Trade Setback Jude Wanniski June 16, 1988

The decision by the House Democratic leadership to strip the plant-closing provision from the trade bill was always a real possibility; there are too many special interests that have a stake in the omnibus bill for it to be sacrificed for an alternate political strategy by the Democrats. The decision this week, though, means the likelihood of a signed trade bill this year has increased sharply. It's likely the favorable trade numbers hastened the decision, the backers of the trade bill seeing public pressure for it may recede if it's held into next year. Free-trade forces are putting all their chips on getting a Senate amendment to fix the very worst aspect of the bill: the transfer of authority from the President to the trade bureaucracy on trade sanctions. We are now assuming there will be a bill signed by the President with or without such an amendment.

Timing is now of heightened importance. There's at least a small chance the entire process will be wrapped up by the July 15 recess for the Democratic Convention. The House will take up the separate bills next week, and has plenty of time to complete action after the July 4 break. The Senate would have only a week or so, which means even one lengthy debate over a single amendment would force action into the July 22-August 15 period between the Democratic and GOP conventions. Of course we're hoping for such delay.

As I've felt all along, the best chance of winning a change in the trade bill on the issue of Presidential authority is if George Bush would take the lead. The June 10 editorial of The Wall Street Journal, "Bush's Big Opportunity," stated precisely that case. We're told the Vice President reacted favorably to the editorial, but that the myriad pressures of the campaign pulled him away from any focus on it. To this day we've seen not a single press report on what Bush thinks of the trade aspects of the omnibus bill. Without his interest or support, a Senate amendment — by Senator Armstrong of Colorado or Senator Gramm of Texas -- would be brushed aside. A specific amendment could force the issue between George Bush and Michael Dukakis, with Dukakis already stating he would accept the trade bill as is. Bush campaign manager Lee Atwater is exploring this possibility.

President Reagan's chief economic advisor, Beryl Sprinkel, has been speaking publicly against the protectionist elements of the bill, especially the authority transfer. He raised the issue June 9 in Chicago before the Illinois Bankers' Association. Yet he tells me he has not been able to discuss these issues with the President, whose calendar until recently was being chewed up by the summit. Sprinkel and Secretary of State George Shultz were at least successful in getting vague, presidential concerns about "protectionism" into the RR veto message. Thus, a Senate amendment on this issue could easily get the President's support. Otherwise, he'd be totally painted into a corner.

Treasury Secretary Jim Baker, who wants the trade bill as is, is pushing hard to get it cleared before the GOP convention in New Orleans August 18. We assume he wants to have it wrapped up before he leaves Treasury for the Bush campaign. The White House command, which has not found time for a RR meeting with Sprinkel, has found time to have the President call leading Democrats to get them to expedite the trade-bill decision. The cards we're playing at the moment seem weaker than ever.