- The Washington Times - Thursday, October 14, 2010

With unemployment stuck above 9 percent, Democrats have increasingly seized on outsourcing of U.S. jobs as a campaign issue, arguing the GOP’s policies have encouraged companies to shift work overseas.

Republicans say a punitive corporate tax structure and burdensome federal regulations are responsible for both unemployment and outsourcing.

The only problem is that neither side can pinpoint just how much the migration of jobs is responsible for the gloomy economic picture.

“Nobody knows how many jobs have moved overseas,” said Michael Montgomery, an economist with IHS Global Insight. “The reality is, the statistics aren’t kept for the simple reason that it is almost impossible to gather those statistics. You can make estimates of it, but you can’t prove it.”

That uncertainty has left candidates and outside groups free to boil complex economics and labor flows down into a pointed blame game on the campaign trail.

The issue dominated Democrats’ efforts during their short September legislative stint, as Senate Majority Leader Harry Reid unsuccessfully pushed a bill designed to end tax breaks for U.S. companies that move jobs and manufacturing plants overseas. House Speaker Nancy Pelosi pushed through a bill that would raise tariffs on Chinese imports if the communist nation keeps an artificial lid on its currency.

Before leaving town, Mrs. Pelosi and House Democratic leaders also unveiled a “Make It in America” agenda that she said was aimed at “creating good-paying jobs here and not shipping them overseas.”

Since then, polls have shown increasing voter anxiety over outsourcing of jobs, and China has become a common target for both parties to attack - a trend that is likely to increase after the Commerce Department released numbers on Thursday showing that the trade deficit with the Asian giant had ballooned to $28 billion in August, up from July’s $25.9 billion.

The concerns over trade and outsourcing of jobs to China have been on full display in Pennsylvania, where Rep. Joe Sestak, the Democratic candidate for the state’s open Senate seat, plans to meet Friday with employees of a small company near Harrisburg to speak out against the ongoing job loss and outline the steps the country can take to keep and expand employment opportunities in the state. The meeting follows a campaign ad, sponsored by the Democratic Senatorial Campaign Committee, in which a narrator claims Mr. Sestak’s Republican opponent, Pat Toomey, “is fighting for jobs. In China.”

“In Congress, Toomey voted to give China a special trade status. Toomey’s vote for China helped cost us 2.4 million jobs. Job-killer Pat Toomey, maybe he ought to run for Senate in China,” the narrator says.

The Toomey camp shrugs off the attack, saying that the Republican’s support of trade has helped Pennsylvania’s economy grow and helped thousand of businesses and farms in the state who rely on exporting their goods and services around the world. The campaign also said that former President Bill Clinton, a Democrat, supported China’s entrance into the World Trade Organization.

Meanwhile, the Republican National Congressional Committee is running at least 10 ads that hammer incumbent Democrats for supporting the $812 billion stimulus package that included money for grants that went to green-energy jobs in China.

“Why did Tim Walz vote for a bill that allowed more than $1.5 billion to go to companies overseas?” a narrator asks in an ad running in Minnesota’s 1st Congressional District, which Mr. Walz represents. “Walz helped create jobs in China, and we paid for it.”

The political fight is likely to increase. Democratic strategists James Carville and Stanley Greenberg last week advised candidates to focus on the “offshoring” debate after they found in a survey that fair-trade arguments could help Democrats avoid losses in November. In a memo, they implored Democrats to attack Republicans for supporting free-trade agreements with Colombia, Panama and South Korea and protecting “the loophole for companies outsourcing American jobs.”

It also encouraged them to say, “I have a different approach, to give tax breaks for small businesses that hire workers and give tax subsidies for companies that create jobs right here in America.”

Meanwhile, the AFL-CIO has created a job-tracker database that it says lists on more than 400,000 corporations that have exported jobs, violated health and safety codes or engaged in discriminatory or other illegal practices.

The ongoing debate overlooks the fact that most economists generally agree that the decline of American manufacturing and the increase in white-collar jobs relocating offshore are a natural step in embracing the modern global economy.

“All you have to do is look at the price tags of the stuff that comes from Asia, specifically China, and compare that with what it was five or 10 years ago,” Mr. Montgomery said. “That benefit is spread across larger number of people than just ones who are directly affected by their job moving to China.”

Mr. Montgomery estimates that no more than 500,000 of the 8 million jobs lost since the start of the recession are attributable to offshoring.

The issue of outsourcing started gaining attention in the 1970s when manufacturing jobs started migrating to countries such as Taiwan and Mexico, where labor was cheaper.

But in this decade, as the recession has taken its toll and more high-paying white-collar jobs have started to follow manufacturing positions overseas, the debate over trade has mushroomed.

In the 2004 presidential election, Sen. John Kerry, Massachusetts Democrats, blasted away at President George W. Bush after his top economic adviser wrote that the movement of U.S. jobs offshore owing to cheaper labor costs would prove “a plus for the economy in the long run.”

Four years later, Sen. John McCain, Arizona Republican, came under fire in the Republican presidential primary after he told a crowd in Michigan, “I’ve got to give you some straight talk: Some of the jobs that have left the state of Michigan are not coming back.

“They are not. And I am sorry to tell you that,” he said.

While many believe that statement, and many like it, have made sound economic sense, with the economy and job loss first and foremost in voters’ minds, Democrats and Republicans have learned that when it comes to winning an election, nice-sounding political rhetoric can trump unfortunate economic realities, said Steven M. Suranovick, an economics professor at George Washington University.

“Voters and workers are looking for short-term solutions to a problem that has been here for a couple years now, and it is very easy for politicians to pick up on and point the finger at outsourcing as a way of gathering support - especially among blue-collar workers,” he said.

• Seth McLaughlin can be reached at smclaughlin@washingtontimes.com.

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