Outsourcing Problem Was Not Created By Obama
President Obama was given a taste of his own medicine on Tuesday as Republicans blasted him on his outsourcing record. For weeks, the President has been accusing Mitt Romney of outsourcing jobs while he was CEO at Bain Capital. In a delayed response to the President’s attacks, Republicans are now pinning President Obama as the real “Outsourcer-in-Chief.”
The Republican National Committee unveiled a website on Tuesday alleging that under President Obama’s American Recovery and Reinvestment Act, also known as the stimulus, billions of dollars were sent to companies operating overseas. The website includes a map with pop-up details about the administration’s foreign investments and a breakdown of projects funded by the American taxpayer. Republicans are pointing to electric cars made in Finland and solar panels made in Mexico as examples.
According to the RNC, ABB Inc., an energy and technology company, received millions in stimulus funds to create green energy manufacturing jobs. The RNC charges them with laying off workers in the United States and transferring the positions to Mexico. Similarly, they charge the California based SunPower Corporation with accepting $1.3 billion in loan guarantees and then manufacturing solar panels in Mexico. The RNC also points to Fisker Automotive, luxury hybrid electric car maker based in California, who’s electric car Karma is being assembled in Finland.
While these charges are plausible, as it is impossible to ensure that all of the stimulus money remained in the United States, further inspection shows that the RNC may have misrepresented the facts. The New York Times published a story in which it contacted these companies and all three have denied using stimulus money overseas.
The real question should not be where the stimulus money went, but what President Obama’s policies have done to stem the flow of jobs overseas. A Washington Post article points to criticism from the political left on President Obama for not doing enough to curb outsourcing by not pushing Congress to revamp a federal tax code that encourages companies to maintain overseas operations.
These criticisms should be taken with a grain of salt, as there is no proof that these would do much to curb outsourcing. President Obama has called for Congress to revamp federal tax code but neither Democrats nor Republicans have touched the issue. If Congress did act and pass a measure, enforcing it would be extremely difficult and may lead to multinational companies reorganizing to escape the tax burden, probably by moving additional parts of the company off shore.
The Post story also notes that critics accuse White House officials of not taking a tougher stance towards H-1B visas, a program that allows foreigners with technical skills to come to the United States for work, than the Bush administration did. Critics say that skilled workers come to the U.S. to receive training and then they leave and set up competing enterprises in their home country. While some foreigners may do just that, there is no logic in the argument. By allowing the best technical workers in the U.S. means that U.S. companies do not need to move these highly skilled jobs abroad to hire top talent. If we follow the logic of the critics then we might as well kick every foreign student out of our universities for fear that they will take the knowledge they’ve learned here and use it to start a rival enterprise.
The fact is that neither Obama or Romney are directly responsible for the outsourcing of jobs. They are a product of a society that views free trade as a good thing. It is great to be able to purchase products at the store for a much lower price, but it comes with a cost—jobs will be outsourced. If China can make a t-shirt much cheaper than we can, then our t-shirts will be made in their factories.
While this “I Know You Are, But What Am I?” debate has created yet another great campaign keyword that can be put on the shelve with “fair share,” it does nothing for the American worker. At best this debate is about mudslinging and both sides are guilty of it. The real debate should be whether or not free trade is worth the cost.