WASHINGTON -- Just as the Democrats were getting ready to pass the $800 billion stimulus plan, President Obama gave the green light to water down the bill's "buy American" trade provisions.
Labor leaders were up in arms over what they saw as a betrayal of Obama's campaign promise to support tough trade restrictions. The softer language quietly added to the bill was sought by the Chamber of Commerce and other business groups as the price for their support. In the end, they got some of what they wanted.
The behind-the-scenes battle over the "buy American" language received little media attention in the fiery political warfare over the big spending bill. But the White House's late shift on the issue shook labor's trust in the new president's promises and showed that, when push came to shove, Obama can quickly turn pragmatic.
The protectionist language that Democratic leaders inserted in the original bill immediately raised red flags over at U.S. Chamber headquarters, just one block from the White House.
Section 1605 (a) of the infrastructure-spending package on the "use of American iron, steel and manufactured goods" said this: "None of the funds appropriated or otherwise made available by this act may be used for a project for the construction, alteration, maintenance or repair of a public building or public work unless all of the iron, steel and manufactured goods used in the project are produced in the United States."
This language not only threatened to invite severe protectionist reprisals from our trading partners, triggering a trade war in the midst of a global recession -- it would have violated provisions in U.S. trade agreements.
Obama began sending signals publicly and through back channels that the provisions went too far. He told Fox News that the United States "can't send a protectionism message," then told ABC News that the bill's wording could be a "potential source of trade wars that we can't afford at a time when trade is sinking all across the globe."
The president's language was right out of the U.S. Chamber's playbook, shocking labor officials that Obama could turn so quickly on the issue, but thrilling big-business lobbyists.
That language remains in the bill, but waivers are also in there, saying it "shall not apply in any case or any category of cases in which the head of the Federal department or agency involved finds that applying subsection (a) would be inconsistent with the public interest."