White House

The fallout from the Dems' red hot fight over trade

The Democrats' simmering internal war on trade is turning into a red hot fight that will play out in Washington and on the 2016 campaign trail with potentially enormous consequences for the global economy.

The latest salvo came Thursday night when President Barack Obama lit into his Democratic opponents on the Trans-Pacific Partnership (TPP) and the "fast-track" Trade Promotion Authority (TPA) in surprisingly personal terms, accusing his antagonists of having "no idea what they are talking about" and opposing these deals "on reflex alone" without any regard to specific details.

Obama did not mention Sen. Elizabeth Warren by name but his remarks were clearly aimed in her direction. The Massachusetts Democrat has become an outspoken critic of TPP and fast track, ripping the secretive process of negotiating the Asia trade deal and calling for public release of the agreement in its current draft form.

Sen. Elizabeth Warren, D-Mass., speaks during a United Steelworkers rally in opposition to the proposed “fast-track” bill, or trade promotion authority, in Washington, April 15, 2015.
Bill Clark | CQ Roll Call | Getty Images

Obama on Thursday showed little patience for this line of argument and assured his progressive base that he would never push a trade deal that would be bad for American workers.

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"By this logic I would've had to do all his stuff for the last 6½ years and just say suddenly I want to just destroy all of this," he said. "America has got to write the rules of the global economy. If we don't, then somebody is going to write the rules. China is going to write the rules. And when they do it, they'll do it in a way that gives Chinese workers advantages, and Chinese businesses the upper hand."

Obama went on to call TPP "the most progressive trade agreement in our history." And then he got really mad. "When people say that this trade deal is bad for working families, they don't know what they're talking about. I take that personally. My entire presidency has been about helping working families."

Asked for a response to Obama, Warren's office pointed to remarks the senator made Wednesday night to Rachel Maddow on MSNBC. Warren did not take on TPP directly but instead reiterated her complaints about the public not being able to read the working draft of the deal and said senators should not approve "greasing the skids" for the deal (code for fast track). She also complained that most of the people in working groups working on the partnership are executives of companies in industries that will be affected or lobbyists for those companies.

"My view is when the process is rigged then the outcome is likely to be rigged, too," Warren said. She added that she wanted the deal to be made public before Congress votes on giving Obama special power to negotiate the deal with limited input from lawmakers.

Obama has the better of the argument here, though it's certainly legitimate to be annoyed that the public cannot yet read the full TPP deal. Still, any member of Congress can read the current version whenever they want.

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And the main problem is that Warren is proposing an impossible sequence of events. Because without fast track authority, the administration will have a much harder—if not impossible—time getting a TPP deal with the most favorable of conditions for the U.S.. Other nations do not want to let things they've agreed to be subject to amendments by the U.S. Congress. Essentially there is no final TPP without TPA. So Warren is asking the administration to publicly release something that doesn't actually exist.

Other TPP nations want an up or down vote by the U.S. Congress on a final product and nothing else. And once the deal is finished, there will be a lengthy comment period in which the public can see the deal and let lawmakers know what they think and then Congress can approve it or kill it. It's not like it's going to be a secret forever or that members of Congress will be asked to vote on a TPP that the public cannot read.

Meanwhile, the fight is putting heavy pressure on Hillary Clinton. Liberal Democrats want her to come out against TPA and TPP. But the former secretary of state, who has strongly backed TPP in the past, is now only issuing anodyne nonstatements calling on any deal to raise U.S. wages and be good for workers. Reportedly Clinton is also for baseball and apple pie.

Potential candidates to Clinton's left—Bernie Sanders and Martin O'Malley—are staking out ground against the trade deals. But neither has any chance of taking the nomination away from her so the former secretary of state's hesitancy and flip-flopping seem fairly ridiculous. It would be fair for her to reserve judgment on TPP until the final version is available for public review. But getting to that point would require her to back TPA. Right now she is stuck in the same logically untenable spot that Warren occupies.

Ultimately, fast track is likely to get through the Senate but possibly have a tougher time in the House where liberal Democrats could align with two strains of Republicans: populist protectionists and the say-no-to-anything-Obama-wants crowd.

And if they stop fast track, we will likely never even get to see and asses a final TPP bill and could, as the administration warns, cede the ground rules of Asia-Pacific trade to China.

—Ben White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.