On Steel, Bush Splits the Difference

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US steelworkers gather near the White House to push for import relief

George W. Bush was never going to please everyone with his decision on steel, and so on Tuesday he split the difference. On one side was Big Steel, bellowing for a rescue package complete with high tariffs, low quotas and $10 billion to pay off some overgenerous pension plans. On the other, U.S. steel consumers with their own (far more numerous) domestic jobs on the line, wondering why their steel costs should go up to save Big Steel from foreign competition. And of course there was the rest of the steelmaking world — China, Russia, Ukraine, South Korea, Britain, Japan and Europe — who kept wondering when Bush the free-trader would start walking the walk.

So Bush did what he does when there's no way to win, what he did with stem cells: Get every opinion in town, and compromise so Solomonically that it takes both sides a few days to figure out how mad they're supposed to get. The president didn't get out his checkbook for those $10 billion in pension "legacy costs" that the steel industry wanted. But he did deliver product-specific tariffs ranging from 8 to 30 percent, and while that was a good bit lower than what the industry asked for, it was nothing to sneeze at.

As for the rest of the world — that same rest of the world Bush is trying to keep behind him on his war on terrorism — Bush did his best to show he's still a free-trader at heart. Mexico and Canada, as members of NAFTA, are exempt. Developing nations such as Argentina, Thailand and Turkey are also given a pass. And Russia and Europe and China — well, they'll just have to get over it.

Because Big Steel — and Big Steel's congressmen — have Bush by the red-hot embers. Snub the steel states (Ohio, West Virginia, Pennsylvania), and he doesn't get the fast-track negotiating authority in Congress he wants to do some real trade deals. Snub those states and the GOP might not even hang onto the House of Representatives come November. And while the combination of the continuing war and Bush's hard-money donors will stand him in good stead for 2004, well, there's still no reason to get cocky. Free-trade purism won't win him West Virginia again — and he did make a campaign promise to protect the industry.

So Bush did, a little, and called it a three-year program to give some extra wiggle room. The compromise will do some economic damage at a sensitive time — prices of everything from cars to washing machines will go up, and steel-user companies will lose many more jobs because of it than an unprotected Big Steel would have. U.S. Trade Representative Robert Zoellick will have to do some fancy footwork, particularly in Europe, to avoid a trade war with the EC. And then Bush's supposed free-trade and free-market principles take a beating: The president says he's against "picking and choosing" winners when it comes to economic policy, but product-specific tariffs are the epitome of politically inspired selectivity.

On the other side there's the bigger picture of fast track, and the politicking necessary. There's the steel industry's emotional place in America, particularly during wartime. And there's the necessity of hanging on to voters in West Virginia.

As a political compromise, Bush split it so fine that even Democrats Tom Daschle and Dick Gephardt parted company on the plan — not a bad trick. And as a sell-out of Bush's avowed free-market principles? Well, it could have been a lot worse.