House Democrats humiliated President Obama yesterday, sending his Trade Adjustment Assistance (TAA) bill down to defeat, 302-126.  The pro-free trade Wall Street Journal did not exaggerate with its headline, “Pelosi knifes Obama.”  Whatever you think of the merits of the Pacific trade agreement being vetted, it is clear that President Obama is far from beloved by the congressional wing of his party.

Mr. Obama began the day by paying a rare, unannounced visit to Capitol Hill for an emergency closed-door pep rally with House Democrats, which was in retrospect a bad omen. His talk was reportedly well received at first but then he advised the caucus that “a vote against trade is a vote against me,” while Democrat Peter DeFazio of Oregon noted that the President “tried to guilt people and impugn their integrity.” In other words, it was a vintage Obama performance.

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Minority Leader Nancy Pelosi had until Friday promised the White House she’d remain neutral. But after the meeting she took to the floor to deliver a rambling speech that sounded off-the-cuff and encouraged Democrats to vote against a program called Trade Adjustment Assistance, or TAA. To understand how remarkable this surprise attack was, imagine Pearl Harbor as an inside job.

There are huge elements of irony to the vote against TAA by Dems.  After all, it is a subsidy, a payoff, really, to trade unions, a subsidy of up to 130 weeks of support to workers who can claim they lost their jobs due to expanded trade.  In the past, such assistance has been the price demanded by Dems and unions to expansion of trade liberalization.

But in this instance, it was the bribe itself that was voted down.  What is going on?

It is impossible for me (or anyone else not in Congress) to know what is really going on, since a key part of what is being voted on is being held in secret.  Given the Obamacare debacle, Pelosi’s words, “You have to pass the bill to find out what’s in it,” haunt any attempt to pass a secret bill.  The words “trust me” from President Obama’s lips are not persuasive to many Republicans or Democrats these days.

In general, I am for the expansion of trade, for it enhances overall wealth.  And in particular, I am for expanding our trade ties across the Pacific because, frankly, if we do not step up our links to Asia, then China will step in and sooner or later dominate Asia.  China is coordinating a trade and military offensive aimed at carving out the most populous and dynamic region of the world as its own sphere of influence.  James Taranto of the WSJ laid out the case for going ahead with the agreement, secrets and all.  I take his points, but I revert back to the “trust me” problem with Obama.  If we are to strengthen trade liberalization across the Pacific, it is not going to be under Obama, because he has lost the trust of his own Democratic Party allies.

What I think lies behind Pelosi’s knife in the back is this: Richard Trumka and the AFL-CIO lead an industrial union movement that is failing.  The only source of growth for unions is government workers, but the image of unions fighting evil capitalist bosses is at the heart of whatever political legitimacy the union movement still retains.  If unions are seen as fighting for more taxpayer money for privileged government unions, there is not much appeal beyond the selfish interests of members.

More trade inevitably will mean fewer union jobs in industry, because unions exist in order to make compensation higher than market forces alone would dictate.  Trade liberalization brings market forces to bear.  So in the end, more trade means fewer union jobs, overall, even though Boeing may expand employment.  However, with new Boeing plants going to right-to-work places like South Carolina, the AFL-CIO no longer sees an upside in freer trade.  

I strongly suspect that Trumka and his union allies went to Pelosi and presented her an ultimatum: torpedo this bill, or else we sit out the 2016 elections.  That would be enough for her and the congressional Dems to stab Obama in the back.  They hope to remain in office after he retires to his lucrative career of speeches, presidential library monument, slush fund foundation, and private jet trips.

It is time to admit that president Obama is a true lame duck and no longer has leverage over his own party – unless, like Bill Clinton, he can portray himself as a victim of a GOP attack.  The wisest thing now for the GOP would be to say that trade liberalization will have to await a new president who hasn’t lost the trust of the American people the way Obama has.