How Biden helped avert a rail strike – and another economic crisis

The White House came close this week to facing yet another crisis, this time over a railroad dispute that could have taken a crowbar to the U.S. economy ahead of crucial midterm elections.

But in the end, a tentative deal was struck, with both sides crediting the Biden administration with stepping in to help avert a strike that was set to begin on Friday — one that could have further disrupted the nation’s fragile supply chain.

Administration officials became involved in the talks weeks ago, lobbying both sides around the clock to argue the stakes were too high for a strike. 

“It’s a big political risk. If it all blew up, the administration was going to be left holding the bag,” an industry source familiar with the talks said.

Biden called into negotiations around 9 p.m. last night to say a shutdown of railways was unacceptable, according to a White House official. Labor Secretary Marty Walsh led 20 hours of talks in the final stretch while Transportation Secretary Pete Buttigieg worked the phones. 

Walsh called the White House at 2 a.m. on Thursday morning to say there appeared to be a deal, the official said. Biden wasn’t on that call but put out a statement announcing the deal around 5 a.m. 

A source familiar said Biden’s Wednesday night call was “crucial” for the deal. White House press secretary Karine Jean-Pierre on Thursday said Biden’s message was for negotiators to recognize the harm a strike and subsequent railway shutdown would have, asking that they be creative, flexible and meet others halfway.

Both sides had until 12:01 a.m. on Friday to broker a deal to avoid a strike, which would have brought the transport of grain, fuel, lumber, car parts and other key products to a halt. Unions now have to approve the deal.

Congress had the power to block a strike, but lawmakers were divided up until Wednesday on whether to intervene. Democrats blocked a GOP resolution that would have swiftly put an end to the strike by imposing the White House-appointed board’s contract, which called for 24 percent raises over five years and back pay. 

But taking a vote on the GOP resolution could have put divisions on the Democratic side on display over how to handle the situation and, with the midterms looming, potentially hurt Democrats at a critical juncture. 

Action by Congress instead of the White House could have also hurt Biden, who regularly lauds support from labor unions as being imperative to his decades-long political career.

“Biden owns this space. Most labor friendly president ever. If Congress stepped in and dealt a perceived blow to labor on his watch, that would have been a problem going into the midterm,” a Democratic operative said.

SMART Transportation Division, one of the two largest railroad unions, said its members requested Congress not be a part of the deal-making.

“Congressional leaders … listened to your requests and stayed out of our dispute, allowing for an agreement to be reached across the bargaining table, rather than through legislation,” the union said in a statement.

The same sentiment was shared by the White House.

“Even up until the very end, the Biden administration was really reluctant to bring Congress into it,” the industry source said.

Another industry source conveyed Speaker Nancy Pelosi’s (D-Calif.) optimism that Biden would handle the situation, adding that Pelosi “did not think that Congress was going to touch this.”

Rodell Mollineau, a Democratic strategist who served as an aide to the late Senate Majority Leader Harry Reid (D-Nev.), said the tentative deal “also saved the political momentum” the president has right now. 

Mollineau said media attention on higher consumer prices, which has plagued the White House for much of this year, “would have zapped that momentum.”

“It would have restoked the economic anxiety that some Americans are feeling,” he said, adding that not only does averting a strike benefit Americans, “It’s a good thing for Democrats going into the midterms.”

Another Democratic strategist agreed with Mollineau. 

“This would have been a shitstorm because it’s at the intersection of so many things that are vital to this country,” the strategist said. “It would have looked so bad for Biden and even his reputation as Amtrak Joe.”

“The longer it would have been out there, the worse it would be for Democrats,” the strategist added. 

Biden had personally called CEOs and leadership of the rail unions multiple times up until the deal was reached and on Thursday, he hosted the negotiators who brokered the agreement at the White House.

The group included union leaders, including from SMART, the Brotherhood of Locomotive Engineers and Trainmen, and AFL-CIO. It also included industry leaders from the Association of American Railroads, the trade group that represents railroad companies.

Aside from Biden, Walsh and Buttigieg and Agriculture Secretary Tom Vilsack were the most involved administration officials working on reaching an agreement.

Buttigieg also hit the road with Biden, joining him in Michigan on Wednesday for the Detroit Auto Show while juggling negotiation talks.

“At the car show with the president yesterday, anytime there wasn’t a public thing he was doing or meeting with people, the secretary was in the hallway or in some room making calls to companies,” an administration source said.

When press reports started emerging this week that the U.S. could be heading towards the first rail strike in 30 years, the administration had already been engaged in quiet conversations.

It was around Labor Day weekend when officials started ramping up their involvement, with Buttigieg and Vilsack mostly focusing on conversations with railroad companies and Walsh on conversations with unions, according to the administration source. 

As they were trying to get both parties to agree to an extension of the cooling off period, Walsh and Buttigieg “were on the phone, like, 24/7 trying to get that deal done,” another source familiar said.

The tentative deal struck early Thursday includes provisions such as providing workers with voluntarily assigned days off and one additional paid day off, increases to health care copays and deductibles, protections for two-person crews and 24 percent raises over five years.

Mollineau also emphasized the significance of the deal for the U.S. economy.

“Two things: One, this White House, through their leadership, averted this crisis. And two, they will get no credit for averting this crisis,” he said. “I don’t think the American people understand how close to a supply chain crisis would have happened here.”

An industry source said that there was “a fair amount of heartburn” in Washington when the deal wasn’t getting done.

“The administration deserves credit for wrestling this to the ground ultimately,” the source said.