Made in America: The Good And Bad News For A Jobs Recovery

Three important things happened in the last few days for manufacturing in America. Two are good. One is really really bad. The House passed good bills promoting American manufacturing, and the Joint Economic Committee released a new report finding that our manufacturing sector has gained jobs for six months in a row. Unfortunately, the House failed to pass a bill that would eliminate tax breaks for companies that ship jobs overseas.

First, the good news. The House democrats have selected Made in America as a theme for the campaign through the fall. That’s smart politics because it’s popular across political parties and demographic groups. And it’s smart policy because America can’t thrive without a robust manufacturing sector.

Creating goods that Americans can use and people in other countries can buy is crucial to ending our $650 billion annual trade deficit. Services are great, as far as they go. But our deficit in goods is five times as big as our surplus in services. The imbalance is unsustainable.

The full “Make it in America” initiative includes a range of legislation, some of which has already passed in the House, and some in the Senate. Both chambers passed the U.S. Manufacturing Enhancement Act (HR 4380), which reduces some tariffs and therefore some costs on U.S. manufacturers. Last week the House passed the Clean Energy Technology Manufacturing and Export Assistance Act (H.R. 5156), designed to help promote export of clean energy goods and technology, and the National Manufacturing Strategy Act (HR 4692), which would require the administration to develop an overall manufacturing strategy and update it regularly. The week before, the House passed The Strengthening Employment Clusters to Organize Regional Success Act (SECTORS, HR 1855), designed to help address local skills shortages by bringing employers in key industries together with education, labor, and other groups to provide training tailored to local manufacturing needs.

None of these Acts alone hits a home run. Altogether they barely constitute a single. But they show unity of purpose and steps in the right direction.

The next piece of good news is about progress so far. On Monday the Joint Economic Committee released a new report on manufacturing, “Signs of Recovery.” The report finds that the American manufacturing sector has gained jobs every month since December 2009, a total of 136,000 jobs. It’s the first time since 2006 that the manufacturing sector has put together two or more consecutive months of growth.

Like so much else in the Obama economy, we can cheer the positive change in direction — but it’s only a tiny step forward. We’re still five million manufacturing jobs behind where we were in 2001, when China joined the WTO.

But at least we’re trying. The report says: “A recovery in the manufacturing sector is vital to America’s global competitiveness; the sector is a key source of good-paying jobs that can play an important role in spurring growth in other sectors of the economy that support manufacturing. Increasing exports of manufactured goods will also help improve the country’s trade imbalance and current account deficit.”

Here at Campaign for America’s Future we’ve been saying that for months. It’s nice to see it from the Joint Economic Committee.

Now the bad news. Even as I work to applaud these baby steps, the more important steps still go nowhere. Last week the House failed to pass the Investing in American Jobs and Closing Tax Loopholes Act (H.R. 5893). Republicans were unified in opposition and the Democrats couldn’t muster the two-thirds majority needed under the exceptional rules of the day.

The bill provided some modest reductions in small business capital gains taxes, but the crucial element was the elimination of tax breaks for companies that ship taxes overseas. Those tax breaks (and others, not even included in this bill) are crippling American industry. America actually subsidizes American businesses to move American jobs offshore. As President Obama has said, our tax code “says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.”

People think the decline of American manufacturing is about competing with low wage workers in low wage countries. It’s not.

Our troubles come from the distortions of the tax code. Our troubles come from illegal Chinese subsidies and currency manipulation. Our troubles come from the incentives on multi-national corporations nominally headquartered in America to do things that are good for them but bad for the country.

So there’s more than just news here, good, bad or otherwise. Making it in America is good policy and good politics. There’s an election coming up. People can act on the news.

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