The Political Reaction

Offshoring vs Outsourcingg





The reaction to the offshoring of American jobs among politicians has been varied and, predictably, split along party lines. Generally speaking, Republicans support offshoring as good for the American (and world) economy in the long run, while Democrats are against it as causing American workers to lose jobs, often irreplaceably.

Offshoring According to the Republicans:
The general Republican opinion is that, at least in the long term, offshore outsourcing is good for Americans and the American economy. There have been some disagreements, however, and at the very least, many Republicans have often felt compelled to add qualifiers to their support for offshoring in the face of public pressure. For instance, Republican Speaker of the House Dennis Hastert warned in early 2004 that "[offshore] outsourcing can be a problem for American workers and the American economy."[6]

The Bush Administration
President George W. Bush and his administration take the more common view of Republicans: offshoring, while it may cause some difficulties for a few people in the short term, will contribute to "a mounting prosperity that will reach every corner of America" in the long run.[1] Offshoring services or the production of goods allows a company to make the product or offer the service at a much lower price; thus, the American consumer benefits. In 2004, the chairman of Bush's Council of Economic Advisors noted that "Outsourcing is just a new way of doing international trade... More things are tradable than were tradable in the past. And that's a good thing."[1] Bush has also linked the fortunes of the American economy to those of other countries in a broad global economy. If India's economy improves (due at least in part to American companies' offshoring of jobs to India), then this will result in "an overall plus for the U.S. economy." In September 2004, two months before his re-election, President Bush stated that "Today, India's consumers associate American brands with quality and value, and this trade is creating opportunity at home."[2] It is perhaps worth nothing that, in the days leading up to the 2004 US presidential elections, public opinion polls in India confirmed that India was one of the few countries in the world, other than the United States, where Bush might have won more votes than Kerry.[3]

Offshoring According to the Democrats
The official Democratic Party line, as it appears on the party website, is a carefully crafted statement that says very little.[7] It is easiest, therefore, to examine the main views of the party through those expressed by the 2004 Democratic presidential candidate, John Kerry.

Kerry's Campaign Interpretation
In the 2004 presidential campaign, John Kerry had as part of his official platform the stance that, while it is impossible to stop or reverse offshore outsourcing, it is necessary to create "a fair playing field."[3] He promised to do this by closing "the loopholes [in the tax code] that actually encourage companies to go overseas." He likened it to giving a tax cut to corporations - those that keep jobs at home.[4] "While George Bush has chosen to support a tax code that rewards outsourcing and moved America in the wrong direction with record job loss and low-paying jobs, Kerry stressed today that his plan will make America stronger at home by creating and keeping good-paying jobs in America," says Kerry's former campaign website.[5] As it is, corporations have many incentives to move production and services to other countries where labor often costs less than a fifth of US minimum wage.[8] Kerry, along with most Democrats, seeks to find ways of preserving American jobs without endorsing explicitly protectionist laws.

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