6 Republican Economic Myths Obama and Dems Must Stop Repeating
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“Throughout the campaign, President Obama lamented the so-called ‘skills gap’ and referenced a study claiming that nearly 80 percent of manufacturers have jobs they can’t fill,” reported the New York Times’ Adam Davidson. “Mitt Romney made similar claims. The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills.”
According to this view, the primary problem with the economy is not that US corporations are failing to create enough jobs or are moving them overseas, but that American workers are unable to take advantage of rapidly expanding opportunities. In his 2012 State of the Union speech, Obama called attention to this problem, saying, “I also hear from many business leaders who want to hire in the United States but can't find workers with the right skills.”
But even when the right skills are present, big corporations will opt for plentiful cheap labor offered under brutal conditions in Mexico and China. For example, Milwaukee, once known as the “machine tool capital of the world” for its highly skilled workforce, has lost fully 80 percent of its industrial jobs since 1977, according to Marc Levine.
Today’s generation of workers also discover that opportunities to acquire skills have dried up and that skilled manufacturing jobs are paying far less than in the recent past. According to professor emeritus Frank Emspak of the University of Wisconsin's School for Workers, “Training programs have been eliminated by major corporations. Trade schools and apprenticeships are being abolished."
Calling this situation a “skills shortage” badly mischaracterizes the situation, according to a conclusion reached in a study by the Boston Consulting Group: “’Trying to hire high-skilled workers at rock-bottom rates is not a skills gap.”
6. American Corporate Taxes Are Among the Highest in the World
This is a familiar complaint of CEOs and Republican politicians, but it happens to be utterly false.
So why has President Obama repeated this falsehood so often?
Obama claimed at a Milwaukee event that when "companies that are doing the right thing and choosing to stay here, they get hit with one of the highest tax rates in the world. That doesn’t make sense."
But Obama’s claim of high corporate taxes also fails to make sense. On paper, the official US corporate tax rate is 35 percent, but very few corporations pay anywhere near that rate. In practice, effective corporate tax rates for U.S. firms are actually among the lowest in the 30 advanced nations belonging to the Organization of Economic Cooperation and Development (OECD). The Bush Treasury Department found that between 2000 and 2005 U.S. corporations paid only 13.4 percent of their profits in corporate income taxes, well below the OECD average of 16.1 percent.
Another indicator of the real situation: “Corporations paid on average 47.4 percent of their profits in federal taxes in 1961; in 2011 the percentage fell to 11.1 percent,” Robert W. McChesney reported recently in Monthly Review.
Obama’s habit of repeating this lie is not only perplexing, but dangerous. To have a Democratic president reiterate a crucial corporate/Republican talking point only adds credibility to two ongoing campaigns to radically cut corporate taxes even further.
First, a group of corporations calling itself Win America—including such heavyweights as Apple, Cisco, Google, Microsoft, Oracle, and Pfizer-- has been lobbying for another “tax amnesty” like the one offered in 2004, when corporations were allowed to “repatriate” profits from their foreign subsidiaries, bringing them back to the US at a discounted tax rate of just 5 percent. The tax holiday failed to deliver the promised explosion of investment in America, as corporations mainly chose to buy back their own stock and drive up stock values.