Tax Haven Rhetoric Doesn't Trump Job-Loss Reality

President Obama wants to close accounting loopholes for corporations that set up "tax havens" abroad.

Excellent.

But don't be fooled into thinking that this is a particularly
significant development in the struggle to protect American jobs -- let
alone to expand manufacturing and service industries in the United
States.

It's not.

The "tax haven" complaint has long been a favorite of politicians at
election time. Even conservative Republicans, when they find themselves
facing populist turmoil at home, ramp up the rhetoric about curbing the
creative bookkeeping of US corporations. It's an easy applause line
that appears to address offshoring in a meaningful way. But the key
word here is "appears."

It was not just Obama who said during the course of the 2008
campaign that he wanted to end tax breaks "for companies that ship jobs
overseas." Congressman Paul Ryan, the Wisconsin Republican who has
emerged as the leading congressional critic of Obama's economic policies,
spent roughly $1 million on television ads that featured Ryan declaring
it to be "unfair" for American companies to get tax breaks by producing
goods elsewhere and then importing them to the US. "Instead of
exporting jobs," Ryan asserted, "we should be exporting American products."

Don't count on Ryan, whose economic hypocrisy has been well confirmed
by now, to stick to his campaign-season stance. And don't be satisfied
if Obama makes tax-haven tinkering the central theme of his struggle to
address offshoring.

Corporate tax breaks are just icing on the policy cake for US
corporations that are in the business of shutting factories and laying
off workers in this country and moving them elsewhere. Offshoring is
driven, in large part, by bad trade policies and, increasingly, by bad
bailout policies. So far, Obama and his aides have sent mixed signals
about the administration's willingness to alter those trade policies.

And the president's bailout policies are actually promoting
offshoring. For instance, the Chrysler bailout, which the president has
been hailing as an important step toward stabilizing the US auto
industry, actually helps the the "new Chrysler" -- which will
presumably emerge from bankruptcy proceedings -- to shutter plants in the US and open them in Mexico.

Make no mistake: It is good to curb offshore tax havens and corporate tax breaks.

But if President Obama wants to get serious about job retention and job
creation in the United States, he should get serious about changing our
failed free-trade policies -- which encourage US corporations to move
plants from country-to-country in a race-to-the-bottom search for low
wages and lax regulations -- and bar the payment of billion-dollar
bailouts to companies that are shutting US factories and moving work
abroad.