Obama Seeks to Make Amends With Unions Over Tax Deal

AFL-CIO President Richard Trumka
AFL-CIO President Richard Trumka. Photographer: Andrew Harrer/Bloomberg

President Barack Obama met today with union leaders to try to heal a relationship strained by his agreement to extend Bush-era tax cuts. Behind the scenes, the White House is waging a broader campaign among Democratic Party loyalists to undo damage over the deal.

The administration is making an “all hands on deck” effort to contact party activists angry over the accord, Jared Bernstein, Vice President Joe Biden’s chief economic adviser, said last night before the U.S. House passed the $858 billion bill. Bernstein has made telephone calls and met with activists to defend a deal with Republicans that continues lower tax rates for all Americans, including top earners.

“The president is trying to build consensus among labor leaders for his compromise tax policy,” said Amy B. Dean, a former official with the AFL-CIO labor federation. The administration has “no problem reaching out to the labor movement when they need labor to be part of their electoral coalition. But they quickly forget that labor has a role to play in their governing coalition.”

Obama today signed the bill, which extends for two years the tax cuts enacted in 2001 and 2003. Before the House voted 277-148 for final passage, lawmakers defeated an amendment crafted by some Democrats to express displeasure with the legislation -- and especially a Republican-backed proposal to cut the estate tax.

‘Fight Harder’

After a meeting with the president that lasted more than an hour, AFL-CIO President Richard Trumka told reporters that the tax-cut bill and a trade agreement with South Korea, which the AFL-CIO and United Steelworkers oppose, didn’t come up.

“We had a very, very good discussion about the economy, about how working people are hurting out there and how we want to work together with him to create jobs,” he said.

In a statement after last night’s House vote, Trumka struck a less agreeable tone, saying “this deal comes at a terrible price” and vowing to “redouble” efforts and “fight harder” on behalf of working people.

And in a Dec. 15 statement, Trumka said he wanted the House to change the tax agreement to eliminate what he called an “indefensible” reduction in the estate tax, which he said was “simply another bonus to the super-rich.”

Obama and Labor Secretary Hilda Solis met with labor leaders at about 2 p.m. in the White House’s Roosevelt Room for what the White House said would be discussions focusing on jobs and the economy. In addition to Trumka, participants were expected to include United Steelworkers President Leo Gerard, American Federation of Teachers President Randi Weingarten, Service Employees International Union President Mary Kay Henry and United Auto Workers President Bob King.

Investors Cheered

Obama’s Dec. 6 announcement that he would agree to renew the Bush tax cuts in exchange for extending unemployment insurance and lowering the payroll tax boosted stocks, with the Standard & Poor’s 500 Index rising to a two-year high in early trading the next day.

Liberal activists responded to the deal by lashing out at the president.

“President Obama let down millions of voters who trusted him when he said he would fight for his core campaign promise -- ending the Bush tax cuts for the rich,” Adam Green, co-founder of the Progressive Change Campaign Committee, said in a Dec. 6 e-mail to the grassroots group, which claims 650,000 members.

‘Work With Independents’

Such activists are bound to get angrier as the president “governs more from the center” over the next two years, said Mark Penn, a pollster who has worked for former President Bill Clinton. Penn said Obama must “work with the independents, and the vital center and also, at the end of the day, rally the base” to get re-elected.

Not everyone considers liberal angst a serious problem. Angry progressives are “like gnats” who won’t be able to stop Obama from being re-elected, said Democratic strategist James Carville. There isn’t a lot progressives can do to hurt the president other than “run around,” Carville said.

Still, enthusiasm among young voters, among Obama’s biggest backers, is slipping. A Bloomberg National Poll conducted Dec. 4-7 showed that just 51 percent of respondents under 35 give the president a positive job-approval rating.

And John Aravosis, who runs AMERICAblog, a website that focuses on gay rights, said the left may not be as motivated in 2012, which could hurt Democratic fundraising. Obama brought in a record $749 million for his 2008 campaign, Federal Election Commission records show, with 54 percent coming in donations of $200 or less.

Reduced Donations

In the 2010 elections, gay advocates and political action committees linked to gay causes gave less than half of the $2 million they did in the 2006 midterms, according to the Center for Responsive Politics, a Washington-based research group that tracks the effect of money on elections and public policy.

Aravosis helped create the “Don’t Ask, Don’t Give” campaign calling for a boycott of donations to the Democratic National Committee, Obama’s campaign, and Organizing for America, the president’s political arm outside the White House, until they “keep their promises to the gay community.” Among them are the repeal of the military’s “don’t ask, don’t tell” law.

The White House is taking these concerns seriously, said Bernstein, who spent more than a decade at the Economic Policy Institute, which focuses on issues affecting lower-income Americans. He is among administration officials, including Biden and White House budget director Jack Lew, dispatched to quell concern among Democrats.

Today’s meeting with union leaders is part of that effort.

Some Labor Victories

In the past two years, Obama and the Democratic Congress delivered some labor-backed legislation, such as the health-care overhaul and a law making it easier for women to sue employers for wage discrimination.

On other issues, like the “card-check” bill, which would make it easier for workers to join a union, labor has been frustrated that Democrats failed to overcome Republican opposition.

Labor leaders have expressed opposition to the tax-cut deal since its announcement. “If we made the choice to invest in job creation, the tax breaks for the wealthy could get unemployment under 8 percent by the end of 2012,” Henry of the Service Employees International Union said in an e-mailed statement the day after the president announced the deal.

Carville said the White House shouldn’t be too concerned about the pushback from some of the party loyalists.

“There’s a lot of time between now and November of 2012,” he said. “It’s not that a lot can happen, it’s that a lot’s going to happen.”

Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

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