With President Barack Obama dropping another major hint that his second term in office will witness the emergence of a strong liberal economic agenda, policymakers in countries competing with the U.S. must be wondering what his State of the Union references to attracting jobs back on-shore implies.
In particular, eyebrows were raised at the President’s proposed plans to tweak the country’s tax code with a view to penalising companies that created any jobs beyond U.S. borders. In a broad-brush announcement of tax reform that would also see wealthier Americans pay more in tax, Mr. Obama said in Capitol Hill on Tuesday that he wanted to create “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 U.S.”
In part-fulfilment of the long-standing stereotype that Democratic-Party administrations in the U.S. have tended to lean towards domestic protectionism, Mr. Obama’s first term saw strident calls for policy measures against outsourcing, and India was sometimes caught in the crossfire. Similarly, Indian companies faced the wrath of some legislators here who labelled companies such as Infosys as “chop-shops” and some Indian companies also came up against work visa restrictions as the overall visa numbers in some categories shrank dramatically.
In his speech this week, as indeed in his inaugural address last month, Mr. Obama, however, made clear that his next four years in office would probably see a continuing focus on bringing jobs back to the U.S. In the inauguration speech, he said, “We cannot cede to other nations the technology that will power new jobs and new industries — we must claim its promise.”
On Tuesday, Mr. Obama again remarked on the same theme saying, “Our first priority is making America a magnet for new jobs and manufacturing. After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three. Caterpillar is bringing jobs back from Japan. Ford is bringing jobs back from Mexico. And this year, Apple will start making Macs in America again.”
A small footnote to these comments that few media picked up, however, was that Mr. Obama appeared to slightly tone down the rhetoric and dropped a line that his prepared remarks carried, the comment that, “After locating plants in other countries like China, Intel is opening its most advanced plant right here at home.”