WASHINGTON, Jan. 21, 2015 – President Barack Obama used his State of the Union message Tuesday night to urge lawmakers, including fellow Democrats, to give him fast-track negotiating authority to wrap up a Pacific Rim trade deal, but he pointedly challenged Republicans on climate change and other issues.
Obama repeated his call for ending the trade embargo on Cuba. “When what you’re doing doesn’t work for 50 years, it’s time to try something new,” he said.
Obama touched on tax reform, too, including a veiled mention of a proposal to stop the longstanding use of “stepped-up basis” to limit capital gains taxes on inherited land and other assets. With a step-up in basis, an asset’s value is determined to be its worth at the time of inheritance, not the value at which it was originally purchased.
The president appealed to both parties to vote for trade promotion authority (TPA), which would require Congress to give an up-or-down vote to new trade agreements, including the Trans-Pacific Partnership deal nearing completion. That won a rare standing ovation from Republicans in the House chamber, along with a smattering of Democrats.
Obama said his trade agenda was needed to counter China’s desire to “write the rules” for Asian trade. “Why would we let that happen? We should write those rules. We should level the playing field. That’s why I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair.”
Obama acknowledged that “past trade deals haven’t always lived up to the hype, but he said that with most of the world’s consumers living outside the United States, “we can’t close ourselves off from those opportunities.”
Obama tweaked the GOP for its skepticism about climate change and for the party’s push to approve the Keystone XL pipeline.
On climate change, he said, “I’ve heard some folks try to dodge the evidence by saying they’re not scientists; that we don’t have enough information to act. Well, I’m not a scientist, either. But you know what – I know a lot of really good scientists at NASA, and NOAA, and at our major universities.”
Obama contrasted Keystone to what he said would be the broader impact of a new highway bill. “Let’s set our sights higher than a single oil pipeline. Let’s pass a bipartisan infrastructure plan that could create more than thirty times as many jobs per year, and make this country stronger for decades to come,” he said.
In the subsequent GOP response to Obama, freshman Sen. Joni Ernst of Iowa also appealed for action on new trade deals. “Let’s tear down trade barriers in places like Europe and the Pacific. Let’s sell more of what we make and grow in America over there so we can boost manufacturing, wages, and jobs right here, at home,” she said.
But Ernst used a story from her farm background in Red Oak, Iowa, as she tried to make the case that the Obama economy was leaving many families still struggling. As a young girl, she said, she and other kids had to wear bread bags over their shoes to protect them from the rain. “Our parents may not have had much, but they worked hard for what they did have,” Ernst said. “These days though, many families feel like they’re working harder and harder, with less and less to show for it.
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Regarding the president’s push for fast-track Trade Promotion Authority, the chairmen of the congressional committees responsible for moving the legislation have yet to set a timetable for action, although they have indicated it is a high priority.
Senate Finance Chairman Orrin Hatch, R-Utah, told the U.S. Chamber of Commerce earlier Tuesday that his panel would “move quickly” on TPA and that he was working with the committee’s ranking Democrat, Ron Wyden of Oregon, and House Ways and Means Chairman Paul Ryan of Wisconsin to see if they could agree on a “bipartisan, bicameral bill that we can move in short order.”
Wyden would have to give up getting a series of additional protections, which he dubbed “smart track,” that he talked about last year when he was the committee’s chairman. Hatch wouldn’t give reporters a timetable for releasing the legislative text, saying only that “we’re working on it as we speak.”
Republicans should have the votes necessary in both the House and Senate to pass TPA despite broad Democratic opposition. Republicans continue to call on Obama to lobby Democrats to support the legislation -- which the White House has done in the past -- but the fact is the Republican takeover of the Senate this year means there’s less pressure on Democrats to buck their base and support him on this issue.
Senate Majority Leader Mitch McConnell, R-Ky., said at least week’s GOP congressional retreat that there is a “high likelihood” that TPA will be enacted this year as well as a cybersecurity measure, the two pieces of legislation on which he believes Republicans and the president can agree.
Some conservative groups are pushing back against TPA, but they concede that it will be difficult to get many Republicans to vote against it, especially members from farm districts that stand to gain from lowering barriers to agricultural exports to Japan and other countries that will be partners to the TPP when it is finalized.
Last week, several tea party organizations and such groups as Americans for Limited Government and the Eagle Forum sent a letter to lawmakers urging them not to give Obama fast-track authority.
“Given the fact that the TPP has largely been negotiated in secret with only the administration’s multinational stakeholder partners involved, it is Congress’ duty to examine every job and note to ensure that American interests are protected,” the letter said. Rick Manning, president of Americans for Limited Government, declined to predict how many Republicans might oppose TPA.
TPA supporters believe they have enough Democratic support in the House to overcome the loss of at least 30 Republicans. “We’re not worried about it,” said Bill Reinsch, president of the National Foreign Trade Council. “The people who have come out against us were always going to be against it,” he said. While TPA is unlikely to pass “overwhelmingly,” he believes there has been little growth in the opposition ranks.
The tea party view that Obama shouldn’t be given any more power because he’s misused his authority on immigration policy should have even less resonance among Republicans in the Senate than it does in the House, he said.
The White House, meanwhile, has started recruiting Democrats on the Hill to support TPA. “I have certainly heard from my colleagues (that) they’ve received a lot of attention from the White House,” said Rep. Dan Lipinski, D-Ill., who opposes TPA because of what he says will be the detrimental impact of trade deals on manufacturing jobs.
Food safety will also figure prominently in the coming debate on trade. Rep. Rosa DeLauro, who will lead the anti-TPA whipping operation in the House, is warning that it will lead to more imports of unsafe seafood from TPP countries such as Vietnam.
Ø Regarding Cuba, the Obama administration last Friday implemented a series of more liberal trade and travel regulations, including one allowing U.S. financial institutions to have direct relationships with Cuban banks. Also, the definition of “cash in advance” is being redefined from “cash before shipment” to “cash before transfer of title to, and control of.”
These measures, which the White House announced in December, are likely as far as the president can go with this Congress to expand trade with Cuba. His proposals to end the embargo on Cuba and install an ambassador in an embassy there were dead on arrival. It’s not clear how much impact the revised financial regulations will have on U.S. farm exports given Cuba’s lack of cash to increase its purchasing, but there could be some attempts by critics of Obama’s Cuban policy to use the appropriations process to roll back some of the recently implemented actions.
A leading critic of Obama’s policy, who has a seat on the House Appropriations Committee, Florida Republican Mario Diaz-Balart denounced the revised regulations as the “fulfillment of the president’s shameful pledge to do all he can to prop up the Castro regime at the expense of the Cuban people.”
Diaz-Balart told Agri-Pulse this week that he’s considering trying to reverse some of the president’s new rules but wouldn’t say which ones. “Some of them are clearly counter to the spirit of the law. The spirit of the law is very clear -- it is to deny hard currency to the regime and to help the opposition.”
Reinsch said he has “absolutely no doubt “that Diaz-Balart and his allies “are going to do everything they can to block what the president is doing.” But he also expressed confidence that allies of agricultural interests will defend the policy moves.
“People are going to stand up and tell the pro-embargo people that what you want to do is a mistake. The main source of that is going to be in the ag community. This matters to them,” he said.
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