Barack Obama: The Depression President?

The recent news that U.S. public works projects funded by the stimulus package will be required to use only U.S.-made iron and steel was not entirely unpredictable. On issues of trade, the Democrats are bad for Canada, and by extension global trade. If Barack Obama lets this stand he risks becoming known as the Depression President.

Thus far, the temptation among nations to shield their economies from the ravages of the global credit crisis has largely been limited to backstopping their financial sectors or bailing out struggling industries such as autos. To be sure, these efforts are at root protectionist, but it is still possible to believe that the primary intention is not to beggar thy neighbour.

The recent U.S. stimulus package approved by the U.S House of Representatives rips away any pretense of adherence to the principles of free trade. It is as if the legislators slept through their history lessons on the catalytic role of the Smoot-Hawley Act in the Great Depression.

So instead of standing up to the entreaties of Big Labour, Congress now looks to it for its marching orders.

"We've got manufacturing in America in a total and complete freefall. ... It's about time we had some economic patriots," said Leo Gerard, president of the United Steelworkers union.

And to make matters worse, Congress is not content to stop there:

Senators are working on an expanded version that would also include other materials such as cement, Sen. Sherrod Brown, an Ohio Democrat, told reporters.

Fortunately, Obama is on record as being opposed to protectionism:

By a cruel irony, President Obama used the steel business as an example of the futility of protectionism in his book The Audacity of Hope, where he wrote that "A tariff on imported steel may give temporary relief to U.S. steel producers, but it will make every American manufacturer that uses steel in its products less competitive in the world market."

Encouragingly, even Iggy sees the threat, although Jack remains true to form.

The Obama Administration is said to be "studying" the rule introduced by the House; meanwhile, our opposition leader, Michael Ignatieff, is asking pointed questions about it in the Commons when he might be better advised to form a united lobbying front with the Conservatives. (And Jack Layton is exemplifying the worsening international mood by calling for immediate countervailing action.)

We can only hope that there is substance behind Obama's rhetoric. Otherwise, things are going to get a lot worse.