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(Bloomberg) — Signs of trouble for President Barack Obama’s trade bill surfaced early Tuesday when 14 Democrats huddled behind closed doors in a room one floor below the Senate chamber.
Republicans needed just six Senate Democrats to prevail and were counting on several in the room who had voted for the bill in committee.

Instead, the Democrats emerged with an ultimatum: Consider three other bills alongside the one Obama wanted most, or lose their backing.

Hours later, the Democratic rebellion had denied Republicans the 60 votes needed to advance the trade bill. It fell short, 52-45.

“I don’t think today’s vote is a death knell,” Senator Chris Coons, a Delaware Democrat, said at a news conference after the vote. “But it’s a very strong warning shot that without enforcement provisions and without worker protections, it won’t move forward.”

The defeat set back Obama’s trade agenda and his hopes to close a 12-nation deal called the Trans-Pacific Partnership and submit it to Congress for an up or down vote without amendments.
On a personal level, the loss was a rebuke for Obama, who in recent weeks has been in meetings, on the telephone and in personal appeals scratching for every Democratic vote.

‘Do Better’

As the Senate voted, Obama’s political organization sent an e-mail, under the president’s name, asking backers to show their support for the trade plan. “This is personal for me,” Obama is quoted as saying in the e-mail from Organizing for America. “This is our chance to do better, to get it right.”

After the vote, Obama summoned 10 Democratic senators who publicly backed the trade measure to a White House meeting aimed at plotting a way to get it back on track, according to a White House statement. Those lawmakers, including Ron Wyden of Oregon, reiterated their support for Obama’s fast-track legislation to expedite approval of trade accords.
Senate Majority Leader Mitch McConnell, a Kentucky Republican, said he would work to bring back the measure later. His spokesman, Don Stewart, said Republicans are “still working on a path forward” for the legislation.

McConnell also is seeking business support to put pressure on the Democrats.
White House press secretary Josh Earnest sought to minimize how vulnerable the Democrats’ rebellion may leave Obama, using the expression “snafu” nine times during his daily briefing with reporters to describe the development.

“A ‘no’ vote on this procedural situation should not be interpreted as a change in position on the substance of the bill,” Earnest said.

In the end, the fiercest opponents remained within Obama’s party.

Wyden Briefing

At the late morning meeting held in a Senate Finance Committee room in the Capitol, the 14 Democrats gathered around the conference table beneath a crystal chandelier heard from Wyden, the top Democrat on the panel. He updated them on negotiations he had with Republicans about the plans to advance the bill.

The Oregon lawmaker said he had no assurances from McConnell about how one measure, with language to punish nations that manipulate their currencies, would move forward. Since four bills were approved in the Finance Committee on the same day, the Democrats considered McConnell’s plan a breach of their earlier deal.

Currency Manipulation

Democrats then insisted that in addition to the fast-track measure, the Senate act on the related bills. Senator Charles Schumer, a New York Democrat, wanted to consider a bill approved by a committee that would let the Commerce Department penalize imports from nations that manipulate their currencies. The Treasury Department vigorously opposes the bill.
McConnell, siding with the administration, barred linking the Schumer bill to the trade measure. Bringing it up risked swift passage because criticism of other countries’ currency manipulation has been bipartisan.

“The currency issue on TPA is a killer,” McConnell said. “The president would veto the bill.”
Senator Tom Carper of Delaware was the only Democrat to vote with Republicans to advance the fast-track bill.

Assigning Blame

Both parties blamed each other for the setback. McConnell said Wyden had “changed the understanding that he had” with committee Chairman Orrin Hatch, a Utah Republican, on how to deal with the four bills.

Both sides agreed that the fast-track measure and displaced worker bill proceed together, with action on the two other trade measures to follow, Hatch said before the vote. Senate Democrats knew neither Obama nor the House would accept language on currency manipulation, Hatch said. They were willing to allow a vote on that bill and “let the chips fall where they may,” he said.
“That’s not what we agreed to, it’s not what we went forth on, it’s not what everybody understood, and it’s strange to me that they would change their commitments at the last minute,” Hatch said.
In the House, a narrative was emerging in which Republicans ultimately will grab credit for any rescue of the president’s trade agenda.

Top Priority

“While it is unfortunate that Senate Democrats have chosen to delay the president’s top legislative priority, the Republican House will continue working on a free-trade framework that creates jobs, increases wages and expands markets for U.S. businesses,” said Steve Scalise of Louisiana, the No. 3 House Republican.

“Either America will write the rules of global commerce for the 21st Century, or China will do it for us to the detriment of U.S. workers,” Scalise said in a statement.

The White House continued to make its case for fast-track to the public, saying it’s needed for the Trans-Pacific Partnership.

Commerce Secretary Penny Pritzker said on the Charlie Rose show on PBS that “it’s really tough to negotiate a deal when you don’t have the authority.”
–With assistance from Heidi Przybyla, Margaret Talev, Billy House and Toluse Olorunnipa in Washington.

To contact the reporters on this story: Kathleen Miller in Washington at kmiller01@bloomberg.net; Carter Dougherty in Washington at cdougherty6@bloomberg.net To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net; Jodi Schneider at jschneider50@bloomberg.net Justin Blum, Don Frederick