Outsourcing and Presidential Politics

We’re in the thick of the presidential campaign, and the attack ads are in full force. President Obama’s strategy is clear: hammer Governor Romney on outsourcing. It’s the same mantra the Democrats trot out for every election cycle, but they really seem to be hammering the point this year: Republicans support tax breaks for companies that ship jobs overseas.

FactCheck.org already debunked this myth in 2004. As has Cato’s Dan Mitchell. Among the important points:

*The United States taxes corporate profits at a higher rate than other industrialized countries.

*The US taxes the profits US-based companies earn overseas when those companies attempt to bring those profits back into the country, one of only a few countries in the world that does this. Instead of the claims that we give “tax breaks to companies shipping jobs overseas” it could also be explained the US policy punishes profitable enterprises from trying to reinvest in their US operations, thus depriving our workers of job opportunities.

*Companies that outsource use the savings generated to create jobs. One study cited shows that between 1991 & 2001, foreign affiliates of US companies added 2.9 workers to their payrolls, and also added 5.5 million US employees. Just imagine those numbers if our policymakers didn’t implement growth-distorting tax policy.

*In the IT sector of the economy, outsourcing lowered inflation, netted 90,000 jobs, increased consumer spending, and put GDP $124 billion higher than it would be in an environment without outsourcing.

Romney has plenty of faults, but it seems these attacks are designed to mask that Obamanomics have been an abysmal failure.

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