The White House and Senate Democratic leaders reached a breakthrough on passing long-sought trade agreements with South Korea and other U.S. trading partners.
But key Republicans immediately threatened to torpedo the plan Tuesday because it would extend an existing federal program to retrain American workers who lose jobs to foreign competition.
In the kind of compromise that historically assures passage of a legislative proposal, the job-training provision was added to the trade agreements, long favored by business groups, in order to win over Democratic lawmakers from industrial states such as Michigan, where overseas competition is blamed for thousands of lost jobs.
But “tea party” and other conservatives bolted over the issue of more spending on job training as yet another example of big government.
The on-again, off-again deal illustrates the policy paralysis that now grips Washington on almost any issue involving federal spending.
Even as the Republican Party’s stalwart constituents such as the U.S. Chamber of Commerce vigorously endorsed the trade pacts, GOP leaders were balking at renewal of so-called Trade Adjustment Assistance, funding for which was more than doubled two years ago to $575 million annually.
The Heritage Foundation, a conservative think tank, labeled the TAA program “ineffective” with “overly generous benefits” for a small fraction of laid-off workers at a time when “out-of-control spending and surging public debt [are] threatening our nation’s stability.”
The White House described the typical beneficiary of the TAA as a 46-year-old male, the family’s main breadwinner, with a high school education who had worked more than a decade in a factory that is closing.
More recently, with the program’s expansion to include service industry employees, many more of those benefiting have been in occupations such as bookkeeping, call-center work and data processing.
Senior Obama administration officials said they had worked out the compromise on the TAA with Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.). The officials said the training funds would be fully paid with offsetting savings in other areas.
But even as administration officials were briefing reporters Tuesday evening, saying they were hopeful that the trade pacts and the extension of the TAA would all be approved, Camp issued a statement suggesting he would not throw his support behind it.
“It is regrettable that the White House has insisted on Trade Adjustment Assistance in return for passage of these job-creating [trade] agreements,” Camp said.
While acknowledging that he had “been willing to work with the White House to find a bipartisan path forward on TAA in order to secure passage of the trade agreements,” he said that “the decision on how to move these items through the House is a matter for Republican leadership to determine.”
House Speaker John A. Boehner (R-Ohio), for his part, indicated he was pleased that progress was being made on the trade measures.
Said Boehner spokesman Michael Steel, “We have long said that TAA — even this scaled-back version — should be dealt with separately from the trade agreements, and that is how we expect to proceed.”
President Obama, who has sought to redouble a focus on jobs and economic growth amid a sputtering recovery, has pushed the trade deals with South Korea, Colombia and Panama as a key element in achieving his repeatedly stated goal of doubling U.S. exports in five years.
With Republicans thwarting any chance of new major federal spending to stimulate the economy, Obama has held out the trade pacts as a boon for American jobs and the long-term prospects for the economy.
Yet one of his key allies, organized labor, has insisted that the pacts would hurt American workers.
“We believe that, on net, the South Korea deal will cost jobs,” said Thea Lee, deputy chief of staff at the AFL-CIO.
Opposition to the trade deals from organized labor and some influential Democratic lawmakers kept the agreements languishing ever since the Obama administration inherited them from the prior Bush administration.
More recently, the White House made progress in winning additional concessions from South Korea on autos, the key sticking point, as well as obtaining stronger language to protect labor rights in Colombia and better tax provisions in Panama.
The legislative paralysis is an indication of the difficulty Obama’s economic policies face as conservative Republicans hold an ever-tougher line on spending — even at the expense of the trade initiatives they would support.
Rep. Sander M. Levin of Michigan, the top Democrat on the House Ways and Means Committee, said he was “dismayed that some Republicans seem intent on stonewalling any agreement on TAA, which until this year was long hailed as a hallmark of bipartisan achievement.”
Republican opposition to the Trade Adjustment Assistance program had been building, but the GOP reaction on Tuesday was swift and decisive.
Sen. Mitch McConnell of Kentucky, the Republican leader, quickly drew a line in the sand, saying he would vote against the South Korean pact unless the White House dropped the provision on the Trade Adjustment Assistance program.
“I’ve never voted against a trade agreement before, but if the administration were to embed a TAA into the Korea trade agreement, I would be compelled to vote against it,” McConnell said. “I think this is making it needlessly complicated and contentious.”
Congress unanimously approved a short-term extension of the TAA late last year, extending the program to February. The employee assistance and retraining program had been expanded during the recession, covering 282,000 unemployed workers in fiscal 2010.
But pressure from political conservatives who say the worker adjustment program is costly and ineffective began to chip away at support for the assistance, which had been first launched as part of a Kennedy administration trade act.
The TAA now provides income and healthcare support while workers learn new job skills.
Backing from the Chamber of Commerce, which has long supported pairing the worker assistance programs with the trade pacts, could sway some Republicans.
“With our economic recovery stalling, the time is now for Congress to act on these deals,” said Thomas J. Donohue, the chamber’s chief executive. “We simply cannot afford to put American jobs at risk any longer.”