Thursday, January 12, 2012

Deja Vu: Obama Revives Fake Plan to "Eliminate Tax Breaks for Companies Shipping Jobs Overseas"

Is it an election year already?  It must be, because President Obama is once again trotting out his campaign-approved, focus-group-tested "plan" to punish mean ol' American companies who engage in "outsourcing."  Bloomberg gives us the utterly unsurprising news:
President Barack Obama vowed on Wednesday to help bring jobs home from overseas and promised new tax proposals to reward companies that invest in America as he launched an election-year effort to show he is tackling high unemployment....

"In the next few weeks, I will put forward new tax proposals that reward companies that choose to bring jobs home and invest in America and we're going to eliminate tax breaks for companies that are moving jobs overseas," Obama told business leaders and state and local officials....

His push for corporate America to return more jobs to U.S. soil after years of hiring workers in lower-wage countries like China and India ties in with the increasingly populist theme of his re-election campaign....

Leaving little doubt that election politics were in play, Obama said he wanted the next generation of manufacturing jobs to "take root in places like Michigan and Ohio and Virginia and North Carolina." All four are key election battlegrounds.

Lobbyists and congressional aides said Obama is likely to revive many of his earlier international tax proposals and also propose tighter limits on the ability of corporations to avoid taxes by parking profits in low-tax countries.

"I'd envision some type of carrot-and-stick approach that offers tax incentives to firms that keep jobs here while penalizing firms that outsource," said Greg Valliere, an analyst at the Potomac Research Group.

For several years, Obama has proposed closing what he calls tax loopholes used by multinational firms, including those restricting the use of foreign tax credits, and preventing companies from deferring taxes on income earned abroad.
Yes, yes, Obama has been proposing such "sticks" for years, but Reuters unfortunately fails to mention several important facts about the President's "plan," all of which I covered in 2010 when the President and his party last trotted out this hackneyed scheme.  I highly recommend reading the entire blog post, but here are the highlights:

First, any plan to "eliminate tax breaks for corporations that ship jobs overseas" is economically nonsensical:
Now, I've repeatedly discussed just how wrongheaded this plan is, and several good folks stepped up last week to do the same.  And for those of you who don't remember, here's a good summary from a recent blog post of mine:
As I've noted here (and here and here and here), this standard trope is complete drivel for (at least) four basic reasons: (i) the idea that hordes of American jobs are being outsourced to Mexico or China or India is a complete economic fiction; (ii) those evil "tax breaks" for US multinational corporations actually increase American jobs; (iii) raising these taxes on American companies would be devastating for the US economy (great WSJ op-ed here on this point); and (iv) the candidates' proposed "solution" - ending tax breaks for companies that ship jobs overseas - is utterly unworkable.  In sum: this is hackneyed political demagoguery and little more.
Second, Obama's shiny new plan is actually far dustier than Reuters leads on.  It's not from 2010 or even Obama's last campaign in 2008.  No, it's much older than that:
And as Hot Air's Ed Morrissey helpfully reminds us, the Democrats' "strategy" is hardly novel:
Obama and the Democrats plan to take a page out of John Kerry’s playbook from 2004. Remember “Benedict Arnold CEOs,” the companies that moved out of US jurisdiction to save money on taxes and regulation? Even though Kerry did much the same thing with his yacht (and took money from the very same CEOs in that election), he railed against the companies when it was the taxes and regulation that created the situation.
Third, it's not just fiscal conservatives who have noticed how silly the President's tax and outsourcing plan is; in fact, pretty much everyone across the entire political spectrum knows that it's nothing more than worthless political theater - Democrats, journalists, liberal bloggers/wonks and even the White House:
[E]ven Democrats themselves are now acknowledging that their plan is, well, hackneyed political demagoguery and nothing more:
Republicans mock the endeavor, dubbed "Make It in America," as blatantly political, designed primarily to save the jobs of endangered Rust Belt Democrats whose races could determine the balance of power in the November congressional elections. Senior Democrats acknowledge that the strategy emerged after the issue of off-shoring jobs figured prominently in a Pennsylvania special election earlier this year and a recent poll....
The seeds of the "Make It in America" campaign were planted earlier this year, when Rep. Mark Critz (D-Pa.) won an unexpectedly large special-election victory by campaigning against tax breaks for companies that move jobs offshore. Then in late June, House Democrats were briefed on a poll conducted this spring for the Alliance for American Manufacturing, which found that voters are anxious about the nation's mounting debt to China. Key voting blocs -- including independents and older people with no college education -- named the loss of manufacturing jobs as a top worry, the survey found. 
The poll "crystallized" Democratic thinking, said Rep. Chris Van Hollen (D-Md.), who leads the political committee in charge of electing Democrats to Congress.
In short, Democrats are pursuing these old, bad trade policies not because they'll actually help the struggling US economy, expand our manufacturing sector or lower the unemployment rate, but instead because they poll well....
[Furthermore], the Daily Caller released emails documenting a dialog between the White House and JournoList members which clearly demonstrates that most of the Democrats' own supporters oppose their protectionist plans and recognize them as a dishonest political stunt:
Two of the administration’s chief economic advisors, Jared Bernstein, the vice president’s top economist, and Jason Furman, deputy director of the National Economic Council, were members of Journolist until they began working officially for Obama.
Even after the campaign ended, and he had joined the Obama administration, Bernstein continued his contact with the group. In May of 2009, Bernstein contacted Ezra Klein to pass a message along to list members. 
“Calling all Journos,” Bernstein wrote in a message relayed by Klein. “I thought we got too little love from progressive types re our tax changes targeted at businesses with overseas operations. We’re maybe going for another bite at the apple this Monday,” he wrote. Bernstein invited members of the list to join him on a conference call on the issue a few days later. 
Not everyone was sold. A couple of members on the list, including Greg Anrig of the Century Foundation and Bloomberg’s Ryan Donmoyer, panned the administration’s plan to crack down on offshore tax havens as a misleading political stunt. 
Dean Baker, at the time a blogger at the American Prospect, agreed the policy was dishonest, but defended it anyway. “Sure, some of the things they are saying are not true (the jobs story first and foremost),” he wrote, “but the industry groups have this town blanketed with lobbyists and own a large portion of Congress outright. … There has to be some counterforce to the industry groups and that is the populist rabble. It might not be pretty, but that’s Washington.” 
In the end, 14 journalists expressed interest in the conference call with Bernstein, including Donmoyer and Washington Post reporter Alec MacGillis. The effort appeared to be wasted on Donmoyer, who in the coming weeks wrote a couple of stories for Bloomberg expressing skepticism about the idea. 
Bernstein’s effort did appear to bear fruit elsewhere, however. “I’ve heard that there’s some disappointment in the administration that they haven’t gotten the level of progressive love they feel they deserve for their ambitious proposals to curb abusive corporate tax loopholes,” wrote influential liberal blogger Matt Yglesias the next day. Yglesias went on to attack opponents of the plan, noting “how absurd some of the abuses the administration is trying to curb are.”
Basically, the Obama administration's most die-hard supporters have already rejected the President's "new" tax and outsourcing plan - and the White House is very aware of this little fact.  (As an aside: I wonder if Reuters or anyone else has bothered to ask Dean Baker what he thinks of the President's "new" outsourcing plan.  Hmmm.)

So to recap: yesterday the President announced his intention to resurrect a decade-old, economically illiterate tax scheme that has been both pilloried by folks on the left, right and center and repeatedly revealed - by the President's own party, no less - as nothing more than a poll-driven election year sham.  And to top it all off, the White House already knows all of this.

And yet here we are.  Again.

Can someone please just wake me up when it's 2013?

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