December 6, 2016
In the thick of his reelection campaign in 2012, President Obama devoted six paragraphs in his State of the Union address to his plans to reverse a flow of factory jobs to foreign countries.
He called to end tax breaks for companies that outsource jobs, to cut taxes for domestic manufacturers and to levy a minimum tax on multinational corporations. He implored businesses to “ask yourselves what you can do to bring jobs back to your country,” and he told Congress, “It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.”
“Send me these tax reforms,” Obama said, “and I will sign them right away.”
Congress — including the Republican-held House of Representatives — never sent Obama any of those reforms. In the official Republican response to the speech, the then-governor of Indiana, Mitch Daniels, chided him for not focusing on a different economic issue, the growing national debt. Later that year, the GOP nominee for president, Mitt Romney, declared in a debate with Obama that “the idea that you get a break for shipping jobs overseas is simply not the case.”
Obama repeatedly proposed measures to punish offshoring companies and reward domestic producers. None of them were as far-reaching or punitive as President-elect Donald Trump's threat to slap a 35 percent tariff on goods imported from “any business that leaves our country for another country.”
But Republicans have been more receptive to Trump's efforts to prevent offshoring than they were to Obama's.
Obama has included changes to the tax code, meant to penalize companies that move jobs overseas and boost those that invest in America, in every budget he submitted to Congress since 2009. Since 2012, he has repeatedly proposed an “insourcing” tax credit and eliminating deductions for moving expenses incurred in shipping jobs abroad.
Congress ignored nearly all those proposals.
Since 2010, Obama has also proposed several steps meant to discourage so-called corporate inversions, which is the practice of companies moving their headquarters out of the United States in order to avoid corporate taxes. When his Treasury Department moved to crack down on that practice this year, Republicans howled.
“The president’s answer is to go punish the companies,” the House's then majority whip, Steve Scalise (R-La.), said at the time.
GOP lawmakers have been more muted in their critique of Trump's call on Sunday for “retribution,” in the form of tariffs, on companies that outsource under his administration.
“I think there’s other ways to achieve what the president-elect is talking about,” House Majority Leader Kevin McCarthy said on Monday.
When Trump cajoled Indiana manufacturer Carrier into canceling part of its plans to ship jobs to Mexico last week, in part by offering a state tax incentive package to the company, House Speaker Paul Ryan dismissed criticism of Trump's efforts.
“I'm pretty happy that we're keeping jobs in America, aren't you?” he said.
Two things are going on here.
One is partisanship — Trump's a Republican, and so Republicans are naturally more inclined to support his proposals than Obama's.
The bigger issue is broad policy hopes.
Republicans and business lobbyists have long said the best way to end inversions and reduce outsourcing is to cut corporate taxes. Trump's tax plan includes a big cut in the corporate rate, from 35 percent to 15 percent.
Conservatives, business groups and even financial markets appear optimistic that Trump will deliver on that rate cut, then abandon the trade threats. That's why GOP lawmakers are talking up the possibility of quick corporate tax reform, while staying away from trade and even, in the case of Carrier, endorsing a version of the policies they have long derided as “crony capitalism.”
It's not the most consistent stance the party's leaders could take, but as strategies go, it's easy to understand.
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It's no surprise that they rejected Obama's strategies, because those strategies would have been to the advantage of the working class.
If Trump suddenly proposed every initiative that Obama has proposed over the past 8 years, we are sure the GOP would jump to support him, and when things started working better, they'd be able to say, "See? We were right all along," and take credit for all the good that they refused to let Obama do.
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