By Rep. Christopher Lee (R-N.Y.) - 06/28/10 11:23 PM EDT
More than a year after the $787 billion “stimulus” was signed into law, and — despite promises by leaders in Washington that unemployment would remain below eight percent and that 3 million to 4 million jobs would be created — unemployment still stands near 10 percent and more than 2.5 million jobs have been lost. It’s clear we need to approach our economic recovery from a different direction, both in the long and short term.
Part of the reason our economic recovery is taking so long is because we no longer have a strong manufacturing sector. We cannot just restart the factories when product orders pick up like we were able to do last century because the factories are gone. We cannot simply be a service-focused economy.
I’ve had the pleasure of working with my colleagues on both sides of the aisle during the past 18 months to develop meaningful proposals to increase the amount of the start-up deduction for new small businesses, to make the R&D tax credit permanent, and to allow a five-year carryback of net operating losses. Unfortunately, leaders in Washington are not serious about implementing many of the common-sense solutions to strengthen domestic manufacturing. It’s time to get serious.
That’s why I believe we should work to double manufacturing during the next 20 years to ensure we are competing to win and creating jobs here at home.
The first important step is to have a competitive tax structure domestically. U.S. manufacturers cannot succeed globally when we punish them with some of the highest taxes in the world. The Cato Institute reports that “[t]he U.S. corporate tax system has become unwieldy, inconsistent with world practice, and highly anti-competitive.” This must change.
Internationally, the trend has been to lower the tax rate, yet Washington refuses to adapt. With some of the highest tax rates in the world, American manufacturers are constantly at a disadvantage with their international counterparts, stifling economic growth and job creation. It makes no sense to compete globally with one hand tied behind our back.
Cato also reports that “[o]f the 30 nations in the Organization for Economic Cooperation and Development, 27 cut their general corporate income tax rates since 2000, with an average cut of more than 7 percentage points.” This structure has a direct influence over whether or not a business chooses to set up shop in the United States, and as more countries lower their rates while Washington stands still, we will continue to lose many well-paying manufacturing jobs overseas.
Another key component to leveling the playing field for domestic manufacturers is to make the Research and Development tax credit permanent. The Milken Institute, an independent economic think tank, reports that increasing the R&D tax credit by 25 percent and making it permanent could generate 270,000 manufacturing jobs and raise total unemployment by 510,000 within the next 10 years. By providing this stability, we will remove one of the key uncertainties facing American manufacturers.
Education also needs to be a key area of focus in order to produce the highly skilled workforce critical to our long-term economic future. In order to remain competitive in today’s global economy, we should invest in Science, Technology, Engineering and Mathematics (STEM) educational programs. We need to ensure students have the opportunities to pursue careers in the math and science fields, as it is experts in these fields who will strengthen our manufacturing industry and keep America as a leader in innovation.
We must ensure money invested in workforce training is spent effectively. We must also create industry-recognized credentials that will strengthen the pathway for students and transitioning workers to have the skills and education necessary for employment in the manufacturing sector.
Finally, we need to ensure manufacturers are able to grow in the global marketplace, and there are a number of key ways we can do that.
There are several pending free trade agreements that could directly lead to the increase of more than 250,000 U.S. jobs, according to the International Trade Commission. Ensuring free and fair trade globally will lead to increased U.S. exports, and more American goods to export means more jobs here at home. Congress should move forward to enact a trade agenda that is free and fair to all.
We can no longer allow foreign manufacturers to consistently have a leg up on American industries. It is my hope Congress can move forward with these common-sense approaches to strengthening our manufacturing sector and creating jobs here at home. The need has never been greater.
Lee is a member of the House Financial Services Committee.