The "Unpatriotic" Mr. Obam
Dick McDonald | www.riseupamerica.us

Under the disguise of patriotism, Barack Obama proposes to "protect" American jobs by a system of rewards and punishment imposed on corporations and businesses who are competitively engaged in the global marketplace. He and his Democrat sponsors figure to pander to those Americans too confused or otherwise occupied to understand interference in the free market is a devastatingly ignorant and counter-productive political philosophy.

President Bush made that mistake early in his first term by slapping tariffs on steel imports to protect American steel workers. All that did was lose more jobs than it saved. Company after company that was forced to buy the higher priced steel became non-competitive in the global marketplace and went belly up. Their workers lost their jobs trying to protect the steel workers. Enthusiastically the President repealed those tariffs noting the error of his ways.

The article below spells out what a menace Obama would be as a president believing there are no consequences in interfering with the competitive nature of business. The man believes he can demagogue his way to the White House fooling the people on one hand with his call for change and unity while stabbing the business community and eventually the consumer in the back. Think about it folks. Wal-Mart claims it saves every one of its customers $2,300 a year in lower prices. Senator Obama proposes to cut that savings by taxing the consumer at the check-out stand. Watch out for uneducated civil-rights and ghetto-plumbing attorneys and their hair-brained proposals - they are a real menace.


Obama's 'Patriot' Act

No, we're not talking about Barack Obama's opposition to the post-9/11 antiterror law. We're referring to the Senator's support for something called the Patriot Employer Act, which deserves more attention as an indicator of his economic agenda.

Along with Democratic co-sponsors Sherrod Brown and Dick Durbin, Mr. Obama introduced the bill in the Senate in August 2007. Recently in Janesville, Wis., he repeated his intention to make it a priority as President: "We will end the tax breaks for companies who ship our jobs overseas, and we will give those breaks to companies who create good jobs with decent wages right here in America."

Mr. Obama's proposal would designate certain companies as "patriot employers" and favor them over other, presumably not so patriotic, businesses.

The legislation takes four pages to define "patriotic" companies as those that: "pay at least 60 percent of each employee's health care premiums"; have a position of "neutrality in employee [union] organizing drives"; "maintain or increase the number of full-time workers in the United States relative to the number of full-time workers outside of the United States"; pay a salary to each employee "not less than an amount equal to the federal poverty level"; and provide a pension plan.

In other words, a patriotic employer is one which fulfills the fondest Big Labor agenda, regardless of the competitive implications. The proposal ignores the marketplace reality that businesses hire a work force they can afford to pay and still make money. Coercing companies into raising wages and benefits above market rates may only lead to fewer workers getting hired in the first place.

Under Mr. Obama's plan, "patriot employers" qualify for a 1% tax credit on their profits. To finance this tax break, American companies with subsidiaries abroad would have to pay the U.S. corporate tax on profits earned abroad, rather than the corporate tax of the host country where they are earned. Since the U.S. corporate tax rate is 35%, while most of the world has a lower rate, this amounts to a big tax increase on earnings owned abroad.

Put another way, U.S. companies would suddenly have to pay a higher tax rate than their Chinese, Japanese and European competitors. According to research by Peter Merrill, an international tax expert at PriceWaterhouseCoopers, this change would "raise the cost of capital of U.S. multinationals and cause them to lose market share to foreign rivals." Apparently Mr. Obama believes that by making U.S. companies less profitable and less competitive world-wide, they will somehow be able to create more jobs in America.

He has it backwards: The offshore activities of U.S. companies tend to increase rather than reduce domestic business. A 2005 National Bureau of Economic Research study by economists from Harvard and the University of Michigan found that more foreign investment by U.S. companies leads to greater domestic investment, and that U.S. firms' hiring of more offshore workers is positively, not negatively, associated with the number of American workers they hire. That's in part because often what is produced overseas by subsidiaries are component parts to final, higher-value-added products manufactured here.

Mr. Obama is also proposing to raise tax rates on affluent individuals, as well as on capital gains and dividends. This would also lead to more capital and jobs leaving the U.S. The after-tax return on U.S. investment would fall appreciably if these tax hikes were adopted, and no amount of tax-credit subsidy will keep capital from fleeing to lower tax jurisdictions.

If the U.S. didn't impose the second highest corporate income tax rate in the world, companies would have less incentive to move jobs overseas. Rather than giving politically correct companies a 1% tax credit, it makes more sense to reduce the U.S. corporate tax rate for everyone -- by at least 10 percentage points to the global average.

Economists have long understood that companies don't really pay taxes; they merely collect them. A study by the American Enterprise Institute has shown that U.S. workers bear the cost of the corporate income tax in lower wages and salaries. To borrow Mr. Obama's language, what's really unpatriotic is the 35% U.S. corporate tax rate.