Why is Joe Biden out to kill the U.S. Steel deal?

Subscribers Only Content

High resolution image downloads are available to subscribers only.


Not a subscriber? Try one of the following options:

OUR SERVICES VISIT CAGLE.COM

FREE TRIAL

Get A Free 30 Day Trial.

No Obligation. No Automatic Rebilling. No Risk.

Not too long ago, the name U.S. Steel was symbolic of America’s industrial might. It was the biggest, most important company in the world.

Or maybe it just seemed like it was. Whatever it was then, now it’s just a shadow of its former self. But after decades of economic upheaval, recession, and increased competition from Asia, it has a chance to be revived. A significant capital investment, money enough to allow it to play a significant role in the U.S. manufacturing renaissance that some experts say is just around the corner, is on the table. A proposed alliance with Nippon Steel promises job preservation and considerable growth, a prospect that should be of great interest to policymakers.

The prospect, however, leaves some people cold. It’s not that they don’t want the money. They’re opposed to the idea of U.S. Steel allying with a Japanese company.

They shouldn’t be. Nippon Steel is offering a $14 billion investment that will help restore the firm to its former glory. The deal would preserve every existing job and honor the union contracts now in force.

You’d think that would be a reason for cheering. Instead, it’s getting the thumbs down from the United Steelworkers and President Joe Biden. It seems they’d prefer that control of U.S. Steel go to another U.S.-based firm called Cleveland Cliffs.

It’s not a better deal. Its original offer was for far less than what the Japanese put up. It recently shuttered one U.S. plant, and, with more potentially to come, Cleveland Cliffs cannot legitimately make the same pledge to protect jobs and facilities that Nippon Steel has.

Why Biden and the USW would want the Cleveland Cliffs deal to be the one that goes forward is a mystery. Maybe it’s the politics involved. Biden may be looking askance at the deal because he thinks it will help him in swing states like Pennsylvania, where steelworkers are still a significant voting bloc. The union may see it as a way to increase its political pull now while banking a favor for later should the president win re-election.

If economics were the sole criteria for evaluating the deal, the Nippon proposal would win out easily. The shareholders’ value increases substantially under the offer they’ve already approved. Workers’ jobs would be preserved. Customers would see competition in the U.S. steel sector continue, keeping prices lower and quality higher than would be the case if the other bd, which would reduce competition, won out.

A responsible person could conclude the fix is in the way those opposed to the Nippon offer have been talking, so Congress should consider stepping in. In particular, it might want to examine whether the president or members of his administration have exerted undue pressure on the Committee on Foreign Investment in the United States, which reviews deals involving foreign companies.

The committee can block certain transactions involving foreign investment in the United States over national security concerns. It could block Nippon’s investment in U.S. Steel, even though Japan is just about our closest ally in the region. A consummated deal would deepen relations between our two countries, strengthening the counterweight to China.

There’s no legitimate basis for blocking the deal on the grounds that it endangers U.S. national security. However, that may be the only basis upon which the U.S. government can kill the deal, which is the outcome Biden wants.

Why kill a deal that’s good for the U.S. economy and creates a free-world counterweight to China’s dominance of the steel industry? No country produces more steel than China. Of the world’s largest ten steel producers, six are Chinese. Nippon is currently the fourth. An alliance with U.S. Steel would boost the combined firm into second place, making it a real competitor to China’s companies.

It would be scandalous if Joe Biden elevated his political needs over what’s best for the American economy and the domestic steel industry. The people have a right to know if he has. Congress should hold hearings to determine what exactly is going on.

Copyright 2024 Peter Roff distributed by Cagle Cartoons newspaper syndicate.

Peter Roff is former U.S. News and World Report contributing editor and UPI senior political writer now affiliated with several DC-based public policy organizations. He writes for numerous publications and appears regularly on international television talking about U.S. politics. You can reach him at [email protected] and follow him on Twitter @TheRoffDraft.

Peter Roff is a media fellow at the Trans-Atlantic Leadership Network, a former columnist for U.S. News and World Report, and senior political writer for United Press International. Contact Roff at [email protected].