Wednesday, September 29, 2010

Pledge To America: #6

They call it A Plan to Create Jobs, End Economic Uncertainty and Make America More Competitive. They promise “we have a plan that will help create jobs, end economic uncertainty, and make America more competitive.”

It’s never too soon for the GOP to start making good on the emphasis on jobs in its Pledge to America, especially in a nation increasingly losing jobs to other nations. So how is that “create jobs and make America more competititve” objective being applied?

We didn’t have long to wait to find out. Tuesday, Senate Democrats tried to bring to the floor for a vote S.3816, the Creating American Jobs and Ending Offshoring Act, which would, according to

1) exempt from employment taxes for a 24-month period employers who hire a employee who replaces another employee who is not a citizen or permanent resident of the United States and who performs similar duties overseas;

(2) deny any tax deduction, deduction for loss, or tax credit for the cost of an American jobs offshoring transaction (defined as any transaction in which a taxpayer reduces or eliminates the operation of a trade or business in connection with the start-up or expansion of such trade or business outside the United States); and
(3) eliminate the deferral of tax on income of a controlled foreign corporation attributable to property imported into the United States by such corporation or a related person, except for property exported before substantial use in the United States and for agricultural commodities not grown in the United States in commercially marketable quantities.

If you prefer the summary:

This bill would give companies a two-year payroll tax holiday, reducing the amount of Social Security taxes they would have to pay, for new employees who replace workers doing similar jobs overseas. It also revokes provisions of the tax code that Democrats say encourage companies to outsource their work force.

With five of their own members voting against cloture, Democrats were unable to break the Republican filibuster. There are 41 Republicans in the Senate; Alaska’s Lisa Murkowski did not vote and, with the five Democrats, there were 45 votes against cloture. Of the 41 Republican Senators, one missed the vote…. And 40 voted against American workers. All 40 Republicans refused the opportunity to vote to deter offshoring and encourage the creation of jobs in America for Americans.

The simple explanation is: the Party of No strikes again. In the interview with Rolling Stone to appear in the October issue but now available online, President Obama recalls

I'll tell you that given the state of the economy during my transition, between my election and being sworn in, our working assumption was that everybody was going to want to pull together, because there was a sizable chance that we could have a financial meltdown and the entire country could plunge into a depression. So we had to work very rapidly to try to create a combination of measures that would stop the free-fall and cauterize the job loss.

The recovery package we shaped was put together on the theory that we shouldn't exclude any ideas on the basis of ideological predispositions, and so a third of the Recovery Act were tax cuts. Now, they happened to be the most progressive tax cuts in history, very much geared toward middle-class families. There was not only a fairness rationale to that, but also an economic rationale — those were the folks who were most likely to spend the money and, hence, prop up demand at a time when the economy was really freezing up.

I still remember going over to the Republican caucus to meet with them and present our ideas, and to solicit ideas from them before we presented the final package. And on the way over, the caucus essentially released a statement that said, "We're going to all vote 'No' as a caucus.
And this was before we'd even had the conversation.

Of course, as we all know, the President took the wrong lesson from the Republican stance and failed to realize that no matter what he proposed, it would be opposed. And the uniform opposition to S3816 by the party rhetorically opposed to, and operationally supportive of, job loss may be due more to its reflexive opposition to anything proposed by Democrats. Condemning opposition to the legislation by the U.S. Chamber of Commerce and the National Association of Manufacturers, a cynical, but realistic, Bernard Sanders (I-VT) noted

Of course they are (opposed). They much prefer paying people in Vietnam 20 cents an hour than American workers a living wage….. It is to their advantage, in many cases, to shut down plants here and pay people a fraction of the wages that American workers lose by going to China. What’s the surprise about that?
There is an added bonus for the American businesses which prefer to pay foreigners a paltry wage than a livable wage to Americans.

By giving the job to workers abroad (or, in this case, failing to bring them back home to the U.S.A.), the pool of workers in this country remains high, far below the demand for their services. (The most recent, reliable estimate: 4.7 workers in the U.S.A. for every job.) The cost of labor remains low as American workers continue to be paid a miserly sum compared to their bosses. Thus, they have cheap jobs in Asia with more unemployed workers, thus lower wages, in their own country.

For some American corporations and the Republican Party, that is a very satisfying twofer.

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