December 17, 2014    Volume 21, No. 18

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President Obama, Wall Street Financiers, Corporate CEOs And Members Of Congress Meet Together To Plan Strategy To Sell And Pass Free-Trade Agreements

By Richard A. McCormack

The country's top executives from Wall Street and corporate America are working directly with President Obama and members of his cabinet and appointees on passing a free-trade agenda that is unpopular among the president's natural constituents of democrats, labor unions, environmental and consumer groups and the American public as a whole.

Obama, his staff and members of Congress met directly with CEOs of major multinational corporations in Washington, D.C., on December 11 to discuss the "ground game" -- as his aides described it -- needed to persuade Americans on the benefits of free trade and to lobby Congress on passage of Trade Promotion Authority [TPA] and the Trans-Pacific Partnership [TPP] next year.

Under the auspices of the December meeting of the President's Export Council, Obama lambasted opponents of the free-trade agenda he adopted from Presidents Bush and Clinton, arguing that opponents are ignorant of the benefits of trade and admonished them to back off in their effort to oppose passage of TPA and TPP by stating: "Don't fight the last war. You already have."

At the President's Export Council meeting, CEOs of some of America's largest multinational companies responsible for outsourcing hundreds of thousands of American jobs told Obama and his team that they will work together on gearing up a major lobbying effort to pass his trade agenda. Obama and his senior trade and economic appointees welcomed the overture and encouraged them to engage members of Congress and the public.

In joining the meeting of his Export Council, Obama sat between council co-chairs James McNerney, CEO of Boeing, and Ursula Burns, CEO of Xerox Corp., and encouraged them -- along with two dozen other executives from companies like IBM, Archer Daniels Midland, Dow, Pfizer and Deloitte -- to help him "make the sale. . . It's going to be very important for business to be out there and champion this and show that this is ultimately good for you, for your suppliers, for your workers," Obama said.

Obama told Boeing CEO McNerney to galvanize his company's suppliers "and their workers . . . presumably in every congressional district [to make] the case so [that] it's not just a bunch of CEOs calling [members of Congress] but it's people who understand they've got a stake in it."

Obama said these workers need to overwhelm the "pushback" to free trade that is occurring "from not just labor, not just organized labor, but a public perception generally that trade has resulted in an erosion of our manufacturing base as companies moved overseas in search of lower-wage labor." This may in fact have occurred, though it's debatable, Obama added: "But that horse is out of the barn [since] much of that shift in search of low-wage labor has already occurred."

Prior to Obama's joining the meeting, McNerney told the assembled executives and administration appointees that the "timing of this meeting is critical" to having the CEOs work in "partnership" with the government "as we try to take our message out to the general public" on the importance of passing TPP and TPA. That will "turn into action in the next year. . . on the most ambitious trade agenda I have ever seen," he said.

Rep. Dave Reichart (R-Wash.), founder and co-chair of the congressional Friends of the Trans-Pacific Partnership Caucus and member of the trade subcommittee of the House Ways and Means Committee, told the President's Export Council that it was "great news to see how engaged this group is in promoting the TPA."

McNerney replied: "The ground game is important there [in Congress]. We will spend time to give you some support in Congress, and we spent some time this morning at breakfast talking about some of the ways the business community is trying to get better organized this time to help. I won't go through it now, but in support of Robert's [Wolf] recommendations and some of the air cover I think you need, we are working on it." (Robert Wolf, founder and CEO of 32 Advisors and formerly President and COO of UBS Investment Bank, is the chair of the President's Export Council's Subcommittee on Trade Promotion and Advocacy.)

Jeff Zients, Director of Obama's National Economic Council and formerly CEO and Chairman of The Advisory Board Company, told the CEOs: "Your help will be invaluable to explain the benefits to American workers in terms of jobs and well-paying jobs."

After Des Moines, Iowa, Mayor Frank Crownie addressed the Council, McNerney stated: "If there is a way for us to engage with the U.S. Conference of Mayors as part of the ground effort to support [USTR] Mike [Froman], we're going to come back to you on that. The closer you get to the action, ironically, the more people support stuff like this, but you have to pull the voices up and have [them] heard in the halls of Congress."

Xerox CEO Burns told the group that she met with newly elected members of Congress at the biennial legislative training session held for them at the Harvard Kennedy School of Government. She and American Express CEO Ken Chenault spoke to them about education, infrastructure and defense, but the "biggest discussion was on trade," Burns said. What she learned was that "we have as much work to do with the new members of Congress to educate them on the benefits of trade as we do with the public. So one of the things we did offer them at that meeting -- and I offered them all of the [the President's Export Council's] services -- is they should connect with business leaders locally; reach out and ask questions and have a dialogue back and forth because there are a large amount of misconceptions about the benefits of trade as we all know. But it is also at the congressional level particularly with the new members."

Caroline Atkinson, Obama's Deputy National Security Advisor for International Economics and formerly an executive at Stonebridge International, the Bank of England and the International Monetary Fund, said that it is "certainly time for the ground game." She noted that the trade deals being negotiated with Asia and Europe have an important "geostrategic nature" beyond the potential to increase trade. They are important in having allies and partners "move closer to us," she said.

Attending a meeting at The Business Roundtable on December 3, Obama said he will be "talking to [congressional leaders] McConnell, Boehner, Reid and Pelosi and making a strong case on the merits as to why this has to get done." The challenge, as he sees it, "is Americans feel as if their wages and incomes have stagnated, and there's a half-truth that is magnified in the discussions around trade that global competition has contributed to some of that wage stagnation. It's an appealing argument," Obama noted. "I think when you look at the numbers, it's actually an incorrect argument and that over time, growth, investment and exports have all increased the capacity for working families to improve their economic standing, but I say it's a half-truth because there's no doubt that some manufacturing moved offshore in the wake of China entering the WTO and as a consequence of NAFTA.

"Now, more of those jobs were lost because of automation and capital investment, but there's a narrative there that makes for some tough politics. We have to be able to talk directly to the public about why trade is good for America, good for American business and good for American workers. And we have to dispel some of the myths.

"Those who oppose these trade deals ironically are accepting a status quo that is more damaging to American workers," Obama continued. "And I'm going to have to engage directly with our friends in labor and our environmental organizations and try to get from them why it is that they think that. There are folks in my own party and in my own constituency that have legitimate complaints about some of the trend lines of inequality, but are barking up the wrong tree when it comes to opposing TPP, and I'm going to have to make that argument."

One of those "barking up the wrong tree" is Rob Scott, Director of Trade and Manufacturing Policy Research at the Economic Policy Institute. When asked his opinion of the Obama administration's trade thrust, Scott said it is based on an economic ideology. "They don't look at the facts," he said. "They have created a bubble and a story that they tell themselves every day and they don't look at what actually happens in the real world. They don't care."

Obama gave up on representing the interests of American workers early on, Scott argues, when University of Chicago economist and 2008 Obama campaign advisor Austan Goolsbee was "secretly" telling the Canadian embassy that Obama's statement about renegotiating NAFTA was meant to dupe working-class voters in the Midwestern states to vote for him. After being elected, Obama named Robert Rubin of Citigroup and architect of President Clinton's trade policy in the 1990s as head of his team of economic advisors. Joining Rubin was Jason Furman, now Chairman of the Council of Economic Advisors and another former Clintonite. Furman had just written a paper about how Walmart's import model based on outsourcing production was beneficial to lower-class Americans, saving them thousands of dollars a year in cheap goods.

And the game was over, Scott added, when the Obama administration's economic team had only one person articulating the interests of American workers -- economist Jared Bernstein, formerly of EPI. Bernstein worked in the Vice President's office and had little impact on policy, outgunned by the Wall Street appointees in the White House. He left the administration in 2011.

When looking at the overall trade numbers, Scott notes that imports of goods to the United States were $2.3 trillion in 2013, and exports were $1.6 trillion. This massive and persistent imbalance has led to the direct loss of millions of American jobs, "but the beneficiaries of those imports make a lot of money and they speak loud with large wallets and they have a lot of influence in Washington," said Scott. "Obama has sold out to the highest bidder to keep his party in power and that means cow-towing to Wall Street because that is where all of the power is in this country."

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