When the Nielsen Company broke its word and began outsourcing jobs to India, a small Florida community did what Congress didn't have the will to do: It moved to end tax breaks for the media giant.
When a private company working for Ohio outsourced jobs to El Salvador, Gov. Ted Strickland knew what to do: He signed an executive order banning the outsourcing of services paid for with state dollars.
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No matter what the technical indicators say, the U.S. economy is in terrible shape, and the IT industry is still suffering painful, long-lasting unemployment. I don't think the government can solve all of our economic problems, but there is one thing it can do: Stop rewarding companies that send jobs overseas.
That could have happened last week. Indeed, such a bill had passed the House, and a majority of the Senate approved, but our political system is so gridlocked, so beholden to corporate interests, the measure never came to a vote. It was filibustered by every single Republican senator with the help of a few Blue Dog Democrats. As a result, the tax dollars of workers who've lost their jobs to lower-paid employees overseas will flow to the very companies that fired them.
The twisted logic of offshoring
The Creating American Jobs and Ending Offshoring Act would have ended tax deductions for expenses incurred when companies close U.S. operations and send the work overseas. It would also have instituted a new tax on products manufactured by foreign workers that were previously made in the United States.
I have enormous trouble with the logic of those who support tax breaks for overseas outsourcing. On the one hand, conservatives say that government should keep its hands off the economy and that the market will do a better job with less regulation. OK, that's a defensible point of view.
But the same people argue that ending those tax breaks is intrusive and will damage the economy because all tax increases stifle growth. Wait a minute -- if you want government to let the market run itself, you can't support a tax policy that encourages a particular form of behavior. Either you want the government to remain neutral or you don't.
Logic, however, isn't the point; money is. The technology industry spent $111 million to lobby lawmakers and regulators last year, but that $111 million is a mere drop in the bucket. It doesn't include lobbying and campaign contribution by companies like Nielsen or Parago, which won a contract to administer a state program in Ohio and then sent the jobs to Central America.
And it doesn't include money spent by the powerful U.S. Chamber of Commerce, which has gone to bat for overseas outsourcing year after year. During the debate over the stimulus, the U.S. Chamber of Commerce fought efforts to include a provision that would encourage taxpayer money to be spent on products made by domestic companies. The chamber, by the way, has made the outsourcing issue explicitly political, saying it may use the vote on the outsourcing bill to determine a senator's business-friendly rating in the lobby's annual scorecard. And did I mention that the chamber plans to spend $75 million to back candidates in the mid-term election?