Research Briefing

Dems’ Political Ploy Would Put U.S. At

“Competitive Disadvantage” And Kill Jobs

“Majority Leader Harry Reid Said Friday That He Would Force Members To Attend A Rare ‘Live Quorum’ Monday Night To Debate The Democrats’ Outsourcing Legislation.” (John Stanton, “Reid Schedules Rare Live Quorum Monday Night,” Roll Call, 9/24/10)

IN REALITY, DEMS’ SO-CALLED “OUTSOURCING BILL” WOULD PUT U.S. AT A

“COMPETIVE DISADVANTAGE,” KILL JOBS AND SPIKE THE DEFICIT

Senate Finance Committee Chairman Max Baucus (D-MT) Said The Bill “Puts The United States At A Competitive Disadvantage.” “Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, expressed concern last week that the bill would damage the competitiveness of U.S. companies, said Congress Daily, a Capitol Hill publication. ‘I think it puts the United States at a competitive disadvantage,’ Mr. Baucus said. ‘That's why I'm concerned.’”  (Michael M. Phillips, “Bill To Slow Overseas Hiring Debated,” The Wall Street Journal, 9/26/10)

U.S. Chamber Of Commerce Says That The Dems’ Bill Will Not Create Economic Growth Or Make American Companies More Competitive Worldwide. “S. 3816 would create a payroll tax holiday for employers moving jobs to the United States from overseas in a purported attempt to stimulate job growth. However, the concept of economic growth is not a zero-sum game. Replacing a job that is based in another country with a domestic job does not stimulate economic growth or enhance the competitiveness of American worldwide companies.” (R. Bruce Johnston, “Letter To Members Of The United States Senate Regarding The Creating American Jobs And Ending Offshoring Act,” The U.S. Chamber Of Commerce, 9/23/10)

• It Would Subject American Companies To “Double Taxation” And “Ultimately Result In The Loss Of Jobs.” “S. 3816 would also significantly curtail deferral, reversing longstanding tax policy and subjecting American worldwide companies to immediate double taxation on the earnings of their foreign subsidiaries. Limiting deferral would hinder the global competitiveness of these American companies, impede U.S. economic growth, and ultimately result in the loss of jobs – both at the companies directly impacted and companies in their supply chains.” (R. Bruce Johnston, “Letter To Members Of The United States Senate Regarding The Creating American Jobs And Ending Offshoring Act,” The U.S. Chamber Of Commerce, 9/23/10)

Dems’ Competitiveness Disadvantage Bill Will Cause U.S. Companies To Lose To Foreign Firms, Leading Some To Move Overseas To Countries With Lower Corporate Tax Rates. “But the more frequent result will be that U.S. companies lose business to foreign rivals, U.S. firms are bought by tax-advantaged foreign companies, and some U.S. multinational firms move their headquarters overseas. They can move to Ireland (where the corporate tax rate is 12.5%) or Germany or Taiwan, or dozens of countries with less hostile tax climates.”  (Editorial, “The Send Jobs Overseas Act,” The Wall Street Journal, 9/28/10)

According To CBO, The Competitiveness Disadvantage Bill Will Add $720 Million To The Deficit, Causing Senate Dems To Have To Waive Their PAYGO Rules. “The Congressional Budget Office has estimated that the bill would add $720 million to the federal budget deficit over 10 years, meaning the Senate would have to waive pay-as-you-go budget rules to advance the legislation, even if it survived the initial 60-vote procedural hurdle, a Democratic aide said.”  (Brian Friel, “Senate Democrats Tee Up Jobs Debate, But GOP Unlikely To Go Along,” Congressional Quarterly, 9/24/10)

DEMS ARE JUST PUSHING THE BILL TO SCORE PRE-ELECTION POLITICAL POINTS …

“Democrats Around The Country Are Making This Issue Their Number One Campaign Theme, Since They Can't Run On Health Care, Stimulus Or Anything Else They've Passed Into Law.” (Editorial, “The Send Jobs Overseas Act,” The Wall Street Journal, 9/28/10)

Reid Plans A “Symbolic” Vote On The Bill Meant “To Score Political Points” Before The Midterm Elections. “Mr. Reid is facing a tight re-election bid in Nevada, which has the highest unemployment rate in the country. He plans to hold a vote Tuesday to test whether the measure has the support to pass—and to try to force the GOP to register aloud its opposition before lawmakers head home to campaign ahead of the Nov. 2 midterm elections. Both parties have used such symbolic votes to score political points in the past.” (Michael M. Phillips, “Bill To Slow Overseas Hiring Debated,” The Wall Street Journal, 9/26/10)

Reid Is Waging “A Messaging War” Instead Of Actually Legislating. “With little actual legislating to do, Senate Majority Leader Harry Reid (D-Nev.) is resorting to a messaging war against Republicans in the final week before the chamber adjourns for elections, forcing all senators to be present in the chamber Monday night to duke it out over jobs initiatives.” (Meredith Shiner, “Harry Reid Preps Procedural War Against Republicans,” Politico, 9/24/10)

Durbin Sees More “Urgency” In This Bill Than In Providing Certainty About Taxes For Americans By Voting On The Dems’ Tax Hike. “Sen. Richard Durbin (D-Ill.), also a leadership member, said Democrats decided Monday to stall action on the Bush tax cuts because the current rates remain in place until the end of the year. ‘We feel there is a greater sense of urgency’ in passing the offshore provisions, Durbin said.” (Shailagh Murray, “Senate Debates Tax Increases On Companies That Move Jobs Overseas,” The Washington Post, 9/24/10

… AT THE EXPENSE OF U.S. COMPANIES AND MANUFACTURING WORKERS

Previously, Microsoft CEO Said He Would Move Jobs Overseas If Dems Plan To Increase Taxes On U.S. Companies’ Profits Made Overseas. “Microsoft Corp. Chief Executive Officer Steven Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.” (Ryan J. Donmoyer, “Ballmer Says Tax Would Move Microsoft Jobs Offshore (Update3),” Bloomberg, 6/3/09)

National Association Of Manufacturers Says That Congress Should Focus On Extending The Bush Tax Cuts And Not Their “Competitive Disadvantage” Bill. “Sen. Richard Durbin (D-IL) introduced S. 3816 on Tuesday. According to CQ Politics, Senate Democratic leadership has bring that bill to the floor next week rather than vote on any of the major tax provisions that expire at the end of 2010.” (Carter Wood, “S. 3816: Higher Taxes, Damaged Competitiveness, Fewer Jobs,” National Association Of Manufacturers, 9/24/10)

• NAM: The Dems’ Bill Would Place Our Manufacturers At A Disadvantage To Foreign Competitors. “The proposed acceleration of U.S. tax on foreign subsidiary operations has no counterpart in the tax laws of our foreign trading partners. Ending deferral in these cases would place U.S. affiliates at a cost disadvantage vis-à-vis their foreign-based competitors. At the same time, the potential scope of the disallowance proposal would have an overall chilling impact on the ability of some companies to meet non-tax cost pressures in delivering goods to American consumers.” (Carter Wood, “S. 3816: Higher Taxes, Damaged Competitiveness, Fewer Jobs,” National Association Of Manufacturers, 9/24/10)

22 Million People In The U.S., Including 53 Percent Of All Manufacturing Employees, Are Employed By Companies With Operations Abroad. “American companies with overseas operations support and create U.S. jobs. An estimated 22 million people in the United States—including more than 53 percent of all manufacturing workers—are employed by companies with operations abroad. With more than 95 percent of the world’s customers outside the United States, American companies establish operations abroad in order to penetrate foreign markets and add new customers.” (Carter Wood, “S. 3816: Higher Taxes, Damaged Competitiveness, Fewer Jobs,” National Association Of Manufacturers, 9/24/10)

Former SEIU Leader Andy Stern, Realizing The Dangers Of Double Taxation, Has Proposed A Plan That Would Allow Corporations Wanting To Bring Profits Home A Temporary Relief From Double Taxation. “In a recent blog entry for the Washington Post, Mr. Stern called for a law that would allow American multinational corporations to bring home, at a temporary low tax rate, a half-trillion dollars in overseas profits. Under the current tax code, these profits would be taxed at 35%, minus the amount already taxed by the government of the foreign country where the profits were earned. Corporations seek to avoid this double taxation, of course, so they keep their money parked outside the U.S.” (James S. Tisch, Op-Ed, “Andy Stern Sees The Light On Overseas Profits,” The Wall Street Journal, 9/24/10)