President Obama has spent billions of dollars in taxpayer money on subsidizing foreign firms through his failed “green energy” programs, so it was ironic and hypocritical when he attacked outsourcing in his State of the Union address. As former congressional economist Chris Edwards notes, Obama made many blatantly false claims about outsourcing and corporate taxation in his speech. Here are just a few:
Claim: “Right now, companies get tax breaks for moving jobs and profits overseas.”
False: There are no such breaks. Instead, we punish U.S. and foreign businesses for investing and creating jobs here.
Claim: “If you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it.”
False: There is no such tax deduction. . .
Claim: “From now on, every multinational company should have to pay a basic minimum tax.”
False: We’ve already got a corporate “alternative minimum tax,” and it’s an idiotic waste of accounting resources that ought to be repealed.
Claim: “It is time to stop rewarding businesses that ship jobs overseas.”
False: We penalize them for locating jobs here. Besides, the overseas operations of U.S. companies generally complement domestic jobs by boosting U.S. exports.
Claim: “Companies that choose to stay in America get hit with one of the highest tax rates in the world.”
True: Our rate is 40 percent, which compares to the global average rate of just 23 percent.
The irony of the president’s claims is that he himself is the Outsourcer-in-Chief and King of Outsourcing, given how many jobs have been — and will be — driven out of America thanks to government subsidies in the $800 billion stimulus package that were given to foreign firms (like a bankrupt Australian company), and Obama administration financial regulations that effectively discriminate against American companies in favor of overseas firms, and impose billions in new costs on American manufacturers. American manufacturers face a growing mountain of red tape that has caused layoffs among medical device manufacturers, and 4,300 employees of an insurance company were recently laid off due to the 2010 Dodd-Frank law backed by the Obama administration. The Dodd-Frank law is also expected to drive well-paying proprietary-trading jobs overseas to Europe. The Obama administration has also imposed harmful and costly labor and employment regulations on American manufacturers.
Weirdly enough, President Obama supports taxpayer-subsidized outsourcing by companies headed by his political supporters (like GE), even while criticizing non-subsidized (free-market-based) outsourcing, which — unlike taxpayer-subsidized outsourcing — can actually save American jobs by reducing the cost of finished goods sold by American companies. (A struggling firm’s decisions to outsource some functions can actually save American jobs in the long run. An American manufacturer of a finished product, facing stiff cost competition from overseas manufacturers, can reduce its overall costs, and thus avoid going out of business, by outsourcing low-skill jobs producing crude components of the finished product to low-wage overseas workers, thus enabling the more valuable finished product designed or assembled by skilled American workers to be cost-competitive with finished goods produced entirely overseas.)
The Associated Press evaluates some of Obama’s claims in “Fact Check: Obama Pushes Plans That Flopped Before.”