Election 2004  
comments_image Comments

The Right Man For The Job(s)?

With jobs going overseas, deficits soaring high, Bush and Kerry offer voters sharply different approaches to turning things around.
 
 
Share
 

In the battleground state of Wisconsin, more than 50,000 manufacturing jobs have been lost since George W. Bush took office, a bulk of them directly due to outsourcing, and the number of people unemployed in that state has increased by 40,000, according to the state’s labor department. In North Carolina, another battleground state, 71,300 jobs have been lost between March 2001 and June 2004, according to a report released this month by the North Carolina Justice Center. “This has led to an increase in the number of workers who are long-term unemployed (over six months), who run out of unemployment benefits before getting a new job or who take part-time work when they need full-time” the report says.

One of George W. Bush’s worst legacies as president, aside from the war in Iraq, will be that the United States lost almost one million jobs during his term. Moreover, 2.7 million jobs have been outsourced since Bush took office, largely due to the lucrative tax credits corporations receive for shipping jobs overseas under Bush’s tax plan. Meanwhile, the president has managed to turn a $125 billion surplus into a $400 billion deficit in just over three years.

In his defense, Bush cites the 1.7 million new jobs created over the past year as proof that the economy is turning a corner and that his tax cuts have made a difference. Still, that’s far less jobs created than in the worst year during President Clinton’s eight years in office, according to the U.S. Department of Labor.

What the jobs loss and deficit numbers reflect is that the Bush administration values working families a lot less than it values the wealthiest Americans and the largest corporations. In the Bush conservatives’ world view, if the largest corporations and the wealthiest Americans are taken care of, eventually it might trickle down to the rest of us, a policy clearly proven not to work during the Reagan years. In fact, Bush’s entire economic agenda is predicated on more tax cuts — which, of course, mainly benefit the richest families.

His Democratic challenger, John Kerry, has a record that stands in sharp contrast to Bush. Moreover, Kerry is proposing policy changes that will stem the flow of jobs overseas and create more jobs at home. Kerry’s policies clearly favor working families over corporate profits.

Tax Cut Mania
The Bush administration pushes cutting taxes with a religious zeal, despite evidence suggesting that they do little to create jobs or reduce the deficit. Indeed, as The New Yorker magazine pointed out in its Sept. 6 issue: “It is far from clear that cutting taxes leads to more saving in the economy as a whole. A tax cut that isn’t accompanied by spending cuts, such as Bush’s, forces the Treasury to borrow more, which lowers the national rate of saving. By the same logic, one sure way to increase national saving is for the government to raise taxes and run a budget surplus. For some reason, conservative economists rarely mention this option.”

Last month, 10 Nobel laureates in economics — including 1970 laureate Paul Samuelson from the Massachusetts Institute of Technology, and 2001 laureate Joseph Stiglitz from Columbia University, a former chief economist at the World Bank — wrote in a public letter that the Bush administration has “embarked on a reckless and extreme course that endangers the long-term economic health of our nation.”

Bush believes that the “tax cuts benefiting the most wealthy Americans are the answer to almost every economic problem,” the letter added. But the tax cut has not resulted in the creation of new jobs and has turned budget surpluses into enormous budget deficits. “President Bush’s fiscal irresponsibility threatens the long-term economic security and prosperity of our nation,” the letter said.

According to a study by the nonpartisan Congressional Budget Office, two-thirds of the benefits of Bush’s tax cuts went to households in the top fifth of the income distribution and a third went to households in the top one-hundredth of the distribution. “To put it another way, families earning $1.2 million a year—that is, the richest one percent in the country—received a tax break of roughly $78,500. Families earning $57,000 a year—middle income families—got a tax cut of about $1,100,” The New Yorker reported.

And those tax cuts are not helping the country’s revenue picture, and resulting in higher deficits. In a departure from precedent, the International Monetary Fund issued several warnings in recent years about America’s runaway deficit, cautioning foreign lenders about trading with the Treasury Department. Historically, the IMF issues such warnings about other nations; warnings about the U.S. deficit are a new phenomena.

Even dire warnings from the country’s top economist won’t sway the president.

Federal Reserve Chairman Alan Greenspan urged Congress recently to restore the budget rules — that were in effect during Bill Clinton’s presidency — which required tax cuts and spending increases to be offset either by tax boosts or spending cuts in other areas. Greenspan warned that if lawmakers don't change their fiscal policies, government borrowing eventually will crowd out private borrowing and drive interest rates higher.

Kerry and his running mate, Sen. John Edwards, however, have said that they would support the portion of Bush’s tax cuts aimed specifically at the middle-class. In fact, on Sept. 23, Congress overwhelmingly approved a five-year extension to one of Bush’s tax cuts aimed directly at middle class families. But there are no spending cuts to offset the plan, which will cost about $146 billion over the next five years.

All of these tax cuts will eventually lead to real problems — higher deficits, higher interest rates — which will eventually make it harder for middle class families to purchase homes. And, of course, they will also mean a

Incentives for Outsourcing

One way to curb the job loss problem is to end the tax incentives corporations receive for sending jobs oversees. But Bush still doesn’t believe outsourcing is a problem; rather it’s the nature of the cutthroat world of capitalism, and it’s good for the economy. He has rewarded corporations that move jobs overseas with some $60 billion in tax credits. In the 2004 Economic Report of the President, Bush said, “When a good or service is produced more cheaply abroad, it makes more sense to import it than to provide it domestically.”

To ensure employees don’t lose the jobs they already have, Bush offers a sound bite. Less government regulation, less dependence on foreign energy, fewer “frivolous” lawsuits that hurt businesses and low taxes — “That's how you keep jobs at home,” Bush said during a stump speech in Ohio in July.

Kerry, on the other hand, has a 20-year record in the Senate of fighting for the working families. For instance, he wants to increase the minimum wage to $8.46 an hour, from $5.15 an hour, in order to keep up with inflation. Bush has maintained since he first took office that he does not support an increase to the federal minimum wage, which, in terms of inflation, is at a 30-year low and vowed to block any effort to increase it.

On workplace issues, Kerry promised to reinstate the country’s first ergonomics standards measure that was designed to prevent the more than two million stress injuries, such as carpal tunnel syndrome, that are reported and treated annually. President Bush signed legislation that supported the lobbying efforts of major corporations to repeal the measure

Kerry has also provided definitive details on his plan for putting the brakes on outsourcing and creating millions of new jobs here at home. He says he will eliminate the tax breaks for companies that sends jobs overseas and provide tax credits to U.S. companies for all new jobs created in 2005 and 2006. But there’s a catch.

“I am not trying to stop all outsourcing, but as president, I will end every single incentive that encourages companies to outsource,” Kerry said in a Sept. 15 editorial in the Wall Street Journal . “Taxpayers spend $12 billion a year to subsidize the export of jobs. If a company is trying to choose between building a factory in Michigan or Malaysia, our tax code actually encourages it to locate in Asia.”

Indeed, as Kevin Hassett, a staunch conservative economist at the American Enterprise Institute pointed out in the Wall Street Journal on March 12, “The U.S. tax code definitely provides a strong incentive for sending jobs overseas.”

Kerry says he will push for a tax reform plan which will save money for the government and which will allow him to reduce the corporate tax rate by 5 percent, making it easier for companies to keep jobs at home. “This would be the most sweeping reform and simplification of international taxation in over 40 years,” Kerry said in the Journal editorial.

Moreover, Kerry wants to bring new jobs to the table by funding projects to build roads and bridges and water and sewer systems and upgrading the nation’s transportation systems.

Another cornerstone of his employment policy is to implement a six-point plan to strengthen trade enforcement, including a 120-day review of all agreements and a probe into human rights violations in China, which is the second largest lender of money to the U.S.

Meanwhile, the bleak jobs picture — in swing states and across the nation — continues to worsen. Making it harder for working families, the Bush administration earlier this year issued new rules essentially denying overtime pay for overtime work for millions of Americans, including workers who earn as little as $23,600 a year, instead saying workers should work with their employers to get comp time.

Kerry, on the other hand, cosponsored legislation to block the Bush administration from issuing those very same rules.

Jason Leopold is the former Los Angeles bureau chief of Dow Jones Newswires where he spent two years covering the energy crisis and the Enron bankruptcy. He just finished writing a book about the crisis, due out in December through Rowman & Littlefield.