Barack Obama promised voters four years ago that he would work to slow the outflow of American jobs to other countries, proposing to revamp a federal tax code that encourages companies to maintain overseas operations.
Obama as president has continued to call for rewriting the rules that allow U.S. corporations to avoid paying taxes for a time on income generated overseas.
But the broad tax changes have not happened.
While White House officials say they have been waiting on Congress to act, Obama’s critics, primarily on the political left, say he has repeatedly failed in other ways to protect American jobs from being moved overseas. They point to a range of actions they say he should have taken: confronting China, reining in unfettered trade and reworking a U.S. visa program that critics say ends up sending high-tech jobs abroad.
The issue of overseas outsourcing has returned to the center of the presidential campaign, with Obama hammering the record of Mitt Romney’s financial company. The debate intensified in recent weeks with Obama’s campaign attacking his Republican rival after a Washington Post article reported that Romney’s private-equity firm, Bain Capital, had invested in companies that specialized in helping other firms relocate work overseas.
American jobs have been shifting to low-wage countries for years, and the trend has continued during Obama’s presidency. From 2008 to 2010, U.S. trade with China alone cost about 450,000 American jobs because of the growth of Chinese exports, said Robert E. Scott, a pro-labor advocate at the liberal Economic Policy Institute. That figure was less than in previous years, but the decrease was probably tied to the U.S. economic slowdown, which crimped demand for imports.
“I think he has walked away from the campaign commitments,” said Scott, the institute’s director of trade and manufacturing policy research. “He has done far too little to improve U.S. trade.”
According to a study by the U.S. Bureau of Economic Analysis, large American companies in 2010 barely added any workers in the United States, increasing their numbers by 0.1 percent, while they expanded their foreign workforce by 1.5 percent. That was business as usual — between 2004 and 2010, the bureau reported, foreign affiliates hired 2 million workers while 600,000 were added by the companies at home.
“The president could not have been more emphatic about his vision for trying to eliminate the incentives for offshoring and increase incentives to create jobs here,” said Brian Deese, deputy director of Obama’s National Economic Council. “We have tried to use all the tools available to us to make creative administrative changes where we can to discourage offshoring.
During his run for president in 2008, Obama promised to “end those tax breaks to companies that ship jobs overseas.” It was a pledge he made repeatedly on the campaign trail.
Obama has continued to propose the tax rewrite during his presidency, but only this year did he put it in the spotlight. In his State of the Union address in January, he unveiled his most ambitious plan yet to overhaul the tax code and discourage the offshoring of U.S. jobs. The proposal’s centerpiece was a minimum tax on global corporate profits that Obama has continued to tout.
But neither Democrats in the Senate nor Republicans in the House have taken up the measure.
White House officials say they are pushing Congress to bring the issue up for a vote before the August recess. It remains unclear whether lawmakers will do so. The tax rules could be addressed during negotiations over a broader overhaul of the tax code, which is unlikely to occur until after the November election.
“We laid them out in a very high-profile way,” said senior White House economic adviser Jason Furman. “Now for broad reform, you need Congress. Everybody acknowledges that substantive tax reform takes time to accomplish.”
American jobs have been flowing overseas for years. While the dynamic hurts groups of workers, it can lead to less-expensive goods and services for American consumers and can produce more-advanced American industries to replace old ones.
His aides say Obama has enforced U.S. trade laws far more aggressively than his predecessor, President George W. Bush, and sought to erect tariffs to protect American workers in the tire industry and force China to stop hoarding raw material used in high-tech manufacturing. Administration officials also say Obama has used his bully pulpit, pressuring U.S. employers to keep jobs in the country.