Rough road ahead for Obama, unions as compromises loom

President Obama and labor unions are entering a new and difficult stretch in their relationship as the White House looks to find common ground with Republicans on issues like trade and the deficit.

Unions praised Obama this week for insisting that talks continue on a free trade agreement with South Korea after negotiators failed to win concessions from that country on automobiles.

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But union sources say that praise is tentative, given that the talks are continuing and Obama has made it clear he wants to present a deal to Congress.

Labor is decidedly more concerned about how Obama will proceed with the recommendations from his debt commission. The two chairmen of that body this week proposed sweeping reforms, including changes to Social Security that would lower benefits. Unions blasted the recommendations as an assault on workers.

Both issues point to the changing political order in Washington, which will complicate Obama’s relationship with labor unions.

The president must now contend with a Republican House majority and weakened Democrats in Congress at a time when the attention of the White House is naturally shifting to the 2012 election.

To get anything done, Obama will have to work with Republicans, and trade and debt reduction have long been seen as two areas where the White House and incoming Speaker John Boehner (R-Ohio) could work together.

That’s a huge concern for unions, which have sometimes been disappointed in the White House. Unions were unhappy when the president gave up on a public insurance option in the healthcare bill, and feel Obama never put much muscle behind card-check legislation that would have made it easier for unions to organize.

An official with the AFL-CIO said that the unions are happy, for now, that Obama is insisting that auto provisions in the South Korea agreement must be changed.

But the official eyed the continued talks warily, and said the union’s praise for Obama “is contingent on [Obama] sticking to his guns, which to their credit, they have been for two years.”

The United Autoworkers, along with Ford and Chrysler, are demanding that South Korea do more to open its market in exchange for the U.S. lowering tariffs on Korean cars and trucks.

Obama this week make it clear Seoul will have to accept some concessions in that area to finalize the deal, saying he is “not interested in signing a trade agreement just for the sake of an announcement.”

“I think we can get a win-win, but it was important to take the extra time so that I am assured that it is a win for American workers and American companies as well as for Korean workers and Korean companies, because I’m the one who’s going to have to go to Congress and sell it,” Obama said this week.

The auto provisions are important to unions, but they also have concerns about the trade deal’s provisions on investment, services and labor rights, none of which were a focus of this week’s negotiations.

The deal “largely replicates” a trade model “which cost the U.S. more than one million jobs,” according to a fact sheet on the deal posted on the AFL-CIO’s web site. The fact sheet contends that the agreement as negotiated by the Bush administration would allow violations of core labor standards to continue unabated and would lead U.S. jobs to be shipped overseas.

The trade agreement is important to Obama, whose administration has developed an anti-business reputation, in part because of fierce confrontations with the U.S. Chamber of Commerce over the healthcare law, the financial regulatory overhaul and tax policy. The Chamber supports the South Korean FTA, and its passage through Congress would allow Obama to hit the 2012 campaign trail with something to tout to businesses.

Despite the breakdown in talks, Obama said he is confident he can still get the trade deal done in “a matter of weeks.”

On the debt panel chairman’s recommendations, Obama offered a much different reaction than unions and Speaker Nancy Pelosi (D-Calif.), who has emerged since the Democrat’s midterm election losses as a standard bearer for the left.

Pelosi described the proposals as “unacceptable” and AFL-CIO President Richard Trumka said the chairmen had told “working Americans to ‘drop dead.’”

“Some people are saying this is plan is just a 'starting point.' Let me be clear, it is not,” Trumka added.

But Obama on Friday, while carefully saying he would not comment on the report until it is finalized, warned, “before anybody starts shooting down proposals, I think we need to listen, we need to gather up all the facts.

“I think we have to be straight with the American people," Obama said. “If people are, in fact, concerned about spending, debt, deficits and the future of our country, then they’re going to need to be armed with the information about the kinds of choices that are going to be involved, and we can’t just engage in political rhetoric.”

None of that suggests Obama will back changes to Social Security, but for unions, they are worrying signs nonetheless.