Obama in Wisconsin: The Soft Economics of Low Expectations

Obama in Wisconsin: The Soft Economics of Low Expectations

Obama in Wisconsin: The Soft Economics of Low Expectations

The president returned to the battleground state of Wisconsin and gave a well-received speech. But he avoided hot-button labor issues and the trade and industrial policies that are needed to really renew manufacturing.


The message that President Obama brought to Milwaukee, a city devastated by free-trade driven deindustrialization, was a sound one—up to a point.

But the point fell very short of where a president who wants to level the economic playing field should stand.

Obama’s Wisconsin speech eschewed any discussion of the brutal battle over the future of organized labor that has played out in the state since last February, when Governor Scott Walker (who skipped Wednesday’s factory visit) attacked collective bargaining rights. That was frustrating, but hardly surprising. Obama has kept the Wisconsin union fight at arms length from the start, avoiding visiting the state from the time Walker launched his initiative until a year and a day after the first major demonstrations.

At the same time, the president said things in Milwaukee that mattered. For instance, he embraced the premise—and the principle—that there is a vital role that government can and should play in promoting job growth in general and the renewal of manufacturing in particular.

Visiting the Master Lock Company factory, a United Auto Workers represented plant that has boomed since bringing production back from overseas, Obama said: “Right now we have an excellent opportunity to bring manufacturing back—but we have to seize it. My message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.”

Presidents have been asking business leaders to bring factories and jobs back to the United States for two decades—since then-President Bill Clinton and House Speaker Newt Gingrich ushered in a new era of American industrial decline with their joint advocacy on behalf of free-trade pacts such as the North American Free Trade Agreement and what would eventually become the permanent normalization of trade with China.

Since Clinton, Gingrich and their allies succeeded in shifting enacting and implementing the free-trade agenda about which they—and their generous donors of Wall Street—were so enthusiastic, US manufacturing has been badly battered. From 1999 to 2009, the period before the most recent recession, the Uniuted States shed 5.8 million manufacturing jobs. That was at a time when successive presidents provided generous tax breaks for businesses and cut taxes for the wealthiest Americans who are supposedly “job creators.”

The US trade deficit remains absolutely staggering. Indeed, it is growing, hitting a six-month high in December as it rose 3.7 percent to $48.8 billion—that’s “billion ” with a “b.” For all of 2011, the shortfall grew 12 percent to $558 billion, the worst since 2008.

But the real measure of the devastation caused by free-trade policies is seen in the once-vibrant industrial towns of America, from New England, to the Great Lakes and the upper Midwest. While Obama delivered a well-received speech at Master Lock, and enthusiastically recounted the firm’s encouraging story, he could not have told the same story just down the road in Kenosha or to the west in Janesville, Wisconsin manufacturing centers where major auto plants were closed by Chrysler (Kenosha) and GM (Janesville). Nor could he have painted quite so rosy a picture in many of the battered factory towns in Wisconsin, Michigan, Ohio, Pennsylvania, western New York or Maine. The picture in those places is still unsettled and unsettling: vast factories remain shuttered. Unemployment remains high. In all of these communities, there is appropriate cynicism about whether the country is doing everything it can to help American workers succeed.

It’s not.

President Obama has been more rhetorically sympathetic to the plight of industrial towns and industrial workers. The decision to support bailouts for Chrysler and General Motors put some of that rhetoric into action, as have some of his tax policies. At his best, he has focused attention on the need to “do something” to renew manufacturing. But, aside from the controversial bailout, his administration has tended to tinker around the edges of the big issue. That issue involves something presidents do not like to talk about: American has a fundamentally flawed trade policy and it lacks the sort of industrial policy that has allowed high-wage countries such as Germany to survive and thrive in an era of globalization.

The response to trade debates of too many US leaders, and this includes both Barack Obama and Mitt Romney, is to presume that the choice is between free trade, which lets Wall Street speculators and hedge fund managers demand that companies engage in a global race to the bottom, versus old-fashioned protectionism, which closes borders and stifles growth. Wiser leaders in other countries long ago figured out it is possible to maintain manufacturing in high-wage countries while encouraging responsible trade and growth.

The key is a smart combination of industrial policy, which develops the best strategies for maintaining existing industries while developing new ones, and fair-trade initiatives that encourage commerce while resisting the race to the bottom. This is the way Germany and other countries that have maintained basic industries—along with high wages and appropriate benefits—approach manufacturing matters. The United States ought not mimic everything that other countries do. But it can and should borrow pages from successful outlines.

There are members of Congress who have advocated for this view: Senators Bernie Sanders of Vermont and Sherrod Brown of Ohio, Congresswomen Chellie Pingree of Maine and Tammy Baldwin of Wisconsin. Baldwin, like former Senator Russ Feingold, has always voted smart and right on economic and trade policy. She’ll be on the ticket this fall in Wisconsin. And she is a Democrat. But she’s a very different kind of Democrat from Obama. She has voted against free-trade pacts proposed by Republican and Democratic presidents (including Barack Obama).

Baldwin is blunt about why she does so.

“Trade agreements should be in the best interests of our nation and its people, but sadly this has not been the case with the past free trade agreements,” the congresswoman said when she announced his opposition to several deals the Obama administration was presenting to Congress in 2011. “Have some of our wealthiest corporations profited from them? Indeed. But the rest of America, especially the middle class, has struggled with job loss, closed factories, and economic and emotional anguish across the country.”

“When done right, trade agreements can help bolster our manufacturing and high-skilled technology industries and create jobs as they increase exports and help our economy recover,” says Baldwin. “Done wrong, trade agreements send these same jobs offshore, leaving Americans out of work.”

Baldwin begins her assessment of economic debates with an eye toward doing best by working people and working-class communities. That’s what put her on the floor of the state Capitol last winter, surrounded by students and union members when they raised a mighty cry for labor rights and democracy.

Obama did not show up for the Wisconsin protests of 2011. He arrived, finally, on Wednesday. The president gave a feel-good speech that was well received by Wisconsin workers who have for a year been battered and bruised by the rhetoric and the policies of Governor Scott Walker. Obama’s different from Walker, and better. Better on policy, better as a principles. But the president did not outline a new or vibrant economic policy in Milwaukee. He had some good lines; his heart certainly seemed to be in the right place. But this was not the moment where Barack Obama outlined an agenda that would transform America’s approach to manufacturing, free trade and industrial policy—let alone the politics of a state, or a nation, that gets far too little straight talk when it comes to economics.

John Nichols’s new book on protests and politics, Uprising: How Wisconsin Renewed the Politics of Protest, from Madison to Wall Street, has just been publshed by Nation Books. Follow John Nichols on Twitter @NicholsUprising.

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