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Obama Promises to Bring Back Manufacturing Jobs, But His Plan Gives More Tax Breaks to Corporations

If Obama does win a second term, it will be fascinating to see how working-class Americans respond when his soaring rhetoric collides with the reality of his timid program.
 
 
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The following article first appeared at Working In These Times, the labor blog of In These Times magazine. For more news and analysis like this, sign up to receive In These Timesweekly updates.

MILWAUKEE—President Obama's appearance last Wednesday at the Master Lock plant here—during which he repeatedly highlighted the company's decision to bring back about 100 jobs from Mexico and China and called for the restoration of America's manufacturing sector—uncorked a lot of hope among local workers.

A crowd of about 1,000 Master Lock workers (the plant employs 412 members of UAW Local 469) and guests roared in approval as the president described the fundamental changes needed in the American economy. He thundered:

Milwaukee, we are not going back to an economy that's weakened by outsourcing and bad debt and phony financial profits. We need an economy that is built to last, that is built on American manufacturing, and American know-how, and American-made energy, and skills for American workers, and the renewal of American values of hard work and fair play and shared responsibility.

But if Obama does win a second term, it will be fascinating to see how working-class Americans respond when the president's soaring rhetoric, which is rekindling dreams of a manufacturing renaissance, collides with the cold reality of Obama's timid program.

Obama concisely offered a powerful critique of corporate greed and domination of the economy by an overgrown financial sector, while promising a renewal of American manufacturing hit by a loss of 5.5 million jobs since 2000. The message resonated intensely with the audience, which has seen Milwaukee rapidly wither from an affluent industrial center into the fourth poorest city in the nation as it lost 80 percent of its manufacturing jobs during the last 35 years.

Yet even as industrial cities and factory towns declined as much of America's productive base went abroad, leading Democratic policymakers (see here and here) have callously dismissed the importance of American manufacturing. These Democrats-—far removed from the consequences of "free trade"—have even added legitimacy to corporations' exploitation of undemocratic conditions by supporting more NAFTA-style free-trade agreements.

While Obama himself has recently pushed three new toxic trade agreements through Congress, his main message has focused on the central need for rebuilding the U.S. manufacturing base. By stressing the restoration of 100 jobs to Milwaukee's desolate inner city, Obama has underscored the importance of manufacturing to America.

The president has channeled into the deep hunger for the day when "America made things," when Milwaukee's skilled workforce labored in "the machine tool capital of the world," and years of job security could not be erased by a few computer keystrokes in New York or Houston that closed a Milwaukee plant and shifted jobs to Mexico or China.

Implicitly in Milwaukee and more directly in speeches elsewhere, Obama has revived hope that America's enormous inequalities can be overcome with the strengthening of the manufacturing base. On Wednesday, President Obama pointed to 23 consecutive months of economic growth, with a heavy emphasis on the first growth in manufacturing employment since 1990. The auto industry alone added 160,000 jobs since the bailouts of GM and Chrysler in 2009.

"It's hard to get a well-paying job in Milwaukee these days," sighed William Schnach, 58, who a UAW Local 469 member at Master Lock for the past 14 years. "Master Lock is one of last places that is hiring. Briggs and Stratton, Allen-Bradley [now Rockwell], Allis-Chalmers, AO Smith, the jobs are all gone. But Master Lock, you work leaner and smarter, and that's why they're still here."

Master Lock has fostered a more productive workforce by paying the tuition of workers who attend local technical colleges to pick up additional skills and knowledge, Schnach said.

For Dean Paulson, 36, his roughly five years at Master Lock have been "a great opportunity." He sees the return of the 100 jobs from Mexico and China as "a positive thing." However, he added, "I wish more companies would do that. The biggest thing for helping the unemployed would be bringing the jobs back. If they don't bring the jobs back, it will be harder and harder for people coming out of school to find decent jobs."

Despite the celebration of Master Lock, other corporations continue to off-shore jobs (three Wisconsin firms have recently announced major job shifts to Mexico) and average Milwaukee earnings have plummeted 21.9 percent since 1999. Master Lock is an oasis amid a barren urban landscape pockmarked by abandoned factories, boarded-up storefronts, cracked pavements and weed-grown lots.

For Milwaukeeans, the inner-city represents a "man-made disaster" of squalor and despair created by government policy and corporate flight to low-wage nations, as UAW International Representative John Drew said at the Master Lock event Wednesday. The plant's zipcode is plagued by 60 percent joblessness, an infant-mortality raterivaling   that of Third World nations, and an appallingly-high incarceration rate.

Given this context, Obama appears to have severely overstated the significance of the Master Lock example. As the New York Times' David Firestone pointed out,

It’s great that the lock factory is now running at full capacity with a workforce of 412, but Mr. Obama omitted a key fact: 15 years ago the Milwaukee factory employed 1,154 workers.

Against these daunting problems, President Obama's chief weapon seems to be the use of tax breaks to punish off-shoring firms and reward in-sourcing corporations. But this seems a very hollow threat (and weak incentive) given that two-thirds of U.S. corporations pay no corporate income taxes at all.

Thus, it was astonishing to hear President Obama repeat a bogus Republican talking point  by asserting that "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."

The reality is vastly different, and the president ought to know better. Corporate tax rates for U.S. firms are actually among the lowest among the 30 advanced nations belonging to the Organization of Economic Cooperation and Development, reported Citizens for Tax Justice:

According to a 2007 study by the Bush Treasury Department, between 2000-2005 U.S. corporations paid only 13.4% of their profits in corporate income taxes, well below the Organization of Economic Cooperation and Development (OECD) average of 16.1%.

While this suggests that Obama's central strategy for encouraging the creation of U.S. jobs is fatally flawed, the president is still doing good by raising the need for a strong manufacturing base to central importance, and the hopes of working-class people for secure jobs.

If Obama wins a second term, he may realize he has unleashed popular expectations that will present implacable demands. Perhaps then he won't devote so much of his attention to the needs and interests of Wall Street.

 
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