The november elections marked a watershed for Democrats, who ascended to power in both chambers of Congress, prying open the GOP’s grip on the legislative branch for the first time in 12 years.
Riding an anti-Republican wave flush with ethics scandals, corruption, discontent over the war in Iraq and topsy-turvy energy prices, Democrats pulled off a dramatic victory in taking control of the House and Senate that may have wide-ranging implications for trade, wage and tax policies that affect apparel and textile manufacturing and retailing.
The jury is still out on whether Democrats will usher in an era of stricter controls on global trade — what some call “protectionism” and others call “fair trade” — elevate workers’ issues and overhaul immigration and tax law, but leaders are galvanizing around a new agenda.
Democrats immediately capitalized on the mandate for change that swept them into power and voted to install the first woman in history as Speaker of the House: Rep. Nancy Pelosi of California.
Brandishing her leadership skills, Pelosi jumped out of the gate early — even before her caucus unanimously named her Speaker — laying out the Democrats’ agenda and priorities in October when she was still minority leader.
Last week, Pelosi chided Republicans for leaving so much unfinished business on the table as they headed out of town for the year and reiterated her agenda in the first “100 hours” of Democratic control next year.
“One month ago today, the American people spoke,” Pelosi said at a press conference on Capitol Hill. “The American people have asked for change both in our economy, in our budget priorities and in the war in Iraq, and the Republicans in Congress are in disarray.”
She said Democrats would deliver on that mandate for change.
“In our first 100 legislative hours, we will raise the minimum wage, make college more accessible, health care more affordable, promote stem cell research, roll back subsidies to big oil and protect Social Security,” Pelosi said.
The Speaker-designate has also promised to cut taxes to spur economic growth, help business become more competitive and keep middle class income taxes low.
On the Senate side, Sen. Harry Reid of Nevada was elected the new majority leader and many industry officials expect to find a more cooperative, bipartisan environment there, primarily because 60 votes are needed for any major legislation to pass.
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Academics and political experts predict Democrats won’t have the muscle to affect major policy changes because they don’t have the necessary two-thirds majority to override a presidential veto. But they will control the agenda, which could create more legislative logjams on Capitol Hill for the next two years.
Retail and apparel executives lost business-friendly and trade-friendly GOP allies in Congress, while organized labor picked up several Democratic power brokers who will try to elevate an agenda more favorable to domestic manufacturers and workers.
Many expect to see Democrats intensify the debate on several issues, ranging from trade to taxes and health care, port security, customs and border patrol issues, immigration and the minimum wage.
There are fears among some retailers and importers that Democrats will stifle new free trade deals but others, including some in the textile industry, see the power shift as a potential for dialogue that will energize cooperation on everything from trade to taxes and health care.
In the House, all eyes will be on Pelosi, an ardent critic of China, and Rep. Charles Rangel (D., N.Y.), the next likely chairman of the tax-and-trade-writing House Ways & Means Committee, who is by no means a free-trader, but has supported some trade preference measures for sub-Saharan African countries, Andean countries and Haiti. Rangel and many other leading Democrats have also vowed to strengthen labor and environmental laws in future trade pacts.
In his first briefing with reporters shortly after the midterm elections last month, Rangel took the Bush administration to task for being too soft on China.
“I don’t think this administration has taken up any issues with the Chinese in going to bat for American businesses,” Rangel said at the time. “I realize it is difficult when you owe a country trillions of dollars to talk about censure for violating trade laws, but we need to try to protect American industries, whether we are talking about currency or intellectual property rights.”
As for the Senate, there are also a lot of unknown variables. Sen. Max Baucus (D., Mont.), the incoming chairman of the Senate Finance Committee, which has jurisdiction over trade and tax policy, has voted against many trade agreements but supports granting permanent normal trade relations to Vietnam.
Retailers, who largely side with Republicans on Capitol Hill because they have similar views on economics, business and trade policies, see some opportunities for trade-related bills, but the challenges appear to outweigh the opportunities.
“On the House side, Rangel supports some trade preference programs, but he has a somewhat protectionist view,” said Rob Green, vice president of government and political affairs at the National Retail Federation. “There are very few free traders in Democratic leadership, so we will be in the mode of communicating aggressively about the retail position.”
Retailers also plan to keep a close eye on organized labor’s agenda. They are concerned that the two Democrats chairing key labor policy committees, Sen. Edward Kennedy (D., Mass.) and Rep. George Miller (D., Calif.), will actively press for new laws governing workers and unions. Kennedy and Miller, validating retailers’ fears but upholding organized labor’s initiatives, introduced legislation entitled “The Employee Free Choice Act” on Friday that would instruct the National Labor Relations Board to develop a procedure under which a union can be recognized if a majority of employees sign authorization cards choosing the union as their bargaining representative, known as a “card check” system.
The bill would also strengthen remedies for employer coercion when employees try to organize or get a first contract by imposing civil fines up to $20,000 per violation and directing the NLRB to go to court for an injunction if employers fire or discriminate against employees based on their union activity.
“It looks like the sleeper out there is labor issues,” Green said.
Textile executives, on the other hand, who are tired of seeing trade deals that displace U.S. textile export business, are hopeful Democrats will put the brake on new pacts and begin a more comprehensive dialogue with textile-state lawmakers about the adverse impact of trade on U.S. manufacturing jobs.
Outgoing Ways & Means chairman Bill Thomas (R., Calif.) has “practically excluded the U.S. textile industry from every major decision and bill-drafting process undertaken in the last four of five years,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “As a representative of the industry, I would hope that there will be a new atmosphere where the committees will have a desire to actually sit down and work with interested parties as opposed to [considering] just one side of the issue and producing legislation.”
It is still too early to tell how Democrats in the House will line up on trade, but most experts expect few new free trade deals to pass.
“Do I see U.S. trade policy being flipped on its head? No,” said Tantillo. “I think there will be a greater emphasis on labor rights, a greater emphasis on environmental trade-related issues, but I’m not sure we’re going to see really important issues tackled such as the need to offset currency manipulation advantages or the need to look at our tax code” for “trade disadvantages.”
There could be a renewed push to place more restrictions on China if lawmakers follow through with legislation targeting everything from illegal subsidies to currency manipulation initiatives.
The President’s trade promotion authority, which expires in July, is also in limbo. The authority requires Congress to vote up or down on a trade agreement without amendment, which has created tension on Capitol Hill. The Bush administration’s chances of getting a trade deal through Congress would be slim without it. The global round of trade talks, which has faltered for some time now, will be affected if TPA is not renewed.