When it comes to economic policy, Robin Carnahan is no Paul Krugman. But then again, she’s no Roy Blunt either, and that’s for sure. I’d rather put Phil the Gorilla in charge of job creation than Blunt. And Phil is dead.
In some respects, Carnahan deserves kudos. In others, raspberries.
Kudos: She proved, during her stint as Secretary of State, that she takes the problems of the middle class and of small businesses seriously, standing up to corporate malfeasance against Missouri families to the tune of $10 billion. That’s ten with a B that she got back for families from banks and brokerage houses that scammed them. And she saved small businesses nearly $12 million.
She pointed out at the kickoff of her “Stop the bull” tour:
We gotta focus on small businesses. While we know these big … big businesses are getting bailed out, small businesses continue to struggle. But the fact is–we all know this–that small businesses are the engines of economic growth in our country. (…) So that’s why I think we need to support them with the tax breaks. (…) These small business owners, you know they never come to Washington asking and begging for bailouts. You notice that? (…) They just want a fair shake.
So I think Washington needs to get serious about helping them do what they do best, which is create jobs. What does that mean? It means we can support them with tax rates and tax breaks if small businesses hire unemployed worker–and all kinds of other incentives that help them create jobs.
Raspberry (sort of): You’ll think I’ve gone mad to criticize Carnahan for promoting tax code changes designed to stop corporations from sending jobs abroad. Indeed, the crowd at that kickoff was enthusiastic when Carnahan mentioned her desire to slow outsourcing. She wants changes to a tax code that is “not only filled with loopholes that benefit these companies that [outsource jobs], it actually encourages them to do that.” Since she didn’t offer details about those faulty tax policies, I went looking for some. And got more than I bargained for from FactCheck.org.
A 2004 article there analyzed John Kerry’s proposal to change the tax code in the hope of limiting outsourcing. FactCheck maintained–backing up its contention with corroboration from a Nobel laureate in economics, from Ben Bernanke, and from a couple of Democratic economists–that changing the tax policy would have minimal effect on the American job situation. First of all, taxes have little to do with whether a company decides to outsource jobs. Obtaining cheap labor and locating factories nearer to their markets are much more powerful motives. And besides, outsourced jobs are a tiny fraction of the job loss picture in this country, about one percent of the jobs lost, by Bernanke’s estimate. In fact, and you’ll find this hard to credit, companies that outsource jobs usually are sending relatively low paying jobs abroad and creating even more well paying jobs right here.
Close your mouth and read on:
Recent studies show that when companies move some jobs abroad the savings stimulate job creation at home. Matthew Slaughter, a Dartmouth economist, looked at foreign and domestic job growth in multinational corporations from 1991 to 2001. He found foreign affiliates of American companies added 2.9 million workers to their payrolls overseas, but at the same time those companies added 5.5 million US employees to their payrolls.
How can that be?
Bernanke: An important reason for the U.S. trade surplus in business services is that this country provides many high-value services to users abroad, including financial, legal, engineering, architectural, and software development services , while many of the services imported by U.S. companies are less sophisticated and hence of lower cost.
Changing tax policy vis a vis outsourcing isn’t going to help the job picture much. So okay, it doesn’t exactly deserve a raspberry, but it’s not something to cheer for either. She should save her breath for more important concerns. Such as:
Kudos: Last February, she offered an articulate explanation of why the U.S. needs to go whole hog into creating alternative energy as a means of weaning ourselves off foreign oil and getting our soldiers out of parts of the world where the weapons used against them are being financed by the oil dollars we send there.
Kudos: You gotta love it when she lays into subsidies for the oil industry and when she strafes Blunt because he shills for same. Last year, Exxon Mobil posted a record profit of $45 Billion and paid lots of income taxes–to other countries. But none to the IRS. Despite all the corporate welfare it got here.
RASPBERRY: Carnahan favors enacting “the kind of commonsense, bipartisan reforms-such as strong “pay as you go” rules-that helped turn massive deficits into surpluses in the 1990s. Missouri families have to balance their checkbooks, and so should our government.”
Aargh! The federal government shouldn’t spend money to prime this wobbly economy?
and Michael Bersin.
And keep in mind that after FDR’s first burst of Keynesian spending had a salubrious effect during the Great Depression, he and the Democrats backed away from priming the economy, it tanked again, and the Democrats lost a passel of House seats in 1936.
Look, there’s plenty to applaud about Robin Carnahan on the jobs front. And come November, when this Senate race ends, I want the checkered flag waving over Carnahan as she crosses the finish line. But as for flags, this business of tightening the federal belt in a deep recession? That’s a red flag for me.
Previous postings about the “Stop the bull” kickoff: