Senate Finance Chairman Max Baucus (D-Mont.) last week was publicly stomping his feet that President Barack Obama had made life difficult by telling him to forget about taxing employee health benefits in order to fund health care reform.

No wonder.

[IMGCAP(1)]Baucus is struggling to figure out how to pay for the package, and the same president who had removed the biggest funding kitty around was also

demanding that he get the bill out of his committee ASAP.

But while it’s bad for a president to anger the chairman of the Finance Committee, it’s worse for him to tick off the people who, perhaps more than any, got him his job. Union officials, who ushered critical votes to the polls in battleground states like Pennsylvania, Ohio and Michigan, are deeply opposed to the tax, and Obama’s move to quash it has helped bolster labor’s confidence in the president.

The relationship between Obama and labor is complex, union officials say. There is uncertainty about the level of his commitment to some of their causes. But some potential flash points between Obama and his union allies appear to be dissipating, and the marriage appears healthy.

“All in all, there is a feeling that the president has our back,— one union official said.

Obama has built goodwill with his somewhat belated effort to forcefully reaffirm his campaign promise not to tax health benefits — a promise that drew a sharp distinction in many union households between him and his opponent, Sen. John McCain (R-Ariz.), who backed the idea.

For weeks, Obama veered toward equivocation, expressing his opposition to the tax but pointedly leaving the door open to it.

But at a White House meeting last Monday between the president and union officials, Obama was clear in his opposition to the benefits tax and emphatic in his commitment to a public insurance option, according to sources knowledgeable about the private meeting.

“The president was very strong— on the health benefits tax, one source said. “He said it’s not on the table.—

The meeting — which focused heavily on health care — left union officials satisfied with Obama’s position and effort on the issue, labor sources said.

Circumstances may also be defusing another potential flash point between Obama and his union allies.

Senate Democrats may drop from a union-organizing bill “card check— language that would end secret ballots on unionization. Some union officials, who had extracted commitments from the White House to push the provision once Sen. Al Franken (D-Minn.) was seated, now appear to recognize that even with Franken, they can’t get cloture on the measure — and so the White House is off the hook.

“The president can only do so much,— said Vince Panvini, director of government relations for the Sheet Metal Workers’ International Association. “You can never get to 60 votes with card check in there.—

Other union officials suggest they’re not so sure card check is dead yet. Obama assured labor leaders during last week’s meeting that he was behind it — but that was before it emerged that the Senate was dropping it from the bill.

With or without card check, labor leaders still expect an aggressive presidential effort behind the unionization legislation. But they are willing to let the measure queue up behind other priorities like health care.

But several issues portend potential tensions between the president and his labor allies.

Labor officials say they are guardedly optimistic that Obama will be with them in opposing a guest-worker program as part of “comprehensive— immigration legislation.

But Obama is under enormous pressure from another key constituency — Hispanics — to strike a deal that provides for a guest-worker initiative, and the president has promised at least to begin addressing immigration in 2009. At the White House earlier this year, McCain, a key player on the issue, declared Obama would have to buck the unions to get a deal.

One union official said labor officials are “in conversations— with the White House about immigration. “It’s OK right now,— this source said.

Union officials are pressing Obama and Democrats for another union-jobs-rich stimulus bill, but they are being waived off by a White House wary of talking new spending while trying to persuade moderates to back an expensive health care bill. For now, union operatives say, they’re willing to wait.

But labor leaders were stunned in April when the Treasury Department declined to label China a “currency manipulator.—

“We thought they would do it,— a labor operative said. “It would have been consistent with the pre-election statements of candidate Obama.—

Union officials urgently want China to expose its currency more to market forces, which could allow more U.S.-manufactured goods to flow into China while stemming the influx of Chinese products into the United States.

Similarly, manufacturing unions are concerned that Obama is not being insistent enough in climate change negotiations on emissions reductions by China and India. If U.S. manufacturers are forced to do expensive retooling and companies in China and India are not, labor officials want trade remedies to counter any advantage those companies might gain.

Labor leaders have also been disappointed with what they see as an insufficient emphasis on labor rights in China.