Obama’s Four Steps For Manufacturing

Dave Johnson

In the State of the Union (SOTU) speech President Obama emphasized the importance of manufacturing to our economy. Wednesday in Ashville he expanded on his plan, outlining four steps in particular. The President has opened the doors to discussion of manufacturing policy. The question is, how much can be accomplished over Republican and “deficit hawk” obstruction?

In the SOTU, President Obama talked about manufacturing’s importance to our economy, saying,

The American people deserve a tax code … that lowers incentives to move jobs overseas and lowers tax rates for businesses and manufacturers that are creating jobs right here in the United States of America.

[. . .] Our first priority is making America a magnet for new jobs and manufacturing.”

… There are things we can do, right now, to accelerate this trend. Last year, we created our first manufacturing innovation institute in Youngstown, Ohio. … So tonight, I’m announcing the launch of three more of these manufacturing hubs, where businesses will partner with the Departments of Defense and Energy to turn regions left behind by globalization into global centers of high-tech jobs.

And I ask this Congress to help create a network of 15 of these hubs and guarantee that the next revolution in manufacturing is made right here in America. We can get that done.

Wednesday the President visited Asheville, North Carolina the President outlines his manufacturing proposals in more detail, describing four steps in particular.

Excerpts from Remarks by the President on Manufacturing — Asheville, NC,

After shedding jobs for more than 10 years, our manufacturers have now added about 500,000 jobs over the past three years. (Applause.) And I mentioned this last night — Caterpillar, which I know you guys supply, they’re bringing jobs back from Japan. Ford is bringing jobs back from Mexico. After placing plants in other countries like China, Intel is opening its most advanced plant here in the United States. Apple is starting to make Macs in America again. (Applause.)

[...] there are things we can do right now to accelerate the resurgence of American manufacturing.

Number one — we can create more centers for high-tech manufacturing in America. Last year, my administration created our first manufacturing innovation institute. We put it in Youngstown, Ohio, which had been really hard-hit when manufacturing started going overseas. And so you have a once-shuttered warehouse — it’s now a state-of-the art lab where new workers are mastering what’s called 3-D printing, which has the potential to revolutionize the way we make everything. That’s the future. And there’s no reason that those same kinds of projects can’t take root in other cities and towns.

So last night, I announced the launch of three more institutes. And I’m calling on Congress to help us set up 15 institutes –- global centers of high-tech jobs and advanced manufacturing around the country. (Applause.)

The second thing we need to do is make our tax code more competitive. Right now, companies get all kinds of tax breaks for moving jobs and profits overseas, but companies that stay here get hit with one of the highest tax rates in the world. That doesn’t make any sense. So what I’m proposing is that we reform our tax code, stop rewarding businesses that ship jobs overseas, reward companies that are creating jobs right here in the United States of America. That makes sense. (Applause.)

Number three — if you’re a manufacturing town, especially one that’s taken a hit — that’s seen a company close up shop or a plant shut down — I want to partner with local leaders to help you attract new investment. Because once that investment starts coming in, things can start turning around. And that means infrastructure gets modernized and research facilities get built, and suddenly a community that was knocked down is getting back up, and they’re attracting new manufacturers who want to come and expand and hire.

… Number four — we’ve got to help our workers get the training to compete for the industries of tomorrow. At least a couple of the guys that I had a chance to meet as we were taking the tour told me they were out of work for a year — in one case, two years — in part because we kept unemployment insurance in place so folks could get back on their feet, they were able to go back to school, and now are gainfully employed. No job in America should go unfilled because somebody doesn’t have the right skills to get that job — nobody. (Applause.)

So if there is a job open, we should train those folks right away, so that they can do the job. And that’s why I’m proposing a national goal of training 2 million Americans with skills that will lead directly to a job.

… So those are four common-sense steps that we can take right now to strengthen manufacturing in America. There’s no magic bullet here. It’s just some common-sense stuff.

Wednesday the White House Blog elaborated, in A Plan to Revitalize American Manufacturing,

The President’s plan builds on that momentum by investing in American manufacturing. Training American workers for high-tech manufacturing jobs, ending tax breaks for companies that ship jobs overseas and opening new markets for American-made products will make the U.S. more competitive and will create new jobs and bring jobs back to our shores.

On Tuesday, President Obama offered four concrete proposals to revitalize our manufacturing industry: Create a network of 25 manufacturing Innovation Institutes; reform our business tax code, lowering the rate for manufacturers to 25 percent, expanding and making permanent the research and development tax credit, and putting in place a global minimum tax; building new partnerships with communities to attract manufacturers and their supply chains, especially to hard hit manufacturing towns; and a dual effort to both open new markets for American-made goods and strengthen the Interagency Trade Enforcement Center launched last year.

The Four Steps

Here are the four steps (from the speech), and the challenges that have to be overcome to accomplish them:

One: Create more centers for high-tech manufacturing in America.

The President is proposing to increase the number of “hubs,” where communities, companies and educational facilities coordinate to help develop a local “ecosystem” for a particular manufacturing specialty to develop. In Monday’s post Sen. Sherrod Brown Proposes National Network of Manufacturing Innovation I described how these hubs work,

The idea is to develop regional “hubs” that are “centers of excellence” across all sectors of manufacturing. These hubs bring together industry, universities and community colleges, federal agencies – such as the Departments of Commerce, Defense, Energy, and the National Science Foundation – and U.S. state and local governments to accelerate manufacturing innovation.

According to a press release from Sen. Brown these hubs will “bridge the gap between basic research and product development, provide shared assets to help companies—particularly small and medium-size manufacturing enterprises—access cutting-edge capabilities and equipment, and create an environment to educate and train students and workers in advanced manufacturing skills.”

The problem is this may face Republican obstruction. Republicans oppose any government involvement in efforts to coordinate manufacturing policy or boost industry sectors, calling this “picking winners and losers.” Successful efforts so far have involved state/local efforts or administrative efforts that do not require Congressional action. Senator Sherrod Brown’s NNMI proposal is a bill to expend the number of existing hubs, and might pass the Senate if Repubicans do not filibuster it, but will depend on the House bringing it up for a vote. Organizations like the Wall Street-backed Club for Growth have opposed other manufacturing efforts like

Two: Make our tax code more competitive. End tax breaks for moving jobs overseas. Cut taxes to reward companies that are creating jobs right here. This is along the lines of last year’s “Bring Jobs Home Act.” This act removed the tax incentives for moving jobs out of the coutnry, and gave tax breaks to companies that hire Americans here.

Unfortunately this bill was filibustered by Senate Republicans, who will likely filibuster it or any similar bills that come up.

Three: Partner with local leaders to help you attract new investment. Modernize infrastructure and research facilities to attract new manufacturers. The challenge here is that Republicans oppose efforts to repair and modernize our country;s infrastructure as “more government spending.”

For example Fox calls it “spending”, Fox News on the SOTU: Obama presses for new spending, says gun control bills ‘deserve a vote’

Obama in his speech defended and promoted investments in clean energy as well as infrastructure. He proposed, among other ideas, a “fix-it-first” program to put people to work on “urgent repairs” like structurally deficient bridges.

Townhall: Majority of Americans Want Spending Cuts, Not More “Investments””,

We’ve all heard President Obama talk about “investments” in education, clean energy and crumbling roads and bridges, but those investments are simply more spending. According to a new Rasmussen Report, the majority of Americans favor spending cuts over more spending in Washington.

National Review: Why Infrastructure Spending Is a Bad Bet

Cato Institute (2008): Jumping off the Government Bridge,

Infrastructure spending is Washington’s latest cure for the nation’s economic ills. In the Washington Post an oped by Emil Henry this week says that conservatives should end their traditional skepticism of government and jump on the government-investment bandwagon.

Conservative National Center for Policy Analysis: Would More Infrastructure Spending Stimulate the Economy?

In sum, further stimulus would be a risky short-term gamble with near-certain negative consequences in the long term.

Four: Help workers get the training. The President proposed a national goal of training 2 million Americans “with skills that will lead directly to a job.”

Unfortunately the record here is just as bad. Last year Republicans even filibustered a job-training bill for returning veterans, never mind the regular unemployed.

LA Times: Republicans shelve Obama’s proposed Veterans Jobs Corps,

President Obama’s proposal to create a Veterans Jobs Corps to stem high unemployment among recent military veterans was shelved Wednesday after Republicans in the Senate balked over the five-year $1-billion cost … would have established a network of job training centers.

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