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Outsourcing jobs: The PRESIDENT Said That?

Kerry ad puts words in Bush's mouth that Bush never uttered.

April 3, 2004

Modified: April 3, 2004

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Summary

 

A Kerry ad has Bush saying that sending jobs overseas "makes sense." But Bush didn't say that.

The quote is actually from Bush's Council of Economic Advisers. The Kerry campaign claims Bush signed the report containing those words, but that's wrong, too.

Some Bush administration officials do indeed defend the practice of contracting for white-collar services overseas as one aspect of free trade, which they say creates jobs in the US.  Textbook economics supports that notion. But the Kerry ad goes too far when it makes the President seem to be rooting for the loss of US jobs using words he never used.

Analysis

 

A Kerry ad released April 1 states that "George Bush says sending jobs overseas 'makes sense' for America." That politically clumsy remark was actually written by the President's economists, however. Bush himself never said it. The Kerry campaign went over the line in attributing the words falsely to Bush himself.

  Kerry for President Ad

"10 Million Jobs"

Announcer: While jobs are leaving our country in record numbers, George Bush says sending jobs overseas “makes sense” for America. His top economic advisors say “moving American jobs to low cost countries” is a plus for the U.S.

John Kerry's proposed a different economic plan that encourages companies to keep jobs here. It's part of a “detailed economic agenda” to create 10 million jobs. John Kerry. A new direction for America.

Kerry: I'm John Kerry and I approved this message.

In a news release defending the ad, the Kerry campaign claims that the report in which the words appear was "signed by President Bush." But that's also false.

Actually, what Bush signed was The Economic Report of the President, which occupies only the first few pages of a 412-page volume that also contains the Annual Report of the Council of Economic Advisers , a separate document signed by the three members of the council, not by the President.

The President's signature appears on page 4, at the end of his economic report. The passage to which the Kerry ad refers appears  on page 25, in the midst of the report by the President's economists. In that passage they argue that free trade benefits the nation as a whole even when it includes "outsourcing" of white-collar jobs overseas: 

CEA: Outsourcing of professional services is a prominent example of a new type of trade. The gains from trade that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane.When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes.

That's standard economic theory, of the sort that can be found in any freshman-level economics text. And in fact, several such textbooks  have been written by none other than Council of Economic Advisers chairman Gregory Mankiw, an economist on leave from Harvard University. Mankiw's words may be good economics, but they are also bad politics, especially at a time when unemployment remains at 5.7% of the workforce.

The Kerry ad also quoted the President's "top economic advisers" as saying that moving jobs to low-cost countries is a plus for the U.S. But what the White House and the President's advisers are actually saying is that trade is a plus, which is different.

The Kerry news release says that part of the ad refers to something Treasury Secretary John Snow said in an interview with the Cincinnati Enquirer on March 30. The ad makes it sound as though Snow and other advisers are rooting for Americans to lose jobs, but of course they didn't put it that way at all. What Snow actually said was that trade makes business more efficient, benefiting the entire economy.

The Enquirer interviewer said he asked Snow if outsourcing made the economy stronger, and got this response:

Snow:  "It's part of trade. . . It's one aspect of trade, and there can't be any doubt about the fact that trade makes the economy stronger. . . .I was struck by the fact coming in this morning, the number of foreign companies that have operations right here, proudly displaying their logos. America can compete with anybody. What we need to do is not build walls but tear walls down. We don't have a lot of walls here. We need to tear walls down in other places, that stop our products, our services from being in the marketplace.

 The newspaper said Snow praised the recent fast growth of US business productivity and suggested that contracting for services overseas has helped bring that about. "You can outsource a lot of activities and get them done just as well at a lower cost," the Enquirer quoted Snow as saying.

And that's also the way the President's chief spokesman puts it. Asked March 31 if the White House views "sourcing" as desirable or undesirable, White House Press Secretary Scott McClellan said  free trade helps create jobs in the US.

McClellan: Our view is that trade and opening markets is very important to creating jobs here at home. The President is focused on creating jobs here at home in America. And one important way to continue to strengthen our economy even more is to continue opening markets and make sure that there is a level playing field for American producers and American farmers and others to compete. And that's what we will continue to do. Free trade is vital to continuing our economic growth.

Q: Is that an endorsement of outsourcing?

McClellan: What I'm saying is that free trade -- and those that would support economic isolationism put us at a competitive disadvantage. And that harms our economy; that harms job creation here at home. Our views are very well-known that we need to continue working to open markets and make sure that America is the best place to do business in the world.

Kerry's ad would have been closer to the mark had it said "The Bush administration says sending jobs overseas 'makes sense' for America." That would merely be taking words out of context and oversimplifying a complex economic argument. But falsely putting words in Bush's mouth is deception.

Sources

 

Economic Report of the President , together with The Annual Report of the Council of Economic Advisers US Government Printing Office, Washington DC February 2004.

John Kerry for President, "New Ad Highlights Kerry Commitment to Keeping Jobs Here ," News Release 1 April 2004.

John Byczkowski, “ Treasury's Snow says jobs coming The Cincinnati Enquirer 30 March 2004.

Press Briefing by White House Press Secretary Scott McClellan, The White House 31 March 2004.