Trade And Consequences

In their rush to prove that they could pass significant legislation and conclude a deal with President Bush on trade, it seems that Democrats forgot to consider the crippling political consequences of their last bipartisan pursuit of a trade deal: the 1993 North American Free Trade Agreement.

From the get-go, the pursuit of NAFTA was damaging to Democrats in general and President Clinton in particular. With pro-labor and pro-environment congressional Democrats lined up against business oriented New Democrats in their own caucus and the White House, the treaty precipitated intra-party strife that got in the way of other parts of President Clinton’s agenda. From a tactical perspective, it was even worse: labor unions were telling the White House that while they would prefer to spend their war chest to build support for universal health care, they were prepared to spend it instead on beating NAFTA.

Clinton ultimately eked out a narrow victory on NAFTA, and many pundits initially deemed it smart politics: Clinton got a short-term boost in his approval ratings and showed that he was strong enough and skilled enough to defy the Democratic leadership in Congress. “He stood up against his two prime constituents, labor and the environment, to drive it home over their dead bodies,” American Express chairman James Robinson was quoted saying in a 2000 book by journalist James MacArthur.

But there were serious long-term consequences to leaving two of your best constituencies “dead.”

Labor was so angry about NAFTA that it cut off its contributions to the DNC for six months. This dealt a fatal blow to the Clintons’ efforts to raise the $10 million they wanted to finance an advertising and grassroots campaign in support of health care reform. And despite everything Clinton had done to help big corporations pass NAFTA, big business made clear that their gratitude didn’t extend to helping the DNC with the health care drive (though corporations like American Express and General Electric did slightly boost their giving to Democrats in the elections). As a result, the Democrats were seriously outmatched when the health care industry started running their infamous Harry and Louise ads against health reform, contributing to the defeat of Clintoncare.

And when the elections came around, Clinton’s advocacy of NAFTA seriously hurt the Democrats, especially with Ross Perot voters who responded to Perot’s spirited opposition to the deal. In both 1994 and 1996, 1992 Perot voters went Republican in congressional races by a 2-1 margin, compared to just 53 percent in 1992. That provided the decisive swing that ousted the Democrats from Congress.

But NAFTA’s most lasting political effect was how it transformed the American economy and political landscape. Bill Clinton’s NAFTA put a lot of Democrats out of work. A 2003 study by the Economic Policy Institute found that NAFTA caused 879,000 more job losses than job gains, with many of those jobs coming from the heavily unionized, Democratic-leaning, manufacturing sector.

Now Democrats are repeating the same mistakes. Although the current deal includes marginally tougher labor and environmental standards than NAFTA, the fact that Democrats gave Bush a victory on this issue before winning concessions on other higher priority parts of their agenda has infuriated progressives in the Democratic party, especially in the labor movement.

“We’re going to go on a jihad and make sure every Joe Labor guy knows that the Democrats sold them out on this,” a trade deal opponent told me this weekend. With 18 months left facing President Bush, the last thing Democrats need is the core of their political coalition out on a holy war against them, rather than providing backing in their fights to increase the minimum wage, end the Iraq war, and tackle the global climate crisis.