Rahm on Trade: You Want to Sell Cars or Tanks?

WASHINGTON, DC - FEBRUARY 25: Chicago Mayor Rahm Emanuel during an East Room on manufacturing innovation institutes February 25, 2014 at the White House in Washington, DC. U.S. President Barack Obama announced 'new steps in partnership with the private sector to boost advanced manufacturing, strengthen our capabilities for defense, and attract the types of high-quality jobs that a growing middle class requires.' 
National Journal
Major Garrett
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Major Garrett
Feb. 25, 2014, 7 a.m.

Rahm is crack­ling good copy.

The may­or of Chica­go and former White House chief of staff knows polit­ics from the street corner to the Oval Of­fice. Pos­sibly no one closer to Pres­id­ent Obama knows trade polit­ics bet­ter than Rahm Emanuel.

“It’s either tanks or cars,” Rahm says about sim­mer­ing trade dis­putes di­vid­ing Obama and con­gres­sion­al Demo­crats.

Hizzo­n­er has no form­al role in trade talks or the com­ing trade arm-twist­ing. But he’s at the polit­ic­al and policy in­ter­sec­tion of the re­ima­gined Amer­ic­an urb­an eco­nomy and think­ing crit­ic­ally about ways that once-dy­ing man­u­fac­tur­ing cit­ies can com­pete in the glob­al eco­nomy. I heard him de­liv­er a speech nearly a year ago when he de­clared that in the next 100 years, much of the world’s his­tory will be writ­ten by the world’s biggest cit­ies. Not na­tion-states, not re­gions, not con­tin­ents. Cit­ies. Any­one fa­mil­i­ar with Rahm’s sense of self could un­wisely ascribe this to his En­er­gizer Bunny ego­ism. Of course, cit­ies — there­fore Chica­go, there­fore Rahm — would de­term­ine the fu­ture of the plan­et.

Sub­tract ego­ism, however, and he may still be cor­rect. It is en­tirely pos­sible that the most im­port­ant in­nov­a­tions deal­ing with urb­an plan­ning, pol­lu­tion, wa­ter use, health care, poverty, tax­a­tion, trans­port­a­tion, and crime will come, and may have to come, from cit­ies grap­pling with enorm­ous and con­cen­trated pop­u­la­tions. In the past five years, the world’s urb­an pop­u­la­tion has grown by 380 mil­lion.

Even if this tra­ject­ory flat­tens, cit­ies will have to meet a vast ar­ray of com­plex needs, chief among them cre­at­ing jobs.

The may­or was in D.C. to cel­eb­rate the award­ing of a fed­er­al con­tract to cre­ate a new man­u­fac­tur­ing hub in Chica­go: $70 mil­lion in De­fense De­part­ment seed money ad­ded to $240 mil­lion in private in­vest­ment from For­tune 100 com­pan­ies and ven­ture-cap­it­al firms. The goal is to ex­pand di­git­al man­u­fac­tur­ing re­search in Chica­go and at the Uni­versity of Illinois.

“This is an Olympic gold,” said Emanuel, still smart­ing from the Windy City’s loss of its sum­mer Olympics bid for 2016. “This al­lows you to cre­ate an eco­nom­ic en­ergy and a mag­net that will bring in re­search-and-de­vel­op­ment fa­cil­it­ies from com­pan­ies that don’t have ‘em in Chica­go.”

Syn­ergy was a 1990s word that fueled a tech boom and some prof­it­able stock op­tions. Then it be­came a bump­er stick­er for mor­ons. The word isn’t ne­ces­sar­ily com­ing back, but the concept is.

“It’s jobs, it’s in­vest­ment, it’s pat­ents, it’s new busi­nesses,” Rahm told me. “It’s a huge eco­nom­ic op­por­tun­ity. This brings brains and brawn to­geth­er like noth­ing else. Com­pan­ies today want their man­u­fac­tur­ing and their re­search and de­vel­op­ment to have things fresh off the shelf that are new.”

These products will need buy­ers. That means an ex­port mar­ket. I asked the Demo­crat­ic may­or about con­gres­sion­al op­pos­i­tion to Obama’s push for Trade Pro­mo­tion Au­thor­ity (fast track) as a pre­lude to a fi­nal deal on the Trans-Pa­cific Part­ner­ship and the Transat­lantic Trade and In­vest­ment Part­ner­ship. Rahm wanted to ar­gue that the op­pos­i­tion is bi­par­tis­an. In­tel­lec­tu­ally, it is. But as he well knows (he ad­vised Pres­id­ent Clin­ton on the North Amer­ic­an Free Trade Agree­ment and Obama on deals with South Korea, Colom­bia, and Panama), Re­pub­lic­ans in the House and Sen­ate will provide a vast ma­jor­ity of votes for TPA. House Speak­er John Boehner has asked Obama for 50 House Demo­crat­ic votes but could prob­ably pass TPA with slightly few­er.

Rahm knows the prob­lem is Sen­ate Ma­jor­ity Lead­er Harry Re­id and House Minor­ity Lead­er Nancy Pelosi, both of whom have told Obama to back off (which he has). Emanuel’s mes­sage: na­tion­al se­cur­ity.

“You look at Asia today,” he said. “We have al­lies from Aus­tralia, Ja­pan, Taiwan, Vi­et­nam, In­done­sia, South Korea. Every­body in the Joint Chiefs sup­ports it. Why do they sup­port it? “˜Cause it’s either tanks or cars. And I’d rather be ex­port­ing cars than try­ing to fig­ure out how we’re gonna move tanks over there or send five [air­craft] car­ri­ers there.”

In an era of de­fense cuts and a smal­ler Army, Emanuel sees free trade as the way around big de­fense budgets and dead-end weapons sys­tems.

“Those are our al­lies around that are part of the Asia Pa­cific. If they’re eco­nom­ic­ally tied to the United States, it’s in our na­tion­al se­cur­ity in­terest. Trade is a good thing if you do everything else right.”

The White House is try­ing. In a very im­port­ant but largely over­looked speech on Feb. 18, U.S. Trade Rep­res­ent­at­ive Mi­chael Fro­man told the Cen­ter for Amer­ic­an Pro­gress (the White House policy and polit­ic­al sound­ing board) that more pro­gress­ive voices would be ad­ded to trade ne­go­ti­ations. Fro­man duly noted, be­cause US­TR keeps num­bers like these, that there have been more than 1,150 sep­ar­ate trade con­sulta­tions with Con­gress. He even dryly men­tioned that US­TR staff con­duc­ted 18 brief­ings with law­makers — drum roll, please — on a snow day.

But Fro­man and the White House know that Demo­crats re­main un­moved: They want more voices at or near the ne­go­ti­ations and more trans­par­ency about en­vir­on­ment­al and labor re­quire­ments. Yes, Obama says he’s com­mit­ted to bak­ing these is­sues in­to the ne­go­ti­at­ing cake. Demo­crats don’t trust Obama. They want in­side the trade kit­chen.

To that end, Fro­man an­nounced, the Com­merce De­part­ment will re­vive dormant trade ad­vis­ory com­mit­tees to gath­er more pro­gress­ive in­put. He also said the ad­min­is­tra­tion would cre­ate the Pub­lic In­terest Trade Ad­vis­ory Com­mit­tee to join the stand­ing Labor Ad­vis­ory Com­mit­tee as a place where pro­gress­ives can learn more about trade ne­go­ti­ations and of­fer in­put. Demo­crats have long com­plained of be­ing out­numbered by in­dustry-backed groups work­ing with US­TR.

Obama fought for TPA in the State of the Uni­on and was re­buffed. Fro­man huddled with pro­gress­ives and law­makers who could even­tu­ally be sup­port­ive, but not without more voices at the table and more trans­par­ency in the pro­cess. Fro­man knows the Left will nev­er be en­tirely pla­cated. He also knows it doesn’t need to be. Obama just needs to get enough votes at the mar­gins to win TPA ap­prov­al after the midterm elec­tions. Meet­ing the de­mands of lib­er­als, or at least be­ing seen as try­ing to, is the new for­mula for TPA and the Asia and Europe deals.

It also prob­ably won’t be long be­fore White House of­fi­cials them­selves start say­ing, “It’s either tanks or cars.”

The au­thor is Na­tion­al Journ­al cor­res­pond­ent-at-large and chief White House cor­res­pond­ent for CBS News. He is also a dis­tin­guished fel­low at the George Wash­ing­ton Uni­versity School of Me­dia and Pub­lic Af­fairs.

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