09.27.10

Whitehouse: We Must Stop Companies From Moving American Jobs Overseas

Mr. WHITEHOUSE. Mr. President, let me first thank the Senator from Michigan who has worked so long and hard on this. We do, indeed, have in Rhode Island the distinction of being in the top three or four States for unemployment for month after month after month. Rhode Island is still hovering near 12 percent unemployment.

For a State that was once the manufacturing capital of the world, for a State that was once the place where the industrial revolution was sparked off, to be in this situation is very painful for a lot of Rhode Islanders, and it is particularly painful and frustrating to have that situation exacerbated by our country's tax and trade laws. At last we are getting around to doing something about it.

So I am here today in strong support of the Creating American Jobs and Ending Offshoring Act. I wish to speak a little bit about the bill itself because one of the things I have noticed about my colleagues on the other side is that they have spoken about anything and everything. They have spoken about taxes. They have spoken about the deficit. They have spoken about wages. They have spoken about every economic issue they can bring to mind, but they haven't spoken about this bill. Nobody has said this is a bad piece of legislation; they just don't want to get to it. They want to give long speeches about macroeconomics rather than look at this bill and how it will help. It is a shame because we are just trying to get to this bill.

Last week, Leader Reid made a procedural motion that the Senate take up this legislation to address the epidemic of companies laying off American workers and moving their jobs overseas.

I was just in a facility in Rhode Island a few weeks ago and there were machines running and there were people working. But if you walked around the machine shop floor, you could see marks on the floor marked off in tape with holes where bolts had been taken out. Those were machines that had been taken out of a Rhode Island factory and shipped to South America so that South American workers could work those machines and sell the exact same products that had been made in Rhode Island back into America.

So this is a very real and practical problem we have to face. With the kind of unemployment we have still in this country, I hope every one of my colleagues, Republican as well as Democrat, will acknowledge that this is a topic that is worthy of debate in the Senate.

Senator LeMieux from Florida was just here. He is a very distinguished Member of this body, and I consider him a personal friend. He came forward with a great list of ideas he believed we should be considering in order to improve our jobs posture and move America forward. Those were all fine ideas, and every single one of them he could have offered as an amendment if he would vote yes to go to this bill.

Where we are is the Republicans saying we are not even going to discuss this piece of legislation. So every good idea or what they consider to be a good idea we have heard about tonight, bear in mind their votes will prevent them from offering amendments to implement those very ideas that they are claiming are good ideas.

This is a basic, smart piece of legislation. The Creating American Jobs and Ending Offshoring Act would close some really perverse loopholes in the Tax Code that, right now, reward American companies for moving American jobs overseas. The law, right now, permits companies that close down American factories and offices and move those jobs overseas to take a tax deduction for the costs associated with moving the jobs to China or India or wherever. Those machines that were unscrewed, unbolted from that Rhode Island shop floor and shipped to South America so that South American workers could run them--the cost of that was a tax deduction subsidized by the American taxpayer. That simply doesn't make sense.

If we want to send a message that we are tired of sending American jobs offshore, then giving people a tax deduction for doing that should be a practice that ends. We would end those taxpayer subsidies for the expenses of moving American jobs overseas.

That taxpayer subsidy is just the cherry on top--the big prize--for companies that are offshoring jobs. The real money comes from their ability to defer paying taxes on profits they earn overseas. Here is an example. Let's say a company manufactures a boat in my State of Rhode Island. That company pays taxes on its profits from selling that boat every year that it earns a profit. Let's say there is a company right across the street--a competitor--that also makes boats, and it decides that it is going to take its manufacturing and move it overseas to China. They will make the same boat but will make it in China and then sell it back to the same U.S. customer. They are identical except that one company moved its jobs overseas. The company that moved its jobs overseas is not obliged to pay income taxes on its profits from the overseas manufactured boat at that time. It can strategically defer and maneuver its taxing to pay it later and use the money in the meantime instead of having to borrow capital or pay it at a time when it has offsetting deductions. This deferral gaming can be quite lucrative for the companies that move jobs overseas, and it can be quite costly for taxpayers. So we close this loophole too.

These tax loopholes that reward shipping jobs overseas have served as powerful incentives for companies to do so, and the numbers bear this out. According to our Bureau of Economic Analysis, 1999 to 2008, the number of U.S. employees of multinational companies declined by nearly 2 million--1.9 million jobs--out of America from multinational corporations. During the same period, these same companies increased their foreign employment by 2.4 million--2 million jobs out of this country and into foreign countries by American multinationals.

Some people think that is a wonderful idea. These are our friends at the U.S. Chamber of Commerce. This is a letter they sent on September 23 to the Members of the Senate from the Chamber of Commerce of the United States of America:

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.

This is our U.S. Chamber of Commerce, the same entity that is out running ads trashing candidates on behalf of Republicans, the same entity that represents all the big multinationals--Exxon, BP, the big insurance companies, the big banks, the folks charging you a 30 percent interest rate on your credit card. That is whom these people represent. Again, they bring this idea to the table:

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.

I will tell you what it does. It will enhance the heck out of the economic growth of the family who gets that domestic job. It will enhance the heck out of the economic competitiveness of a neighborhood that doesn't have a factory shipped overseas so that the company can move the jobs offshore. I don't know whom these people are interested in--the U.S. Chamber of Commerce--but it is definitely not the American family, the American neighborhoods or the American worker. ``Replacing a job that is based in another country with a domestic job. .....'' That is really astounding.

So we need to get to this bill, and we need to begin to reverse the decades-long decline in U.S. manufacturing. This cannot do everything, but it would be a first step.

When we were growing up, the vast majority of the clothes we wore, the cars on our roads, and the food on our tables was all produced in the United States. That time has passed, that time is gone, that time is no more. Today, you would be hard-pressed to find items in a department store that were made domestically. Just go to Walmart--it is China-mart.

It is not just consumer goods either. Earlier this year, I had a meeting with an organization in Rhode Island that runs one of our major ports. Together with Senator Reed, we were able to argue successfully for one of the TIGER grants in the economic recovery bill to help support this port so that they can grow jobs and add to the business that comes to Rhode Island. Part of what they need to do is purchase and install a big cargo crane, a port crane to offload the goods that come in and stack them so they can go onto trains and trucks and off into commerce. Guess what we discovered. We discovered that the Rhode Island organization didn't plan to buy the multimillion-dollar crane from an American company. Do you know why that is? That is because no American company any longer makes a port crane. No matter how much you want to buy a crane for an American port from an American company, you can't do it. We don't make them any longer. Something has gone badly wrong when you go to the biggest retail outlet in America and you can't buy American-made products--it is 90-plus percent from China--and when you go to a port and the crane that is unloading the Chinese goods cannot even be made in America any longer.

So we need to get to work. We need to support our American manufacturing base, and we need to take the wrinkles out of the Tax Code that make it advantageous for a company to move those jobs overseas, with taxpayer subsidies and competitive advantage against a company that is struggling at home trying to do the right thing and keep jobs here.

All we are asking of our colleagues is that they allow us to go to the bill and have this debate. When they come to the floor and object to this procedural motion, and they have nothing to say about this bill but only general bromides--I have had so many bromides that I am ready for some Bromo-Seltzer. They won't talk about this bill. The reason is that it is a good bill, and it would help American jobs, and they don't want anything to pass now. I urge them to change their minds. It is too important to let this opportunity pass.

I yield the floor.