, called hearing on Wednesday night that was ostensibly about “Congress and US Tariff Policy.” It featured several top US officials that deal with trade: US Trade Representative Michael Froman, Agriculture Secretary Tom Vilsack, and Treasury Secretary Jack Lew.
Members of the committee thus suddenly found themselves in a fast-track hearing without knowing it—and before they saw the legislation. Many of them didn’t like it.
Senator Chuck Schumer, likely to be the next Democratic majority leader, opposes fast-track and objecting in the hearing to “rushing” the legislation. Senator Sherrod Brown said “We got twelve hours notice on a bill we haven’t seen…you can’t fast-track fast track.”
Senators appeared unsure if they would even get to see the legislation before a vote. Senator Debbie Stabenow asked if the committee would have to vote “on an agreement that we have not yet even seen and that hasn’t been reached,” according to the Huffington Post.
As the hearing was going on, six Democratic members of the committee took the unusual step of issuing a joint statement objecting to the hearing they were sitting in on:
“With millions of jobs on the line, American workers and manufacturers deserve more than a hastily scheduled hearing without an underlying bill. Congress should undergo a thorough and deliberative committee process for debating trade agreements that account for 40 percent of our world’s GDP. And we should be debating a bill that has seen the light of day and contains strong provisions to protect American workers against illegal trade practices like currency manipulation.”
Schumer, Brown and Stabenow, along with Senators Robert Menendez, Ben Cardin and Bob Casey attached their names to the statement.
Read Next: George Zornick on the Democrats who are backing Fight for 15
If Elizabeth Warren ran for president, a key part of her campaign—if not the centerpiece—would likely involve how to restructure the financial sector in a less dangerous and more productive way. Dodd-Frank was by many accounts a good start, but it’s clear the economy is still over-financialized and too-big-to-fail banks continue to pose an existential threat.
Warren isn’t running for president, but she unveiled that exact agenda in a sweeping speech Wednesday in a conference at the Levy Institute in Washington. It advocated an array of specific, often ambitious policy proposals, many of which have circulated in Washington for years and that Warren, at various times, has already called for.
But tied together in one place, and packaged as a clear call for structural and not just technocratic changes, a blueprint emerged for how Warren thinks Democrats should attack continued financial reform. Whether purposeful or not, the speech was timed exactly to start of Hillary Clinton’s 2016 presidential campaign.
Her ideas fit into four basic categories: first, getting tougher on bad financial actors, particularly big banks, and presenting them with actual legal accountability for malfeasance. Second, Warren outlined how to change the basic structure of the country’s largest financial institutions so their very existence doesn’t threaten the economy nor taxpayer money via inevitable bailouts. Third, she outlined how to change tax policies that incentivize financial risk-taking and instability. And finally, Warren called for tougher regulations on the shadow-banking sector that was a huge contributor to the 2008 crash and which remained largely untouched by Dodd-Frank.
Under no conceivable set of circumstances could most of this happen in the current political climate. Rather, it’s a world Warren wants to see—“She has outlined what a functional Congress and a willing president could do,” Bartlett Naylor, the financial policy advocate for Public Citizen, told The Nation.
Warren openly criticized the Obama administration’s lack of criminal prosecutions related to the 2008 crisis, declaring that “the Department of Justice doesn’t take big financial institutions to trial—ever—even when financial institutions engage in blatantly criminal activity.” She pointed to the overuse of deferred prosecution agreements, in which big banks get a sometimes-large financial penalty but don’t face any further repercussions, nor even admit guilt.
Use of deferred prosecution agreements for large corporations has spiked dramatically under Obama and Attorney General Eric Holder, with the same corporations sometimes receiving several such agreements. Justice entered into 27 such agreements in 2013, compared with eight in 2004. Warren said “no firm should be allowed to enter into a deferred prosecution or non-prosecution agreement if it is already operating under such an agreement—period.” She also said any agreements with financial firms going forward should have “mandatory minimum” fines equal to “at least every dime of profit generated by their illegal activity.”
Also on the enforcement front, Warren called for a vote by the Federal Reserve Board of Governors on major enforcement decisions. In 2013 the Federal Reserve and the Office of the Comptroller of the Currency reached a $9.3 billion settlement with mortgage servicers for improper foreclosure on millions of homes. Warren later found that the Fed Board of Governors didn’t vote on the settlement—widely seen as too weak—and that all the decision-making happened at the staff level.
Warren further called for congressional action to allow the Consumer Financial Protection Bureau to police the auto-loan industry, which it is largely prohibited from doing in the Dodd-Frank legislation that created the bureau. Warren said “the auto-loan market looks increasingly like the pre-crisis housing market” and that immediate oversight is needed.
She also advanced familiar ideas for shrinking the size of too-big-to-fail financial institutions: Warren advocated for a bill that would cap the deposits, liabilities, and assets of large financial institutions. Senators Sherrod Brown and Ted Kaufmann proposed an amendment to this affect to Dodd-Frank, but it failed. Warren also called for reinstatement of the Glass-Steagall division between commercial and investment banking, and for limits on the Federal Reserve’s ability to provide emergency lending to big banks. “The prospect of receiving low-cost loans from the Fed completely undermines market discipline—big banks are free to take big risks, knowing full well that the Fed will be there to bail them out if things go south,” she said.
Several changes in the tax code, such as closing loopholes that allow financial institutions to write off large bonuses and limiting the ability of banks to fully deduct interest payments, are needed, according to Warren. She said both would shift incentives away from short-term corporate decision-making and cash-hoarding. She also boosted a financial transactions tax on high-volume traders, which she said would “push sophisticated trading firms to invest in companies for the long haul and strengthen our markets.”
Warren stressed that these big structural changes—breaking up the big banks, limiting bailouts and increasing prosecutions—would shift the political-economic advantage away from large financial institutions. “Too much reliance on a technocratic approach also plays right into the hands of the big banks,” she said. “Regulatory solutions that pit the government against giant banks too often get diluted over time with loopholes, carveouts, and rollbacks, each of which favor a few well-connected firms over everyone else.”
Without a doubt, if Washington went down the path outlined by Warren it would set off an Armageddon-like showdown with the US financial sector. But in an attempt to pre-empt some of the war-on-banks rhetoric, Warren presented these changes as fundamentally pro-business.
“[F]or too long, the opponents of financial reform have cast this debate as an argument between the pro-regulation camp and the pro-market camp, generally putting Democrats in the first camp and Republicans in the second. But that so-called choice gets it wrong,” Warren said. “Rules are not the enemy of markets. Rules are a necessary ingredient for healthy markets, for markets that create competition and innovation. And rolling back the rules or firing the cops can be profoundly anti-market.”
Read Next: George Zornick on the leading House Democrat who will be opposing the TPP Fast Track
Across the country Wednesday, tens of thousands of low-wage workers protested for a $15-per-hour minimum wage, marking the latest—and largest—battle in a widening war to boost pay in the service sector and, more broadly, to draw increased attention to the U.S. wage gap.
The protests, which were backed by the Service Employees International Union and other unions and progressive activist groups, occurred in several major cities including Los Angeles, New York, Chicago, Atlanta, and Washington.
Politicians in DC—and on the campaign trail—were presented with a crucial test: whether to voice support for what is the biggest existing, grassroots challenge to the unequal American economic structure. Several outlets noted it raised a particularly pointed question for Hillary Clinton, who is leading polls for the Democratic nomination and began her campaign the same week as the large-scale protest. Would she, as The New York Times asked Monday, speak to the “the desire of voters and party activists for an aggressive approach to mitigating income inequality”?
Late Wednesday night, a tweet from Clinton’s campaign account, signed by the candidate, provided the answer:
Every American deserves a fair shot at success. Fast food & child care workers shouldn’t have to march in streets for living wages. -H
— Hillary Clinton (@HillaryClinton) April 16, 2015
Many see the “Report of the Commission on Inclusive Prosperity,” co-chaired by Lawrence Summers and UK Labour leader Ed Balls, as a tentative economic blueprint for the nascent Clinton campaign. Clinton’s support for the “Fight for 15” movement is consistent with what’s outlined in the report: among other things, it says that it’s important for “minimum wages…adjust to keep up with pay at the middle and top.” It calls for “a minimum wage that is at least high enough to prevent full-time workers from living in poverty,” specifically, a pay rate of “at least $10.10 per hour” and linked to the consumer price index.
The repeated “at least” qualifiers left uncertain what pay rate, exactly, Clinton thinks should be the floor. In the Times story Monday, progressive economist Dean Baker noted there is pressure on Clinton to “come up with a number,” and her tweet Wednesday was clearly intended to support the workers asking for $15 per hour.
Does that mean $15 is her number? We may have to wait for the campaign’s official platform to be unveiled. A campaign spokesperson told The Nation only that “Hillary applauds the efforts of organizers coast to coast fighting for an increase in their wages because you shouldn’t have to be a CEO to get a raise. Everyday Americans should be able to make a little more so you can worry a little less. Higher wages don’t just help those at the bottom of the pay scale, they have a ripple effect across the economy and helps millions of American workers and middle class families.”
Another potential 2016 contender, Bernie Sanders, released a statement earlier in the day that said “I want to applaud the workers who are organizing today in the fight to raise the minimum wage to $15 per hour.”
There were no immediate statements of support from Democratic Congressional leadership; neither Senator Harry Reid nor Representative Nancy Pelosi released a statement or tweet about the protests. Several higher-profile Democrats did, however.
In the House, chairman of the House Democratic Caucus Representative Xavier Becerra tweeted his support, as did Budget Committee chairman Chris Van Hollen.
A minimum wage is not the same as a living wage. All people who work for a living deserve to earn enough to afford basic needs. #FightFor15
— Xavier Becerra (@RepBecerra) April 15, 2015
The minimum wage should be a living wage. No one who works full time should have to raise their family in poverty. Period. #FightFor15
— Chris Van Hollen (@ChrisVanHollen) April 15, 2015
The Congressional Progressive Caucus convened a forum Wednesday afternoon on the “Fight for 15,” where several low-wage workers spoke. Various members of the caucus voiced their support throughout the day.
— Raul M. Grijalva (@RepRaulGrijalva) April 15, 2015
In the Senate, Elizabeth Warren, Jeff Merkley, Sherrod Brown, Chris Murphy, Tammy Baldwin, Kirsten Gillibrand, and likely future Senate Majority Leader Chuck Schumer all sent out messages of support for “Fight for 15.” Senator Patty Murray sent out several messages with the hashtag #RaisetheWage throughout the day, though didn’t explicitly back $15 per hour.
No Republican members of Congress nor potential GOP presidential candidates mentioned the movement.
Read Next: George Zornick on how this Senate candidate will not be accepting donations from Wall Street banks