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DNC Ad Says Bush Lost Manufacturing Jobs

But even Clinton lost manufacturing jobs in his second term. Economists say changing the tax code won't do much to help.

August 11, 2004

Modified: August 11, 2004

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Summary

 

The Democratic National Committee released an ad Aug. 6 saying 2.7 million manufacturing jobs had been lost under Bush. That's true, but ignores the fact that manufacturing jobs started their decline three years before Bush took office.

The ad also says "Bush protects tax breaks favoring corporations that move their headquarters overseas" and that Kerry would "end job-killing tax loopholes." But as we've said before , "offshoring" accounts for just a small fraction of jobs that are lost, and even Democratic economists say changing the tax code won't end the overseas job drain anyway.

Analysis

 

The Democratic National Committee ad uses the time-honored tactic of putting the opponent's worst foot forward. It's a one-sided presentation that doesn't give the full picture.

Democratic National Committee
"Believe"

Announcer: Millions of good jobs lost to plant closures and outsourcing.
(Video: 2.7 million manufacturing jobs lost: Source: U.S. Bureau of Labor Statistics, 2001-2004)
Announcer: Yet President Bush protects tax breaks favoring corporations that move their headquarters overseas.
America can do better.
John Kerry's plan: End job-killing tax loopholes, and provide incentives to companies who create good jobs here. Because John Kerry believes we should export American products, not American jobs.
The Democratic National Committee is responsible for the contents of this advertisement.

Job Loss Figures

As the announcer says "millions of good jobs lost to plant closures and outsourcing," the video shows the words "2.7 million manufacturing jobs lost."

That's true as far as it goes. The Bureau of Labor Statistics indeed reports that payroll jobs in the manufacturing sector went from nearly 17.1 million at the time Bush took office to just over 14.4 million in June, a decline of very nearly 2.7 million.

But -- as a look at the chart below will show -- US manufacturing employment was in decline for nearly three years before Bush became President. It actually declined by  544,000 between the peak reached in March, 1998 and when Clinton left office, even as the economy added nearly 7.8 million jobs in all categories during the climax of a roaring economic boom that ended a few weeks after Bush was sworn in. In fact, 238,000 of those manufacturing jobs were lost in Clinton's last six month alone, showing that the decline was well-established even before Bush had spent a day in office.

Manufacturing Payroll Jobs Peaked in March, 1998

By choosing to highlight only manufacturing jobs, furthermore, the DNC ad ignores offsetting gains in other sectors that have been growing. A look at the bigger picture -- total payroll jobs -- shows a much less severe decline of just over 1.1 million jobs since Bush took office. The decline in manufacturing payrolls has been offset to a great degree by gains in such industries as health care, construction and government (teachers and firemen, for example.)

Total Payroll Jobs: The Big Picture

Total Payroll Jobs

At this point it seems unlikely that even total employment will return to the level of January 2001 by the time Bush's full four-year term has ended. As Democrats like to note, that would indeed make him the first president since Herbert Hoover to experience a net job loss over a full term.

It is also true that as of June the economy had regained nearly 1.5 million jobs since the worst point in the job slump in August 2003. Even manufacturing jobs are growing: 91,000 have been added since January.

Would Tax Changes Help?

The DNC ad says Bush "protects tax breaks favoring corporations that move their headquarters overseas." It's true that the administration's tax-policy experts have testified against a Democratic proposal aimed at stopping US companies from moving their headquarters overseas. But that proposal which actually was aimed at stopping corporate tax avoidance, not job loss.

The administration favored a different approach, arguing that the Democratic approach would be "unlikely to work and likely to have harmful effects the U.S. economy,’ according to House testimony  in June 2002 by Pamela Olson, who was then the Treasury Department's acting chief of tax policy. She argued that the Democratic approach would discourage businesses already headquartered overseas from doing business in the US, hurting rather then helping US employment. We won't go into the arcane details of the dueling tax proposals here, except to note that both sides professed to be for more US jobs and against offshore tax-shelter schemes.

The ad also says Kerry's tax plan would "end job-killing tax loopholes," a reference to the way US tax laws give US-based corporations a financial incentive to invest in other countries rather than bring their overseas profits home to be taxed. We've explained before that "offshoring" accounts for only a small fraction of lost jobs, that  tax incentives are not the major reason that US companies locate plants overseas, and that even Democratic economists predict that Kerry's tax proposal wouldn't halt the practice. For more on that see our earlier article .

Sources

 

Bureau of Labor Statistics, "Employment, Hours, and Earnings from the  Current Employment Statistics survey (National)," (seasonally adjusted figures for total nonfarm employment, and manufacturing employment) accessed 11 Aug 2004.

Testimony Of Pamela Olson , Acting Assistant Secretary (Tax Policy), United States Department Of The Treasury Before The House Committee On Ways And Means
On Corporate Inversion Transactions, 6 June 2002.

Corporate Inversions,  Hearing Before the Committee On Ways And Means, US House Of Representatives, One Hundred Seventh Congress, Second Session, 6 June 2002.

Melissa B. Robinson, "Bush administration opposes Democrats' plan to stop companies from moving to overseas tax havens," The Associated Press, 7 June 2002.

Howard Gleckman, "Sealing Off the Bermuda Triangle?; Too many corporate tax dollars are disappearing because of headquarters relocations, and Congress looks ready to act," Business Week 25 June 2002.

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