Category Archives: Making It In America

Fight This New Push To Lower Corporate Taxes

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There is a big push going on to again reduce tax rates for the giant multinational corporations. See if you can guess who will make up the difference? (Hint: it will be you paying through cuts, and smaller companies that are trying to challenge the incumbency of the giant multinationals.)

Recently in the post Beware the New Corporate Tax-Cut Scam: LIFT Is A Big LIE, I warned about the LIFT coalition of large corporations trying to get rid of taxes on profits made outside the country. Of course this would result in giant companies moving jobs, factories and profit centers out of the country.

The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.

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Beware the New Corporate Tax-Cut Scam: LIFT Is A Big LIE

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First it was Fix the Debt, with tax-dodging corporations “leading the charge for massive new corporate tax cuts paid for with cuts to Social Security, Medicare, and Medicaid.” Now there’s a new “LIFT America coalition,” pushing for massive, massive corporate tax cuts, without bothering about cutting benefits. LIFT stands for “Let’s Invest for Tomorrow,” but as Citizens For Tax Justice (CTJ) points out, it really ought to be called LIE, for “Let’s Invest Elsewhere.”

The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.

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Important Bipartisan Currency Bill Introduced In House

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A new bill was introduced in the House today to fight currency manipulation, including China’s. The bipartisan Currency Reform for Fair Trade Act was introduced by Representatives Sander Levin (D-MI), Tim Murphy (R-PA), Tim Ryan (D-OH), and Mo Brooks (R-AL). This bill would treat undervalued currency as a subsidy under U.S. trade law, meaning we could apply tariffs to goods from countries that do this.

A nearly identical bill passed the House overwhelmingly in the 111th Congress and had 234 bipartisan cosponsors in the recent 112th Congress after passing overwhelmingly in the Senate. But Speaker Boehner refused to allow a vote, and the bill did not become law.

Currency Manipulation

Some countries go to great lengths to keep their currencies “weak” relative to where currency markets say they should be set. This means goods from these countries cost less than goods from countries with “stronger” currencies. This gives companies making things in these countries a competitive advantage in world markets, and the jobs and factories flow to those countries. It costs these countries money to accomplish this, but they get it back by gaining all those jobs and sales of goods and services.

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DC Should Talk About Fixing The TRADE Deficit

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The economy is not working for We, the People. But even with $4 trillion already cut from deficit projections, a deficit drop of about 50 percent as a share of gross domestic product, and Congressional Budget Office projections that the deficit is stable for the next 10 years Washington remains focused on even more economy-killing austerity. It’s talking only about what and how to cut instead of how to meet the needs of the people of the country and grow the economy.

This fight over spending cuts led to the “sequester,” which might take us back into recession. The fight will now roll into another manufactured crisis over the continuing resolution, with a government shutdown as the hostage, and of course this will be a further drag on the recovery.

Economics 101, Europe’s austerity experiment and the experience of history all tell us that cutting government is contractionary policy. Cutting government cuts economic growth and costs jobs, which leads to to lower tax revenue and higher government expenditures. Economics 101 and the experience of history also tell us that government investment in jobs, infrastructure, education, research and the rest grows the economy, which fixes deficits. Cutting deficits and debt is important but clearly should not be done when the economy is weak. This is the time to invest, and the investment returns will pay for the investment and more.

Again: There is no real discussion or debate about what we ought to be doing to make this economy work for working people. There is only discussion of what and how to cut. This is the wrong approach to our economic problems.

CAF is presenting job-creating and economy-growing ideas that ought to be debated so we can begin to turn this economy around and make it work for all of us instead of just a few of us. Jobs and growth fix deficits.

The Vast Trade Deficit Drains Our Economy And Jobs

Recently the 2012 U.S. international trade deficit in goods and services was announced. It fell slightly in 2012 (due in part to a decline in petroleum imports), to $540.4 billion from $560 billion in 2011. But 2012 saw a record trade deficit of $315 billion with China – approaching $1 billion a day. That is $540 billion a year drained from our economy, $315 billion of that just to China.

This vast trade deficit represents the loss of millions of jobs, tens of thousands of factories and entire industries. It hits at our ability to fix our economic problems. In particular, this problem affects our manufacturing companies, which provide solid, middle-class jobs and exports that strengthen the country.

Instead of the current focus on budget deficits, Washington should be talking about how to fix this vast trade deficit. Here are some of the things they should be talking about — and doing.

Fix Currency

Countries manipulate their currency rates because a “weak” currency means products made there are much more price-competitive. China’s currency is still estimated to be at least 20 percent below “market” rate, meaning goods made in China cost at least 20 percent less than goods made here, even before you factor in other things China does to give itself a trade advantage.

Confronting currency manipulation offers the biggest “bang for the buck,” requiring no tax dollars and reaping huge returns, shrinking the federal budget deficit by between $78.8 billion and $165.8 billion over three years.

Fixing this one problem could create between 2.2 million and 4.7 million jobs and increase GDP between 1.4 percent and 3.1 percent, helping manufacturers in particular, gaining between 620,000 and 1.3 million of those jobs. It would reduce the U.S. trade goods deficit by at least $190 billion and as much as $400 billion over three years.

Reform Trade Agreements

A $540 billion trade deficit doesn’t come from balanced trade; it is the result of one-sided trade agreements we have entered into. These trade agreements exposed America’s companies, workers, factories and tax base to direct competition with non-democracies, impoverished and exploited workers and countries that do not protect the environment. That could only go one way.

We have a democracy, in which people have a say. So they say they want good wages, safe workplaces and a clean environment. When we open that system up to direct, unregulated competition from places where people have no say and are told they can’t have those things, we put our democratic system at a competitive disadvantage in world markets. We make it a disadvantage to protect the environment, pay well, provide benefits, protect worker safety and the other things that we do and others do not do. Those become just “costs” to be eliminated.

Those trade agreements could have had different terms that lead to different results that lifted working people on both sides of the trade border instead of pushing terrible and increasing worldwide inequality. They could have lifted environmental protections on both sides of trade borders. They could have increased worker and consumer protections. They still can.

Our country’s trade agreements can still be reformed to do these things, rebalancing trade and lifting people and the environment. Future trade agreements should learn the lessons.

Bring Back The Bring Jobs Home Act

Last year Senate Republicans filibustered the Bring Jobs Home Act, but the bill had tremendous public support. It should be revived.

The Bring Jobs Home Act would have cut taxes for U.S. companies that move jobs and business operations to the United States, and ended tax loopholes that reward companies for shipping jobs overseas. The bill would have allowed companies to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the United States. It would have closed a loophole allowing a company moving jobs overseas to deduct various relocation costs.

Additionally, any new bill should tax the overseas income of U.S. corporations the same way domestic income income is taxed, so there would be no tax advantage to them from shifting income and jobs overseas.

Strengthen Buy America In Federal And State Procurement

There is no reason our own government should be undermining American manufacturers. “Buy America” provisions should be a mandate on federal, state and local government purchases, consistent with our trade laws. To accomplish this, our bottom line should be:

  • All federal spending should have “buy America” provisions giving American workers and businesses the first shot at procurement contracts.
  • New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction.
  • Our military equipment, technology and supply purchases should have increased domestic content requirements.
  • Renewable and traditional energy projects should use American materials in construction. State-level spending should have similar requirements, as well as strategies for getting them in place.

Many state-level procurement laws are very weak. As a result, a lot of tax dollars go to purchase goods made overseas instead of goods made in the USA. States should also strengthen their procurement policies to promote buying American-made materials.

The Invest in American Jobs Act of 2013, announced Tuesday, is a good start and deserves support and discussion. The Act strengthens Buy America preferences, closes loopholes and improves transparency in the federal waiver process.

These are a few examples of the things that Washington should be talking about. These proposals solve real problems in practical ways that help the American people.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

New Buy America Bill To Help Recovery And Jobs

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This morning House Democrats introduced ‘Buy America’ legislation to make sure taxpayer money that is used for transportation purposes gets used to support U.S. manufacturing and create American jobs. The ‘Invest in American Jobs Act of 2013′ will strengthen Buy America preferences, close loopholes, and improve transparency in the federal waiver process.

U.S. Representative Nick J. Rahall (D-WV), top Democrat on the House Transportation and Infrastructure Committee was joined by several representatives to introduce ‘Invest in American Jobs Act of 2013.’ The bill:

  • Strengthens existing Buy America requirements for investments in highway, bridge, public transit, rail, and aviation infrastructure and equipment to ensure that all of the steel, iron, and manufactured goods used in these projects is produced in the United States;
  • Increases domestic content requirements for public transit rolling stock and Federally procured aviation facilities and equipment, from 60 percent under current law to 100 percent by FY 2017;
  • Applies Buy America requirements to other transportation and infrastructure investment where such requirements do not exist in current law, including rail infrastructure grants, loans, and loan guarantees, Clean Water State
  • Revolving Fund grants, and Economic Development Administration (EDA) grants; and
  • Requires Federal agencies to justify any proposed waiver of the Buy America requirements and ensures that the American public has notice of and an opportunity to comment on any proposed waiver prior to it taking effect.

Rep. Rahall was joined by:

  • Rep. Peter A. DeFazio (D-OR), Ranking Member, Subcommittee on Highways and Transit
  • Rep. Corrine Brown (D-FL), Ranking Member, Subcommittee on Railroads, Pipelines and Hazardous Materials
  • Rep. Timothy H. Bishop (D-NY), Ranking Member, Subcommittee on Water Resources and Environment
  • Del. Eleanor Holmes Norton (D-DC), Ranking Member, Subcommittee on Economic Development, Public Buildings and Emergency Management
  • Rep. John Garamendi, (D-CA) Ranking Member, Subcommittee on Coast Guard and Maritime Transportation
  • Mr. Leo Gerard, President of the United Steelworkers (USW)
  • Mr. Scott Paul, President of the Alliance for American Manufacturing (AAM)

USW’s Leo Gerard said,

“The United Steelworkers urge all U.S. House members to stand with us and support ‘The Invest in American Jobs Act of 2013′ to spur job creation in the U.S. and foster domestic manufacturing.”

Gerard said the bill also applies to investments like rail and water infrastructure. USW’s endorsement letter is available here.

AAM’s Scott Paul said the ‘Invest in American Jobs Act of 2013′ stresses universal coverage for Buy America preferences, saying,

“Our Buy America laws ensure that hard-earned tax dollars support good, quality jobs right here at home. But loopholes and exemptions have weakened these laws over time, allowing more of the public’s money to be sent overseas to purchase steel and manufactured goods from countries like China.”

AAM provides some numbers to back up that this bill will help American companies and create jobs:

According to polling conducted for AAM in 2012, 87 percent of voters support policies to ensure that taxpayer-funded projects use American-made goods and materials, with virtually identical support from Republicans, Democrats, and Independents.

Additionally, research conducted by the University of Massachusetts – Amherst (PERI) found that maximizing domestic content in public works projects can increase manufacturing job gains by 33 percent.

Congresswoman Cheri Bustos (D-IL) weighed in,

“I’m proud to help introduce a bill that would create jobs here in America and make sure our roads, bridges, tunnels and rail lines are stamped ‘Made in the USA,’ said Congresswoman Cheri Bustos. “For far too long, American workers have seen their jobs shipped overseas to countries like China. This bill will make sure that the rebuilding of our transportation networks and infrastructure is through the hard work of American workers in places like the Quad Cities, Peoria, Rockford and elsewhere across Illinois.”

Why Buy America?

Why is it so important to legislate that taxpayer dollars Buy America when they can? Because “saving money” buy offshoring actually costs more than it saves. In last year’s Should Be Made In America!, I explained,

We need to rebuild our country, and we need to do it with steel and supplies that are made in America. It actually costs taxpayers more to “save money” by outsourcing then it saves because of the “safety net” costs from lost jobs and factories.

…The SF Bay Bridge

Under Governor Arnold Schwarzenegger California turned to China for the steel in the new Bay Bridge between San Francisco and Oakland. The argument for purchasing Chinese steel was that it would “save money,” but when the costs to other state and federal government agencies as well as to the larger economy are added up, the costs to taxpayers are much more than the savings.

This outsourcing cost of thousands of American manufacturing jobs (3.5 million man-hours), which meant :

  • loss of state and federal tax revenue from taxes on the wages and taxes of the workers and taxes on the companies that employed them,
  • outgoing cost of unemployment benefits, food stamps and other “safety net” programs,
  • cost of resulting foreclosures,
  • the “ripple effect” economic costs of all these lost jobs — lost sales at stores, restaurants, gas stations, etc.,
    loss of worker training and in-country manufacturing infrastructure.
  • Although the federal government has “Buy America” preferences requiring American-made materials in procurement, the state of California got around these requirements by refusing federal funding and financing the project with state funds.

There was one more BIG cost:

In addition to “safety net” cost and loss of tax revenue, there is a competitive cost when taxpayer dollars are used to purchase major components of infrastructure projects. The Chinese company that was selected to provide the steel for the Bay Bridge did not yet have the manufacturing ability to make the components. Our taxpayer dollars built the new facilities for them, and now they can bid against American companies for more projects!

So this Buy America bill is a very important component of recovery.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Is Ths Where The (Middle-Class) Money Went?

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Tuesday’s post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, was updated with this chart:

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Now, here’s another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late 70′s / early 80′s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

Correlation isn’t causation, but just sayin’…

In the post, 40% Of Americans Now Make Less Than 1968 Minimum Wage, I wrote this about that:

This means the gains went … somewhere else. See if you can guess who got them? (Hint: it’s the 1%; this is one driver of the terrible income and wealth inequality.) This breakoff of wages from productivity growth is partly (largely?) the result of trade agreements that pit Americans against exploited workers in non-democracies. This weakened the bargaining power of unions, moved factories and industries out of the country, devastated entire regions of our country — and gave the giant multinational corporations, Wall Street and the billionaires the leverage they needed…

(*Click charts for sources.)
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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Who Could Oppose A Bill Fighting Chinese Hacking?

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How come few if any of of the major-media articles reporting on Chinese hacking of computers in American businesses, news organizations and key infrastructure facilities mention that last year Senate Republicans filibustered a bill to do something about it?

Here is a NY Times report on that filibuster: Cybersecurity Bill Is Blocked in Senate by G.O.P. Filibuster,

A cybersecurity bill that had been one of the Obama administration’s top national security priorities was blocked by a Republican filibuster in the Senate on Thursday, severely limiting its prospects this year.

… The bill’s most vocal opponents were a group of Republican senators led by John McCain of Arizona, who took the side of the U.S. Chamber of Commerce and steadfastly opposed the legislation, arguing that it would be too burdensome for corporations.

Wait — the US Chamber of Commerce was lobbying for a filibuster to block a cybersecurity bill? They were trying to block a bill to fight Chinese hacking of US businesses and strategic infrastructure? What? Why would they do that?

Here’s another way the US Chamber of Commerce sides with China: U.S. Chamber Opposes Romney Vow to Punish China on Currency and the Chamber is one of the groups in the following: Business Groups Letter Opposing China Currency Legislation

But wait, there’s more: ‘US’ Chamber Of Commerce Hosts Seminars With Chinese Gov Officials To Teach American Firms How To Outsource.

Makes you wonder, whose side are they on? It also makes you wonder … just where does the US Chamber of Commerce get its money, that it would keep taking China’s side like this?

Back in 2010 Think Progress looked into this: Exclusive: Foreign-Funded ‘U.S.’ Chamber Of Commerce Running Partisan Attack Ads.

And this: ‘U.S.’ Chamber Of Commerce Funded By Top Offshoring Companies

Like I said, makes you wonder… doesn’t it? And how come We, the People have no way of knowing just who and what is funding these lobbying and election efforts?

Fix The Trade Deficit, Fix The Economy.

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Yet another report is out showing how the trade deficit is costing us millions of jobs and hurting our economy. This report has specific numbers: between 2.2 million and 4.7 million U.S. jobs, between 1 percent and 2.1 percent of the unemployment rate and a gross domestic product increase of between 1.4 percent and 3.1 percent.

These are real numbers that were carefully calculated. This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. And there are real solutions available to fix the problem.

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Reporters: Ask About The TRADE Deficit

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Government spending is We, the People doing things to make our lives better. Trade deficits are caused by billionaires and their giant corporations pitting America’s working people against exploited people who have no say, so they can drive down our wages and pocket the difference. Have you noticed that the people who are making the most noise about the budget deficit tend to be the same crowd that’s benefiting from the ruinous trade deficit?

Budget vs trade deficit… You can learn a lot about how our country’s media and policy apparatus works by taking a good look at the way the two are handled. One — pushed by the billionaires and their giant corporations — gets all the attention. The other — the cause of the destruction of our middle class — gets none.

Reporters and others: you should ask policymakers what they plan to do about the trade deficit — that’s the one that really is hurting the country.

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Why Are Republicans Trying To Cut Us Back Into Recession?

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The deficit problem is largely solved. Yet Republicans are still trying to cut us back into recession. Before the election they had an excuse: if they kept the economy down people might vote against Obama. But now? What is their game? Jobs fix deficits, and to fix jobs, fix trade and invest.

Proof In Pudding

We now have (even more) clear evidence of what we already knew for sure: cutting government cuts the economy. Along with every other country that has tried cutting their way to growth (now and in all of history, ever, anywhere), our economy was forced into decline last quarter and that decline was entirely caused by cuts in government.

Bob Borosage yesterday, quoted in the Huffington Post’s Jobs Deficit: Austerity Politics Threaten Obama’s Economy,

As Europe has shown and the IMF has warned, inflicting austerity on a weak economy is ruinous and is likely to drive us back into a recession. Those dismissing the downturn as due to an odd drop in government spending should consider that more of these are on the docket.

And Borosage again in Warning: Austerity Hysteria Endangers Your Job,

The U.S. economy shrank unexpectedly in the last three months of 2012, ending over 30 months of economic growth. Exports lagged, reflecting, in part, declining markets in Europe, now suffering a costly recession inflicted by misguided austerity policies. But the greatest cause of the decline was unexpectedly large cuts in government spending, particularly in the military.

Yes, Virginia, cutting government spending in a weak economy costs jobs.

A three-month downturn is a caution, not a catastrophe. But Washington seems too wrapped in its deficit delusions to pay attention to the flashing yellow lights.

Krugman today, in Looking for Mister Goodpain, points out that everywhere else this has been tried the result is higher unemployment and slower growth. After describing the search of an austerity success story Krugman concludes that we should start fixing unemployment,

So what do we learn from the rather pathetic search for austerity success stories? We learn that the doctrine that has dominated elite economic discourse for the past three years is wrong on all fronts. Not only have we been ruled by fear of nonexistent threats, we’ve been promised rewards that haven’t arrived and never will. It’s time to put the deficit obsession aside and get back to dealing with the real problem — namely, unacceptably high unemployment.

Jobs Fix Deficits

The cutters have had their chance. We all understand that the deficit scare is not about deficits at all, it is really about cutting what they want to cut: the things We, the People do to make our lives better, because they want that money for the 1% who pay for their campaigns.

If you really want to worry about deficits the way to fix deficits is jobs. Invest in our economy and the things that make our lives better, and the growth will come. Because democracy is the best economic policy.

Invest in a modern, 21st-century infrastructure and the economy will grow, and deficits as a percent of that economy will become very small — just like what happened when we did that before. (Unless you think the interstate highway system and airports, etc. didn’t help the economy.)

Look to history, people, not to corporate/billionaire propaganda. Look at what has worked, and do that. Investing grows economies, cutting kills economies.

A Deficit To Worry About: Our Trade Deficit

We do have a deficit to worry about, and that is the trade deficit. More than $1 billion dollars a day is drained out of our economy by the trade deficit.

The same crowd (billionaires and their giant, anti-competitive corporations) that promotes the budget deficit scare is benefitting from the trade deficit.

Since Reagan (coincidence?) we have been buying more than we sell and moving jobs and factories out of the country. This pits American workers against low-paid, exploited workers in countries that do not protect people or the environment. And it gets worse every year.

The result of Republican policies has been millions of people begging for work at any wage, and the middle class forced into ever-increasing debt. Meanwhile all the income and wealth accumulates at the very top. … It almost looks like that is the real Republican plan.

See also:

Me, October: Trade Deficit – One Root Of Many Problems.

Borosage, today: Why a Trade Strategy Should Be a State of the Union Priority

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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If You Want To Reform Something, Reform The Trade Agreements

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When you hear anyone from the big multinationals or Wall Street using the word “reform,” watch out! The way they use the word, it means give them more and We, the People get less. They want to “reform” Social Security, “reform” Medicare and “reform” the income tax code. And now they want to “reform” the taxes corporations pay on money made outside the US. It’s like “reforming” an oak tree with an ax.

$420 Billion In Taxes Owed

American corporations are holding a lot of (their shareholders’) cash “outside of the country.” (But not really outside.) HOW much money are we talking about? Approx $1.2 trillion as of last March. This is money these companies have made in international profits, owed to their shareholders or potentially used for investment in US jobs, facilities and equipment. But they won’t bring the money back to the US because they would have to pay taxes if they did. Instead they are holding it “outside of the country” and pushing for “reform” — meaning let them out of their tax bill. If this $1.2 trillion were repatriated and taxed at the full corporate tax rate of 35% this would bring an additional $420 billion to the treasury for We, the People to use to rebuild our infrastructure, etc.

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Why DC Ignores Real Problems And What You Can Do About It

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How many real and serious national problems can you list? And how many obvious solutions can you come up with literally off the top of your head? Now an experiment: list how many of them are being worked on by our DC elites or even discussed my our elite media? The answer is none. Why is this? And what can you do about it?

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