We have been hearing about the loss of manufacturing jobs in this country for years. Ross Perot talked about a “great sucking sound” in Mexico. That may apply for unskilled jobs but the real manufacturing job is one requiring skill. Not everyone can be a packer or a assembler. A lot of that can be automated. Why is manufacturing leaving our shores ? There are some theories being talked about now. An interview of an executive a couple of weeks ago started another round.
Nov. 11 (Bloomberg) — Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas.
“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.”
Emerson is a big company and has been expanding in other countries for a while. Still, he struck a chord as the administration produced a response from a spokesman for Gary Locke, who is the Secretary of Commerce but has no business experience.
“This attack isn’t supported by the facts,” Kevin Griffis, a spokesman for U.S. Commerce Secretary Gary Locke, said today in an e-mail from Singapore, where they are attending the Asia-Pacific Economic Cooperation meetings.
“This administration has made a significant commitment to U.S. manufacturing, including reforming the country’s health insurance system to bring down costs and make American companies more competitive globally,” Griffis said.
If Locke thinks that health care bill will bring down costs, he hasn’t read it. Of course, no one else has either.
Here is a response, to the Obama Secretary of Commerce and his flunky.
Well, yes it is Kevin. There is a great article in today’s Wall Street Journal that you and Gary ought to read on global warming before they rush off and saddle American manufacturing with Cap and Trade. And rather than slam the manufacturing community represented by the US Chamber of Commerce because they have ideas on health care that are different from the government take-over scheme your boss urges, you ought to shut up and listen. And even the Democrats who control the Senate won’t support your ridiculous Card Check scheme to try to bring labor unions back from the dead. You set up a labor lawyer as the manufacturing czar and a certifiable nut case on the NLRB. You have attacked manufacturing at every turn since taking office.
The Wall Street Journal article on Global Warming closes with:
But from our first column on this subject, we have been convinced that the scientific questions are interesting and irrelevant, since it was never in the cards that Western societies (or Brazil or India or China) would sacrifice economic growth for the uncertain benefits of fighting climate change. Unable to do anything meaningful about climate change, policy would therefore default to satisfying the demand of organized interests for climate pork.
That is no way to run a railroad. Cap & Trade will kill off the rest of manufacturing. I remember when a lot of the fiberglass boat building industry was in Orange County, a half hour or less from my home. The Clean Air Act drove most of it out of business, along with the oil crisis of the 70s as petroleum products quadrupled in price. OIl came back down but the EPA was still there so most of southern California manufacturing moved to Mexico where the Mexican liked jobs more than clean air. In fact, the air was pretty clean in Newport Beach all along.
What else is Obama doing to help industry?
Well, the new hand-picked CEO of AIG, e insurance giant bailed out by the administration last spring wants to resign after 3 months on the job. Why ?
“The executive is chafing under constraints imposed by AIG’s government overseers, particularly a recent compensation review by the Obama administration’s pay czar, Kenneth Feinberg,” WSJ said citing people close to the development.
AIG, which is 80 per cent government owned since its rescue last year, is one of the companies under Feinberg’s purview.
That’s not manufacturing but one thing executives have in common is the desire to make money. Then, of course, there are the new taxes. These are enormous increases in marginal tax rates and they are not indexed for inflation.
In order to raise enough money to make their plan look like it won’t add to the deficit, House Democrats have deliberately not indexed two main tax features of their plan: the $500,000 threshold for the 5.4-percentage-point income tax surcharge; and the payroll level at which small businesses must pay a new 8% tax penalty for not offering health insurance.
This is a sneaky way for politicians to pry more money out of workers every year without having to legislate tax increases. The negative effects of failing to index compound over time, yielding a revenue windfall for government as the years go on. The House tax surcharge is estimated to raise $460.5 billion over 10 years, but only $30.9 billion in 2011, rising to $68.4 billion in 2019, according to the Joint Tax Committee.
Then there is the stimulus which takes the taxes and throws them away.
Taxing the rich hits small business very hard as many file personal returns and many of these new taxes are not subject deductible expenses, just like the AMT.
Americans of a certain age have seen this movie before. In 1960, only 3% of tax filers paid a 30% or higher marginal tax rate. By 1980, after the inflation of the 1970s, the share was closer to 33%, according to a Heritage Foundation analysis of tax returns.
These stealth tax increases—forcing ever more Americans to pay higher tax rates on phantom gains in income—were widely seen to be unjust. And in 1981 as part of the Reagan tax cuts, a bipartisan coalition voted to index the tax brackets for inflation.
We also know what has happened with the Alternative Minimum Tax. Passed to hit only 1% of all Americans in 1969, the AMT wasn’t indexed for inflation at the time and neither was Bill Clinton’s AMT rate increase in 1993. The number of families hit by this shadow tax more than tripled over the next decade. Today, families with incomes as low as $75,000 a year can be hit by the AMT unless Congress passes an annual “patch.”
The Pelosi-Obama health tax surcharge will have a similar effect. The tax would begin in 2011 on income above $500,000 for singles and $1 million for joint filers. Assuming a 4% annual inflation rate over the next decade, that $500,000 for an individual tax filer would hit families with the inflation-adjusted equivalent of an income of about $335,000 by 2020. After 20 years without indexing, the surcharge threshold would be roughly $250,000.
This is a job killer. So is card check.
And on we go toward the fate of Argentina.