President Obama Signs Three New Free Trade Agreements

Although President Obama campaigned heavily against free-trade agreements like NAFTA, he just signed three more into law. The agreements cover US trade relations with Columbia, Panama and South Korea.

During the 2008 Democratic Primaries, free trade became a major campaign issue. Hillary Clinton and Obama exchanged very tough words over the subject as the primaries reached the Midwest. Although Obama faulted Clinton for participating in the process to enact NAFTA, leaked communications between his economic team and members of the Canadian government revealed that Obama privately assured Canada that his tough talk on trade was merely campaign rhetoric.

Although Obama initially denied any allegations of double-talk, he later conceded that language in political debates can become "overheated." Several articles on Dissenting Justice cover this issue (see below).

For more coverage, see:

What Happened to the Thunderous Liberal Opposition to Free Trade?


Don't Blame the Current Economic Conditions: Obama's Softer Position on NAFTA Emerged Almost a Year Ago


Chill Out, Canada: Despite Tough Campaign Rhetoric Obama Will Not Touch NAFTA

Don't Blame the Current Economic Conditions: Obama's Softer Position on NAFTA Emerged Almost a Year Ago

As the Democratic primaries reached the nation's Rust Belt, both Hillary Clinton and Barack Obama began making harsh critiques of NAFTA, and they vowed to renegotiate the trade pact, even if this required pulling out of the agreement. Today, however, during a joint-press conference with Canadian Prime Minister Stephen Harper, Obama took a much softer tone regarding NAFTA and stated that he wanted to expand rather than reduce trade activity between the U.S. and Canada.

President Obama attributed his markedly different stance towards NAFTA to the global economic crisis. Specifically, he said that in the wake of the global recession, he needed "to be very careful about any signals of protectionism." He made similar statements earlier this week. Obama's softer stance on NAFTA, however, began as almost a year ago.

Obama's March 2008 NAFTA "Wink"
In March 2008, during the heat of the Democratic candidates' assault on NAFTA, a leaked memorandum of notes describing a meeting between Canadian Consul General Georges Rioux and Obama's economic policy advisor Austan Goolsbee created created a political firestorm. The leaked notes stated that Goolsbee tried to reassure Canadians that Obama's tough position on NAFTA was merely "political positioning" and that he was fully committed to free trade with Canada.

The leak of the memorandum triggered a response from Obama's campaign, which said that the notes distorted discussions between Goolsbee and Rioux. Although Goolsbee denied using the words "political positioning," he did not deny saying something similar.

Full Retreat on NAFTA By June 2008
As soon as Obama obtained the Democratic nomination, his rhetoric on NAFTA dramatically shifted. And just as the leaked memorandum indicated, he began to pull away from the harsh anti-trade rhetoric that defined the Democratic primaries in the Midwest.

During a June 2008 interview with Fortune magazine, for example, Obama said that he would not seek a unilateral renegotiation of NAFTA, even though both he and Clinton had vowed to do so earlier. When asked by Fortune to reconcile his softer position with his forceful campaign rhetoric, Obama stated that "[s]ometimes during campaigns the rhetoric gets overheated and amplified. . . . Politicians are always guilty of that, and I don't exempt myself."

Last Word: I agree that protectionism will not solve the country's economic problems, and it could even exacerbate them. And I never really expected Clinton or Obama to modify substantially the terms of NAFTA. But Obama's current pro-NAFTA position did not recently take hold. Instead, as soon as he secured the Democratic nomination, he began moving to the center on free trade, which confirms the content of the leaked memorandum.

Obama Might Abandon Campaign Promise on Taxes, Names Economic Team; Plus: Rubinomics and Citigroup

Obama Names Economic Team
Although the rumor mill had already leaked the information, Obama named his economic policy team today. Tim Geithner will head the Department of Treasury, while his mentor Larry Summers will serve as the Director of the National Economic Council. Christina Romer will head the Council of Economic Advisors.

Source: CBS News

Rubinomics?
Members of the Democratic Wing of the Democratic Party are already up in arms over some of Obama's staffing decisions. Today's New York Times adds more coals to the fire in an article that links Obama's economic team with Robert Rubin, who served as Secretary of Treasury to Bill Clinton. Liberals and progressives blame "Rubinomics" for free trade and deregulation, which they argue caused job losses and the current credit crisis. The article states that:

The president-elect’s choices for his top economic advisers — Timothy F.
Geithner as Treasury secretary, Lawrence H. Summers as senior White House
economics adviser and Peter R. Orszag as budget director — are past protégés of
Mr. Rubin, who held two of those jobs under President Bill Clinton. Even
the headhunters for Mr. Obama have Rubin ties: Michael Froman, Mr. Rubin’s chief
of staff in the Treasury Department who followed him to Citigroup, and James
Rubin, Mr. Rubin’s son.

All three advisers — whom Mr. Obama will officially name on Monday and
Tuesday — have been followers of the economic formula that came to be called
Rubinomics: balanced budgets, free trade and financial deregulation, a
combination that was credited with fueling the prosperity of the 1990s [Editor:
And the recession of the 2000s].

Source: New York Times

Speaking of Rubin: Citigroup Gets Largest Bailout Package to Date
Citigroup, the troubled financial conglomerate where Rubin serves as a Director, will receive the largest federal bailout of any financial institution to date during the present credit crisis. Under the plan, the government will give Citigroup at $20 billion cash infusion and insure losses on the bank's $300 billion portfolio of bad debt -- largely from risky mortgage instruments. Geithner helped negotiate the bailout pursuant to his role as Chair of the Federal Reserve Bank of New York.

Source: Los Angeles Times

Obama: "No New Taxes"
Taxation became a major debate issue during the general-election campaign. McCain promised to cut taxes for the "middle class," but he also said he would maintain Bush's controversial tax cuts for high-income earners. Obama, by contrast, promised to cut taxes for the middle class, but raise taxes on upper-income earners in order to fund his social programs and to prevent an explosion in the deficit. Many economic experts argued that both candidates' plans (which involved higher spending and fewer taxes) would increase the deficit. McCain's plan, however, would cause greater injury to the deficit because it would not involve any tax increases (as would Obama's).

Now, less than one month after the election, it seems that Obama's tax plan suddenly looks like McCain's. According to Reuters, Obama's team is now considering abandoning its plan to impose new tax increases due to the poor state of the economy. Wasn't the economy bad a month ago?

Source: Reuters