Showing posts with label outsourcing. Show all posts
Showing posts with label outsourcing. Show all posts

Saturday, November 3, 2012

Campaign Jeep Shots

Because I long ago gave up on the 2012 campaign's horrible trade debate, I've been desperately trying to avoid wading into this week's dumbest trade-related controversy: the Romney campaign's commercial claim that bailed-out (and now Fiat-owned) Chrysler plans to resume Jeep manufacturing operations in China.  Fortunately, AEI's Claude Barfield took one for the team and summed up my angry, depressed thoughts pretty perfectly:
In this campaign, economic “truthiness” has long since disappeared. The latest evidence of this is the flap over Governor Romney’s claim on the campaign trail and in ads running in Ohio that Chrysler is planning to ship jobs to China by opening a plant to make Jeeps in that country. Another ad makes a similar claim for General Motors. This produced sharp rejoinders from GM and Chrysler, and earned Romney four Pinocchios from the Washington Post’s factchecker, Glenn Kessler. My cynical side mainly deplores the ineptitude of Romney’s timing: He should have waited until later in the week before the election in order to avoid the blowback from the Obama team and zealous factcheckers.

But more seriously, there is a depressing, deeper irony in all of this. On the one hand, Romney long ago should have stepped up to the plate with a full-throated defense of offshoring/ outsourcing as a key element of the competitiveness of US (and other nations’) corporations—and ultimately as a force for generating additional jobs back in the US. These ads undercut the larger economic message on the imperatives of global competition his campaign has fitfully attempted to mount.

But not to fear. Help has come from an unlikely source: The eye-opening defense of Chrysler and GM mounted by Obama’s surrogates. Last evening on the Chris Matthews show (I know, hardly the place for economic wisdom or even literacy), Matthews and Steven Rattner (backed by NY Times reporter Bill Vlasic) ridiculed Romney by pointing out that offshoring/outsourcing by corporations was a positive good for the US in that in today’s global economy, in order to survive and succeed, US corporations had to produce their products in the markets they wanted to serve.

Rattner stated that this is a basic fact of life for the automobile industry. Jeeps made in China would feed a growing Chinese consumer demand for this iconic car, and would not come back to the US. This basic fact flies in the face of Obama dogma, which largely equates foreign investment by US corporations as the work of “Benedict Arnolds,” as John Kerry asserted in 2004.

I suppose it’s too late to demand that the Obama guys pull down all those ads condemning Romney as the “Outsourcer-in-Chief”; but maybe the Romney team can quickly flood a few Ohio TV markets with the “Rattner defense.”
Barfield's point about the economics of outsourcing/offshoring is something I've discussed here many times: the vast majority of this routine economic practice is undertaken to satisfy foreign demand, not to ship foreign-made goods back to the United States, and it typically leads to more US employment, not less.  The FT's Alan Beattie reiterates these facts in a nice blog post that also belittles the whole Jeep kerfuffle:
More sympathy might be due to the Obama campaign if it didn’t itself routinely equate foreign investment with sending jobs overseas, particularly its ill-advised attacks on the idea that a territorial corporation tax system would reward US companies for offshoring employment. As informed opinion on the subject routinely points out, the overall evidence is that foreign investment is a complement rather than a substitute to domestic expansion. If you want the specifics, read this.
If Beattie's links don't convince you about the economic benefits of outsourcing/offshoring for the US economy, go here or here.  Or if you want to understand the abject absurdity of political ploys to curb outsourcing, go here.

Of course, none of these truths will change the last few days of the 2012 campaign's moronic trade discourse, but the Jeep controversy does leave me wondering one thing: why didn't Kessler, Matthews, Vlasic and their media colleagues (particularly at the Washington Post) mount such a rational defense of outsourcing when the President and his PAC were spending millions of dollars to demagogue the "evil" outsourcing of Bain Capital and Mitt Romney?

Oh, right.

Man, I can't wait for this campaign to be over.

Friday, October 26, 2012

VIDEO: An Outsourcing Explanation So Simple Even a Politician Can Understand It

A brand new, and much-needed, video from the Cato Institute dispels the widely-held myths about outsourcing and protectionism.  Enjoy, then share:



Monday, July 23, 2012

More on Our Horribly Burdensome Business Tax System

A few days ago, I examined how America's byzantine tax code retards domestic job creation by imposing immense burdens on US businesses (particularly relative to other countries), and how the recent proposals of President Obama and congressional Democrats to extend several temporary, targeted tax breaks would do nothing to solve these problems.  On the latter point, I noted that such tax measures--
don't improve America's business climate because (i) prohibit long-term business planning; (ii) increase tax complexity (which disproportionately hurts small businesses that can't afford armies of lawyers and accountants); and (iii) encourage system-gaming and outright fraud, while discouraging business growth (i.e., small businesses becoming larger businesses and thus outgrowing their eligibility for the tax breaks).
Today comes an excellent new story from the Wall Street Journal that provides tons of statistical and anecdotal support for my (admittedly unoriginal) conclusions and shows just how badly our elected officials have failed in reforming the US tax code and creating a business climate that is ripe for job creation.  The entire article is well worth your time, but here are the highlights:
Both [parties] agree the code's complexity is unfair: While small and medium-size companies such as Raine forgo the headaches and the tax savings, bigger companies can more easily afford the specialized accountants and lawyers needed to claim the best breaks and gain a cost advantage...

Complexity is costly. Compliance costs for U.S. businesses and individuals have been rising, and now reach at least 1% of GDP, or about $150 billion last year, and possibly much more, according to congressional researchers.

The Byzantine nature of the tax code also adds to concerns about U.S. competitiveness in a global economy in which many other countries have eased tax rates and rules in recent years....

Tax consultants estimate that eligible businesses obtain as little as 5% of the main domestic tax breaks that they are entitled to claim. That means firms are leaving tens of billions of dollars on the table every year. Out of 1.78 million corporate tax returns in the U.S., only about 20,000 claimed any of the three dozen main business tax credits in the code, according to IRS estimates.

One example of the tough-to-take breaks is the federal Work Opportunity credit. It was designed to reward companies for hiring workers from several disadvantaged groups, including welfare and food stamp recipients, youths seeking summer jobs and ex-felons. The break typically lowers a company's taxes by up to $2,400 per employee. For businesses hiring unemployed veterans, it can be worth as much as $9,600 per worker.

The credit frequently goes unclaimed, largely because it is such a hassle. It requires extensive paperwork for each worker for whom it is claimed and the paperwork can often take a year or more to process. Sarah Hamersma, a University of Florida professor, estimates that companies claim the credit for just 20% to 35% of all eligible workers....

In the latest global rankings of national tax systems by the World Bank and PricewaterhouseCoopers, the U.S. came in 142nd out of 183 countries for the time it takes a hypothetical small manufacturer to calculate its corporate income tax (the higher the rank, the more time it takes)....

The tax thicket has been growing for years. In 1987, there were 128 major tax breaks for both individuals and companies, of which about 100 survive now. Another 100 or so have been created since then.

Many tax breaks, including the Work Opportunity credit, have recently expired but tax experts expect Congress to renew them retroactively by the end of the year, as it has in the past. Meantime, companies are unsure whether they can plan on it.

Another targeted break, the tax deduction for energy-efficient buildings, often requires computer modeling costing as much as $50,000. That leaves business owners weighing whether the credit is worth the expense....

One reason government officials favor the breaks is that they are a politically expedient way to pursue policy goals—and potentially less trouble than a fundamental easing of business tax rates and rules. Because of political pressure to hold down budget deficits, U.S. lawmakers often design tax breaks in ways intended to narrow the number of beneficiaries.

"The more complicated it is…the more [businesses] are going to say it's not worth the candle" to apply, said Dean Zerbe, a former Senate staffer who is now national managing director of alliantgroup, a tax consulting firm.

Because of low subscription rates for many tax breaks, a cottage industry of tax-credit consultants such as alliantgroup has sprung up. Fees tend to range from 15% to 30% of savings, according to consultants, but can be lower for large deals and occasionally higher.

But even with the availability of outside help, many businesses hesitate....

A tax credit that Congress enacted in 2010—for small businesses providing health-care coverage—was claimed by only about 170,300 employers, out of an eligible pool of between 1.4 million and four million businesses, according to the Government Accountability Office.

"The calculation was ridiculous," says Barbara Webber, property manager for Presidential Estates in Quincy, Mass., an owner of apartment complexes. Despite an accounting background, she said, "I struggled with it." In the end, she says, she didn't qualify due to IRS wage restrictions....

While many companies say it is too complicated to claim tax breaks, the ones who try can find themselves embroiled in complex disputes with the Internal Revenue Service.

One source of increasing contention is the federal research credit. Critics say the IRS sometimes demands more documentation than the rules require, and more than most corporate accounting systems can readily provide, in part because of overly aggressive claims by some firms in the 1990s. The result is sometimes lengthy litigation.

Bayer Corp., the U.S. unit of Germany's Bayer AG, BAYN 0.00% finds itself in just such a morass. In a dispute playing out in federal court in Pittsburgh, the IRS has disallowed 17 years worth of Bayer Corp.'s claims for the research credit—$175 million in all—on the grounds that Bayer hasn't adequately documented its expenditures or tied them to specific innovations.

Bayer said in court that it has provided adequate documentation and has gone to great lengths to gather the extra documentation that the government is demanding, but that it will take many years to fully comply with the IRS demand.

The dispute dates back to 1998. As it drags on, company officials worry it is leading their German parent to look elsewhere to conduct new research projects at a time when global competition for research and development, or R&D, dollars is heating up, according to court testimony....
Just a reminder: according the aforementioned World Bank study (also mentioned in my earlier blog post) the United States ranks 72nd in the world in terms of total business tax burden - two spots worse than last year.  And when the President and his party had total control of the US government in 2009 and 2010, they did absolutely nothing to reform the tax code and instead increased tax complexity and imposed new taxes via Obamacare.  Thus, it appears that the only jobs created by the Democrats' tax policies are for tax lawyers and consultants - not exactly an efficient use of finite resources (no offense, tax lawyers).

And yet we're talking about Bain Capital pushing US companies and jobs offshore?  Really?

Friday, July 20, 2012

Made Everywhere (Thank Goodness)

Continuing one of this blog's main themes is this great new graphic from The Freeman, which shows that it's not just iPods, iPhones and iPads that are "made everywhere":

Unmentioned in the above are all the services associated with this same clothing - services like marketing and design at which the United States just so happens to excel:
Garment manufacturing is a low-cost commodity business. Most of the value in the apparel industry comes from design, technology, sales, marketing, and distribution—not manufacturing. The successful players in apparel, such as Ralph Lauren and Nike (NKE), figured this out long ago.

Because the economics are bad, most U.S. apparel manufacturing operations folded decades ago. Only 97,000 Americans still have jobs in apparel production, according to the U.S. Department of Labor, and most of them are making highly specialized products like DuPont (DD) Kevlar uniforms that cannot be made elsewhere.

But just because America doesn’t manufacture apparel anymore doesn’t mean we can’t lead the industry. In fact, the world’s largest apparel companies are almost all U.S.-based, including Nike, VF (VFC), PVH (PVH), and Ralph Lauren, to name a few. These companies have grown a combined 146 percent during the past 10 years, adding more than $27 billion in revenue. Nike has created more than 15,000 new jobs in the U.S. during this time, Ralph Lauren almost 10,000. And unlike the low-paying production jobs next to sewing machines, these are well-paying jobs in marketing, accounting, design, and management.

These companies are winning globally by out-designing, out-innovating, and out-marketing the competition. Nike, for example, is unveiling a new TurboSpeed running suit at the London Olympic Games that it claims can reduce 100-meter sprint times by .023 seconds. Nike’s gear will be used by teams from many countries, including Russia, China, and of course, the U.S.

What Nike and Ralph Lauren don’t do is make their own products, in the U.S. or elsewhere—and this has become their competitive advantage.

Both companies source products from hundreds of independent manufacturers in more than 30 countries (less than 3 percent coming from the U.S.). The flexibility allows them to be cost-competitive globally. It also allows their design teams to focus on creating the most exciting new products possible without having to worry whether they can be made on a legacy production line.

Remember Fruit of the Loom? Brown Shoe Co. (BWS)? Cannon Mills? Levi Strauss? In 1970 these were the largest U.S. apparel and fabric companies. They all owned their own U.S. manufacturing plants. They all struggled to innovate and grow, and they either went bankrupt or were bypassed by more nimble competitors who had no factories. If only they had outsourced …

Not only is outsourcing good for business, but the future of the American economy is dependent upon it.
In case you're wondering, it's basic economic facts like these that have Chinese politicians and commentators openly mocking protectionist US politicians like Sens. Harry Reid and Chuck Schumer for their latest Olympic hysteria. 

If only we could outsource them.

Monday, July 16, 2012

More on the Idiocy of Our Current Political Discourse re Trade

Last night, I promised that I wouldn't get into the weeds explaining the blatant economic ignorance currently displayed by our political leaders on the issues of trade and outsourcing.  I'm glad I avoided that aspect because today's Wall Street Journal contains a fantastic recap of many of these economic facts.  Not much of this information will be new to readers of this blog, but it is, in my view, the best and most concise summary of many of the economic reasons why free trade, and imports in particular, is undeniably good for the US economy.  After setting the stage with a quick summary of the political firestorm surrounding those made-in-China US Olympic uniform, the WSJ lays out why politicians' anti-import/trade posturing defies all economic sense:
[I]mports of all kinds drive American jobs and export competitiveness. Most goods imported by the U.S. are used to make other goods. The Washington-based Trade Partnership, which studies such things, says that 62% of the $2.2 trillion of imports in 2011 were inputs for producers.

These include oil, precious metals, minerals, green coffee and lumber. But the list also includes motor vehicle parts, semiconductors, aircraft engines and parts, steel products, fertilizers, plastics and machinery and other equipment. American companies buy these products, make other things with them or add value and then sell their output at home and abroad. If they can't buy these imports at good prices, U.S. producers can't compete globally.

Protectionists portray imports as coming from Third World sweat shops that undercut American labor. But half of U.S. imports come from such developed countries as Canada, Japan and Germany. In 2011 imports from low-income countries amounted to less than 1% of the U.S. total.

Even finished goods imported by the U.S. often have a U.S. export component. Today's manufacturers, no matter where they are located, use an international supply chain that employs Americans. U.S. research, development and design—high-paying jobs—are behind much of what is made overseas.

And what about those Ralph Lauren-designed berets? Well, the American Apparel and Footwear Association says that while their industries are now dominated by imports, these two markets in the U.S. employ more than four million people in everything from design to marketing, merchandising and retail. The International Trade Commission says more than half of the value of imported apparel sold in the U.S. is American. The Commerce Department says that more than 50% of direct importing operations in the U.S. are small businesses.

Imports also raise U.S. living standards. According to Cato Institute trade analyst Dan Ikenson, prices of many tradeable goods like electronics, toys, furniture and apparel in the U.S. have been dropping over the last decade even as the price of nontradeables like health care and education have increased sharply.

President Obama says he wants to double U.S. exports from 2009 to 2014, which makes sense even if the government will have little to do with it. As the U.S. Chamber of Commerce points out, 80% of the world's purchasing power is outside the U.S. along with 95% of consumers.

But this export boom won't happen if the U.S. doesn't keep its own markets open. Protectionism will impoverish our best customers. And there is a risk that trading partners will retaliate with their own new trade barriers. Both would be devastating for U.S. producers: Fast-growing middle-income countries like Mexico and China are also the fastest growing export markets for the U.S.
Understanding these facts, as well as the undeniable moral depravity of politicians' anti-trade and anti-outsourcing demagoguery (something known since the time of Adam Smith), I again ask:
Why on earth is the Republican party indulging such garbage (see, e.g., this most recent, depressing example) instead of attacking it?
Seriously.

Sunday, July 15, 2012

An Outsourcing and Protectionism Thought Experiment

The political news is replete these days with discussions of outsourcing and trade, and two stories are driving the chatter: (1) whether US presidential candidate Mitt Romney's firm Bain Capital outsourced US-based business operations to foreign countries; and (2) why the Ralph Lauren-designed uniforms of the US Olympic team are made in China, instead of the United States.  The political discourse on both of these issues has been soaked in economic ignorance, with a depressing, bi-partisan consensus among our political "leaders" that both foreign outsourcing and the private purchase foreign-made goods are "bad" things for America and even downright unpatriotic.  In response, President Obama and Senate Majority Leader Harry Reid have proposed legislation restricting, respectively, (i) US corporations' ability to engage in foreign outsourcing and (ii) the US Olympic Committee's purchase of foreign-made uniforms for the Games.  And, unfortunately, neither the Romney Campaign nor the Republican Party has challenged the underlying assumption in the Democrats' allegations and proposals that somehow outsourcing and free trade are bad, unpatriotic things.

I will not waste my time today again going over just how economically-ignorant these proposals are, nor will I re-hash the vast academic agreement, supported by mountains of empirical evidence, that both outsourcing and trade improve public welfare in the United States and abroad.  Instead, I simply want to pose a basic question for those who accept, promote or even consider the idea - supported by myriad politicians, journalists and pundits - that these private international transactions are somehow "wrong" and deserving of derision:
If it is unpatriotic or immoral for a private company to outsource certain operations to foreign entities or for a private organization to purchase foreign goods, is it also unpatriotic and immoral for private American citizens travel abroad?  And should the government therefore restrict that activity too?
Before you answer, let's walk this through:  Each of these activities involves an American's private, voluntary purchase of a foreign product.  In the case of outsourcing/offshoring, a private US party chooses to spend its money to purchase foreign labor.  In the case of Olympic uniforms, it's the private (remember: the USOC is a private entity) purchase of foreign goods.  And in the case of travel abroad, private citizens are choosing to directly purchase non-US goods (clothes, souvenirs, etc.) and services (hotels, rental cars, restaurants, etc.) in foreign countries, as opposed to having them shipped here.  Each activity involves a voluntary transaction between an American party and a foreign party that, theoretically, replaces the American's purchase of a similar product from a US-based competitor, be it a worker, manufacturer or service-provider.  And the only differences among these private, international transactions are the type of product purchased and the point-of-sale - neither of which should affect one's views on the subject (unless maybe he or she has an irrational hatred of container shipping).

So, again, is my private decision to travel abroad and, for example, to spend my hard-earned American dollars at EuroDisney instead of Orlando - thereby depriving Floridians of those dollars - somehow "unpatriotic" or immoral?  Obvious jokes aside, should I be prohibited from, or condemned for, going to EuroDisney?

If not, then why do politicians loudly and confidently assert - almost entirely unchallenged by the media or their political opponents - that a company's or individual's voluntary decision to purchase foreign labor or foreign goods is somehow unpatriotic or immoral?  And why do these same politicians advocate policies seeking to discourage, restrict or even ban such activities?

If so, then why don't our politicians also support government restrictions - for example, taxes or outright prohibitions - on or condemn foreign travel?  Or, at the very least, why don't they create a system to ensure "balanced trade" in tourism by, for example, passing a law permitting US citizens to travel abroad and purchase foreign goods or services only when foreign citizens purchase equal amounts of stuff when they travel to the United States? ("Sorry, sir, you can't get a federal travel permit go see the Great Wall of China because we haven't had enough Chinese citizens come here to see the Grand Canyon.")  In a similar vein, why don't President Obama and Senator Reid fight for a new law authorizing the US Department of Commerce to monitor "unfair" pricing of, of government subsidies to, foreign tourist attractions and to tax Americans traveling to these places in the amount of the "unfair" or subsidized price? ("Sorry, sir, you must pay us an extra 23% tax on your plane ticket to France because the French government unfairly subsidized the construction and maintenance of the Eiffel Tower.")

These might sound like silly questions but, really, they shouldn't be taken so lightly: we already have laws on the books restricting similar exercises of consumer freedom, and our politicians routinely propose further limits.  For example, the US government often forces American citizens to pay an extra tax on imported goods because these items are supposedly priced at hypercompetitive - and thus "unfair" - prices (aka "dumping").  Senator Reid and his colleagues routinely propose legislation limiting or restricting American purchases of certain "fairly traded" foreign goods or services - the Olympic uniforms being only the most recent example - and they also oppose efforts (e.g., free trade agreements) to eliminate these restrictions.  And, of course, President Obama has repeatedly advocated that the US government raise taxes on private American companies who purchase foreign labor (i.e., "eliminating tax breaks for companies that move jobs overseas.")

So, seriously, why don't President Obama and Senator Reid propose similar limits on Americans' foreign travel and tourism purchases?  Instead of simply demanding that US Olympic Uniforms be made in the United States, why doesn't Senator Reid also demand that all American citizens be prohibited from going to London to watch the Games at all?  Just think of all those private American Dollars that  Senator Reid's patriotic law could force to be "better" spent at Disney World or a NASCAR race, thus supporting American jobs?

And instead of only assailing Mitt Romney's patriotism for being affiliated with a company that engaged in outsourcing, why doesn't President Obama drive a few miles to Dulles International Airport and browbeat the happy American families there who are just about to enjoy a week in Europe?  

I could go on, but I think you get the idea.

The fact is that our politicians don't propose such forcible restrictions on Americans' voluntary international transactions because doing so would be political suicide.  For some reason, the American people are inherently suspicious of government restrictions on their freedom to travel abroad and thus require an immense burden of proof from the government - most notably on national security grounds - to accept any such limits.  Perhaps this is because travel restrictions are imposed directly on individual citizens (instead of in bulk to US importers at the border) or are closely associated with totalitarian/communist regimes, but for whatever reason, a majority of Americans oppose laws that forcibly limit or prohibit their freedom to leave the United States and spend their time and money abroad.  Thus, broadbased travel restrictions have have absolutely zero political support and only very limited ones exist today (e.g., to specific countries like Cuba, Iran or North Korea). 

Yet, other than the insignificant differences mentioned above, there is nothing separating foreign tourism restrictions from the limits that Senator Reid and President Obama are demanding be placed on American companies.  In this light, it's clear that such proposals are not only economically ignorant, but also quite obviously immoral.  And it's these policies, not the voluntary, private actions of their targets that deserve our derision.  Or, to put it another way, the accusers, not the accused, should be roundly criticized for their transparently cynical advocacy of restrictions on our personal freedoms.

So isn't it time Republicans stopped playing along with these offensive political ploys and started asking some very basic questions about the moral implications of their political opponents' allegations and policies?  Is this really too much to ask?

On second thought, maybe I should quit while I'm ahead.

Wednesday, July 11, 2012

Just Who's the Real Outsourcer-in-Chief? (UPDATED)

Over the last few weeks, the Obama and Romney campaigns have waged a massive multimedia war over who is the biggest "outsourcer."  Perhaps unsurprisingly, the majority of this political debate is depressingly nonsensical - each side accusing the other of supporting supposedly-awful policies that "ship American jobs overseas" without ever acknowledging the fundamental and repeatedly-proven economic and moral truths about outsourcing and offshoring in America.  I will not waste your time repeating those truths tonight (you can go here and spend a few days reading up, if you'd like) and instead want to look at one aspect of this debate that's been mostly overlooked but, unlike the pablum referenced above, actually does affect private companies' decisions to move certain business activities offshore: whether the economic policies of President Obama and his fellow Democrats have made the United States a more or less attractive place to do business, relative to other countries.

The Washington Examiner's Conn Carroll today picks up on this important point in a great new article.  After warning against wallowing in protectionist ignorance about outsourcing, Carroll notes:
Romney should make the case that Obama ships jobs overseas not just with clumsy green energy investments, but by keeping the U.S. corporate tax rate as the highest rate in the world. His impending Environmental Protection Agency global warming regulations are not helping either. Neither is Obama’s impending tax hike, which is more than double the size of President Clinton’s 1993 tax hike.
This is exactly right, and it's something I'd like to expand upon tonight.  Whether Obama's policies have increased the cost of doing business in the United States is far more important than, for example, whether Bain Capital helped a few companies outsource certain business operations to other countries or whether some stimulus dollars were spent in foreign countries, because such policies actually can encourage - or even force - businesses to locate certain operations and jobs in more hospitable jurisdictions.  And, unlike biased, misinformed pieces from supposedly unbiased newspapers or the campaigns themselves, there are actually two independent, annual studies - one from the World Bank and the other from the World Economic Forum - that measure the relative burdens of business regulations on job creators in pretty much every country in the world.

The evidence from these two reports is abundantly clear: since President Obama and congressional Democrats took charge in 2009, the United States has become an increasingly hostile business environment.  The US government has increased a wide range of tax and regulatory burdens, thereby causing the United States to decline relative to other countries in terms of its ability to attract and retain companies and jobs.  Thus, it appears that President Obama, not Governor Romney, more aptly deserves the title of "outsourcer-in-chief."

That's a pretty significant accusation, so let's dig into the studies.  First up is the World Economic Forum's Global Competitiveness Index, which describes itself as follows:
The GCI comprises 12 categories – the pillars of competitiveness – which together provide a comprehensive picture of a country’s competitiveness landscape. The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.  The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of Partner Institutes. This year, over 14,000 business leaders were polled in a record 142 economies. The survey is designed to capture a broad range of factors affecting an economy’s business climate.
The latest GCI is a depressing read for the United States.  It finds that America's overall global "competitiveness landscape" dropped from 2nd in 2009-10 (reflecting policies from the previous year), to 4th in 2010-11 to 5th this year.  According to the country fact sheet accompanying the latest GCI (emphasis mine):
The United States continues the decline that began three years ago, falling one more position to 5th place. While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive. 
On the other hand, there are some weaknesses in particular areas that have deepened since past assessments.  The business community continues to be critical toward public and private institutions (39th). In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policymaking is assessed as less transparent (50th) and regulation as more burdensome (58th). A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth. On a more positive note, after having declined for two years in a row, measures of financial market development are showing a hesitant recovery, improving from 31st last year to 22nd overall this year in that pillar.
In short, the US government's dramatic and widespread fiscal mismanagement and heightened regulatory burdens have caused a significant drop in America's business environment, and only certain systemic, non-governmental factors prevent us from falling even further.  Moreover, according to the surveyed CEOs, four of the top five "most problematic factors for doing business" in the United States are directly related to the government's fiscal policy: Tax rates (14.8% of respondents); Inefficient government bureaucracy (13.2%); Tax regulations (10.9%); and Inflation (9.8%).  (Access to financing (12.9%) was the other major concern.)

Unfortunately, the World Bank's Doing Business Report tells a similar story.  I described the Report's methodology in an earlier blog post as follows:
[The Report] ranks 183 national economies on their ease of doing business based on an analysis of ten economic factors: Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, and Resolving Insolvency. As the Bank explains, "a high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm." In short, the higher a country is on the list, the better its business environment.
The World Bank Report only started doing relative rankings in 2011.  This year's version - which covers regulations measured from June 2010 through May 2011 - showed that the United States stayed steady in fourth place overall between 2009-10 and 2010-11 - President Obama's first two years in office.  However, the breakdown of the US score reveals that we dropped in five of the ten economic categories listed above, didn't improve in any category, and rank in the top ten globally in only three:

TOPIC RANKINGS
DB 2012 Rank
DB 2011 Rank
Change in Rank
13
11
-2
17
17
No change
17
16
-1
16
11
-5
4
4
No change
5
5
No change
72
70
-2
20
20
No change
7
7
No change
15
14
-1


As with the World Bank, the things that the United States does well - enforcing contracts, getting credit and protecting investors - aren't really affected fiscal policies and instead relate to longstanding systemic and legal matters.  On the other hand, one issue that has been in the news a lot recently and most definitely is a fiscal policy matter is the United States' dismal, and dropping, 72nd place ranking in "paying taxes," which the Bank defines as "the taxes and mandatory contributions that a medium-size company must pay in a given year as well as... the administrative burden of paying taxes and contributions."  I explained at the time the ranking came out that--
Basically, US companies pay higher taxes - and have a more difficult time paying them - than 71 other countries. Such a tax burden has a crippling effect on American companies global competitiveness, and the World Bank study is further proof of just how desperately the current US tax system needs a fundamental overhaul.
As Carroll notes above, the United States now has the industrialized world's highest statutory corporate tax rate.  It also has one of the highest effective rates, and the complexity of our existing tax system further increases the immense burden on American businesses.  For example, according to the World Bank's breakdown, the average business located in New York City (the only city surveyed) makes 11 different tax payments, costing 187 hours of preparation time and a whopping 46.7% of its profits (over 25% in federal taxes).  Assuming a 40-hour workweek, this means that the typical New York businessman must dedicate a little under 5 weeks and almost half of his profits to meeting his annual tax obligations.

Yet when they had total control of the US government in 2009 and 2010, President Obama and Congressional Democrats did nothing to reform these long-term tax burdens and instead fought tooth and nail to increase them, most notably through the myriad new taxes in Obamacare.

And just this past week, the President and his fellow Democrats have sought to make things even worse by seeking to raise taxes on over 900,000 small businessmen who pay taxes at the individual level (while maintaining current rates for all others) and to pass short-term extensions of piecemeal tax breaks for certain small businesses.  The latter measures are intended to "help" small businesses but, as most economists will tell you, don't improve America's business climate because (i) prohibit long-term business planning; (ii) increase tax complexity (which disproportionately hurts small businesses that can't afford armies of lawyers and accountants); and (iii) encourage system-gaming and outright fraud, while discouraging business growth (i.e., small businesses becoming larger businesses and thus outgrowing their eligibility for the tax breaks).

We rank 72nd in the world – 72nd – in terms of total business tax burden, yet this is President Obama's latest plan?  But I digress...

As I've repeatedly explained here, a private company's decision to move certain business activities offshore is a complex determination of whether the total cost of doing business - including things like labor costs, transportation, and regulatory burdens - is higher in a foreign jurisdiction or in the United States.  When these costs become unbearable here, the company is faced with two choices: end the business activity or move offshore to a more hospitable environment.  Two detailed, independent and well-regarded studies show unequivocally that, over the last three years, the tax and other regulatory policies of President Obama and his fellow congressional Democrats have significantly increased the cost of doing business in the United States, thereby creating a job-killing riptide that pulls US companies offshore.  It's simply beyond the pale for them to now condemn any private company for going with the flow.

UPDATE 1:  In an amazing coincidence, Cato's Dan Ikenson this morning (Thurs) publishes an epic rant about this very same issue and, in the process, takes a fun jab at one of my favorite protectionist punching bags - the Economic Policy Institute.  I highly recommend you check Ikenson's article out.

UPDATE 2:  Also today, the Washington Post's wonkbook notes the publication of a new study on manufacturing offshoring in the United States.  Main conclusion:
[T]he researchers found that increasing offshore jobs by 1 percent is linked to a 1.72 percent increase in overall U.S. employment of native workers, though they describe the effect as neutral overall because the 0.72 percent difference is too small to be statistically significant. Offshoring also tends to push native U.S. workers toward more complex jobs, while offshore workers tend to specialize in less-skilled employment.
This, of course, is consistent with every other reputable study out there on the subject (sorry, EPI).  My only question: when will the wonkbook folks talk with their WaPo colleagues who ignorantly published this nonsense about the supposed harms of outsourcing?

Wednesday, May 30, 2012

Huge New Report Further Crushes Protectionist Myths about Trade, Jobs & Outsourcing

The OECD recently concluded a giant new report on the effects of open markets on employment, and the consensus conclusion couldn't be any clearer: free trade is awesome.  In the process of coming to that (admittedly broad and obvious) conclusion, the authors of the myriad studies included in the final OECD Report also debunk a whole host of protectionist myths still floating around out there about imports, jobs and outsourcing (President Obama, please take note).  Here's the press release announcing the new Report (emphasis mine):
Governments that foster open markets and resist protectionism have the best chance of stimulating inclusive economic growth and creating high-value jobs, according to a new study from 10 international organisations presented in Paris.

Policy Priorities for International Trade and Jobs, launched by OECD Secretary General Angel Gurria during the annual OECD Forum, shows that protectionist and discriminatory trade measures do not protect or preserve jobs. On the contrary, closing markets is actually more likely to stifle growth and put additional pressure on labour markets.

The report, a product of the International Collaborative Initiative on Trade and Employment (ICITE)*, analyses the complex interactions between globalisation, trade and labour markets. Drawing on numerous studies covering different parts of the globe and countries at very different levels of development, the report highlights the powerful role trade can play in driving growth and improving employment.
Of the 14 main studies undertaken since 2000 reviewed in the report, all 14 have concluded that trade plays an independent and positive role in raising incomes.
Through its impact on productivity, trade also raises average wages. Over the 1970-2000 period, manufacturing workers in open economies benefitted from pay rates that were between 3 and 9 times greater than those in closed economies, depending on the region. In Chile, workers in the most open sectors earned on average 25% more in 2008 than those in low-openness sectors.

Fears of the impact of offshoring may be exaggerated. Studies for the United Kingdom, United States, Germany and Italy demonstrate that off-shoring of intermediate goods has either no impact or, if any, a positive effect on both employment and wages.

The report also shows, however, that openness to trade is not enough. Complementary policies – such as sound macroeconomic policies, a positive investment climate, flexible labour markets and adequate social safety nets – are needed to realise the full benefits of trade....

The ICITE report debunks the principal argument against freeing up trade – the supposed impact of imports on jobs. The report says that there is no systematic link between imports and unemployment. Instead, evidence shows that in country after country, both exports and imports push productivity growth upward while helping create better skilled and higher paying jobs.
Offshoring and outsourcing by developed countries – two commonly-cited negative aspects of globalisation – often complement, rather than replace domestic jobs, while creating new, higher-wage opportunities in developing countries, according to the report.
There is enough in this report to keep even the nerdiest of trade nerds busy for a long while.  I especially like the part about the necessity of "complementary policies" to realize the full benefits of free trade.  That's something I've been arguing here for a while now - open markets are awesome, but their benefits are seriously undermined unless they're accompanied by sound fiscal policies (especially tax policies), a streamlined, predictable regulatory environment and a dynamic labor market.  Without these things, all the trade in the world won't fix what ails the US and other struggling economies.

But all the trade stuff's important too, particularly during yet-another-election-season featuring scores of US politicians spewing populist nonsense about the allegedly horrible effects of imports and outsourcing on American jobs.  At the risk of sounding like a broken record, isn't it about time we stopped listening to these people?

Thursday, February 16, 2012

Is The Obama Administration Really This Clueless About US Companies' Global Competitiveness? (UDATED)

In Sunday's Chicago Tribune, Caterpillar CEO Doug Oberhelman explained why his manufacturing powerhouse has no plans to expand business operations in its home state of Illinois.  The whole op-ed is worth reading, but here are the money grafs:
Despite the fact that we announced plans for dozens of new factories in the last few years and our United States workforce increased by more than 14,500 in the past 10 years, we haven't opened a new factory in Illinois in decades. Our Illinois workforce is at the same level it was 10 years ago. Caterpillar recently informed several Illinois communities that they are not in the running for a new factory we will build in the U.S., ultimately adding 1,400 jobs — work that's now done in Japan. In that case, logistics was a key factor, but even if it were not the case, when Caterpillar and most other companies look to locate a new factory in the U.S., Illinois is not in the running.

It doesn't have to be that way.

About 10 months ago I wrote a letter to Illinois political leaders expressing my hope that the state would undertake long-term, fundamental reforms so Illinois could compete for jobs and long-term business investment that drives growth.

To date, we haven't seen much change.

The governor's recent three-year projection of state revenue and spending proves that even with the income tax increase, Illinois has not done what is necessary to balance its budget. Major credit agencies have downgraded the state's bond rating. The state passed some changes to workers' compensation last spring, but it wasn't enough. Illinois will still be among the most expensive states in the nation for workers' compensation insurance. Our own comparison of workers' compensation costs showed Illinois was far more costly than neighboring Indiana, which is consistent with a comparative study by Oregon, which also shows Illinois is much more expensive than Indiana, Iowa and Kansas in workers' compensation insurance rates.

What's the solution? For starters, Illinois needs to adopt a long-term sustainable state budget that relieves pressures on taxpayers. Unlike some, I do not favor an early rollback of the temporary tax increases in Illinois; but they should expire as planned. Keeping the temporary tax increases in place for now gives the state time to develop a multiyear plan that balances the state budget. In addition, the state needs to dramatically lower workers' compensation costs. Some say these changes are not politically possible in Illinois. But if Illinoisans put pressure on both parties to make these types of improvements, I think the state can become a place that can successfully compete for business growth and new jobs.

Let me be clear. Caterpillar is not threatening to leave Illinois. Rather, we want to grow our presence here. For Illinois to really compete for new business investment and growth, the state must address these matters.
In short, high taxes, fiscal profligacy and bad regulation - not the absence of state subsidies or other taxpayer-funded "incentives" - prohibit Caterpillar from both locating new business operations in Illinois and remaining globally competitive (a critical issue for the export-dependent company).  Mr. Oberhelman was speaking about state-level policies, but the principles he describes apply equally to national policy.

Unfortunately, the Obama administration does not appear to understand these principles and is instead cluelessly pursuing the exact opposite course.  I've already explained repeatedly how existing US regulations - and new ones like ObamaCare - are doing a number on American businesses' ability to compete on the global stage, so I won't get into that again tonight. [UPDATEBrand new - and totally depressing - stuff from The Economist on how the United States "is being suffocated by excessive and badly written regulation."]  Instead, I'd like to review the administration's brand new budget plans and their impact on American corporate competitiveness.

In short, it ain't pretty.

On tax policy, the budget keeps the United States' corporate tax rate at one of the highest levels in the world, even though pretty much every other industrialized economy has lowered their rates (charts courtesy of AEI's Jim Pethokoukis):




Pethokoukis cites to studies showing how high corporate tax rates lead to lower growth, and then explains that President Obama's budget not only retains our sky-high 35% stautory rate but also "raise the corporate tax burden by some $350 billion over ten years."  This insanity includes $30 billion in new taxes on oil & gas companies, even though they are fueling (pun intended) the current economic recovery and already pay a much higher effective tax rate than other US manufacturers:

Smart.  Meanwhile, our northern neighbor (and a major global competitor) Canada lowered its corporate tax rate again to a jealousy-inducing 15% on January 1, 2012, making Canada the #1 country in the world to do business, according to Forbes Magazine.  Congrats, Canada.  You big jerks.  (As I said, I'm jealous.)

Ok, well, sure, that's just tax policy.  I'm sure that those taxes are being well spent in the Obama budget and making sure that the United States house is totally in order, right?  Wrong (again via Pethokoukis, who's clearly been on a roll this week):


Pethokoukis concludes that the President's Budget "makes no effort to deal with Medicare, Medicaid, and Social Security — the long-term drivers of U.S. federal debt. The debt curve never gets bent, as the above White House(!) chart shows. It just goes up and up and up — until the heat death of the universe or the economy is struck by a Greek-style debt crisis."  Holy souvlaki, Jim!

So the Obama budget kills US companies on regulations, taxes and debt, but how does the administration propose to help them?  Targeted subsidies for US manufacturing, of course.  The administration's "Blueprint to Support U.S. Manufacturing Jobs, Discourage Outsourcing, and Encourage Insourcing" pays lip service to broader tax reform, but never once actually provides even a hint as to what such reform would look like. Instead, it just provides a laundry list of new tax subsidies for US manufacturers - including expanding "domestic production incentives," a new "Manufacturing Communities Tax Credit," and temporary tax credits for "domestic clean energy manufacturing."  (The plan also proposes - in tellingly vague fashion - to eliminate tax breaks for "shipping jobs overseas," but we all know what a political joke that is.)

Unfortunately, the administration's manufacturing blueprint - which continues the President's long-held preference for manufacturing - is just as misguided as their broader tax and fiscal plans.  As I've repeatedly noted, the prioritization and subsidization of US manufacturing over other sectors of the domestic economy (like our expanding and globally dominant services sector) is completely misguided, especially as some sort of "plan" to solve the country's high unemployment.

But, hey, don't take my word for it.  The former Chair of President Obama’s Council of Economic Advisers (Christina Romer) thinks the same thing, recently arguing in the New York Times that Obama's "singling out of manufacturing for special tax breaks and support" was wrongheaded because none of the primary rationales for subsidizing the American manufacturing sector - market failures, jobs or income distribution - actually holds any water.  She concludes:
AS an economic historian, I appreciate what manufacturing has contributed to the United States. It was the engine of growth that allowed us to win two world wars and provided millions of families with a ticket to the middle class. But public policy needs to go beyond sentiment and history. It should be based on hard evidence of market failures, and reliable data on the proposals’ impact on jobs and income inequality. So far, a persuasive case for a manufacturing policy remains to be made, while that for many other economic policies is well established.
As I noted when Romer's op-ed first came out, smart people on the right and left might disagree about the solutions to our current mess, but at least we they all can agree that the solutions do not involve targeted subsidies for the US manufacturing sector.  If only Dr. Romer had explained this obvious fact to President Obama when his office was a just few doors down the hall.

When Caterpillar realizes that Illinois' tax, spending and regulatory policies prevent it from competing in the global economy, it can - and often does - choose to simply move its operations to a state with a better business environment.  Indeed, the migration of American companies from poorly-managed, debt-ridden states like Illinois and California to leaner, meaner states like Texas is well-established.  Unfortunately, those migrating businesses won't escape bad federal policies so easily.  And if President Obama and his team don't soon get their fiscal and regulatory acts together quickly, Caterpillar and others might not be moving South to Texas but instead heading North to Canada and thus out of the country altogether.

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?