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Appendix C: The Democratic Presidential Candidates’ Job Proposals


As the federal debt and personal debt rise to record levels, a sense of anxiety hangs over the U.S. economy. Our “jobless recovery” in the context of robust stimulus from tax cuts and an obliging monetary policy is deeply troubling. If not tax-paying workers with adequate incomes, who will pay pay back this debt, much of which is owed to foreigners?

Jobs are the most important issue in this campaign, acknowledged as such by most of the Democratic presidential candidates. What is the cause of the job erosion? What can the federal government do about it? These are the questions that ought to be asked.

One element of the problem is that, even with increased production, employers are asking their employees to work longer hours instead of hiring new people. In 2003, U.S. workers put in 32.7% more overtime than in 2000. Even then, overtime was at historically high levels.

Another element is the increase in labor productivity due to investment in equipment. You don’t need as many people to do the work. Productivity increases hit a 20-year high in the 3rd quarter of 2003.

Still another element is the outsourcing of U.S. jobs to low-wage countries. The Chinese do much of our manufacturing. Well-educated workers in India and the Philippines can do our office work. The U.S. trade deficit is expected to approach $500 billion this year. Much is due to intracorporate trade between the United States and low-wage countries.

Fine, what do the leading Democratic candidates for President propose to do about job loss? The following is taken from the candidates’ web sites:

John Kerry: Kerry promises to “restore the (3 million) jobs lost under Bush in the first 500 days of his administration. Kerry has proposed creating jobs through a new manufacturing jobs credit, by investing in new energy industries, restoring technology, and stopping layoffs in education.” He proposes “new tax breaks to manufacturers who produce goods and create jobs in the United States” and will “provide relief for companies that provide quality health care and retirement. John Kerry will strongly enforce trade laws to assure that American industries are on a level playing field with our trading partners.” He will also “invest in research and development, give tax incentives to help industries upgrade, and work to assure a highly qualified work force”, which means invest in education. With respect to trade, Kerry promises a “120-day review of all trade agreements” to make sure that foreign governments are living up to them. All trade agreements should include “core labor standards and environmental protection.” Countries such as China should not manipulate their currencies. Displaced workers should be retrained. Also, Kerry would lower the corporate tax rate for firms staying in the U.S.

Howard Dean: Dean wants a 2-year $100 billion “Fund to Restore America” to create one million new jobs especially in disadvantaged communities. He would create a Small Business Capital Corporation within the Small Business Administration. He, too, wants to put “core labor standards” in trade agreements. His “four fundamentals” are: (1) Repeal the Bush tax cuts. (2) Shoot for a balanced budget. (3) Create a fairer and simpler tax system. (4) Adequately fund Social Security and Medicare.
John Edwards: “John Edwards has a plan to create jobs with a 10 percent tax credit for companies that keep jobs in America, a venture capital fund to bring jobs to those hardest hit in the Bush economy, new tax credits for working Americans to buy their first home, save for retirement, or save for child’s education.” Edwards also wants trade agreements to contain “strong labor and environmental protections.” He would crack down on “lax Chinese trade law enforcement.”

Wesley Clark: Clark would “devote $100 billion over two years to jump start job creation without increasing the deficit.” $80 billion of this would be for homeland security and aid to state governments. More money would be put into improved public infrastructure. Clark also supports a “Job Creation Tax Credit” that gives “up to a $5,000 tax credit for each additional full-time employee that any business hires.” He also wants to crack down on Chinese currency manipulation.

Comments: The idea of paying manufacturers to stay in this country is laughable. We don’t have the money to do that. The same is true of all these “job-creation” funds. Any federal fund will be funded either through taxes or borrowing which will crowd out other job creation in the private sector. Linking labor standards to trade is fine, except it is no violation of any labor standard for Third World workers to be paid so much less.

Bill McGaughey’s Approach: (A) Address the productivity and overtime problems by amending the Fair Labor Standards Act to reduce work time. Priorities: (1) Raise the overtime penalty to double time and tax away the extra 1/2 time premium for the employee. (2) Tighten overtime exemption for administrative and professional employees. (3) Reduce standard workweek to 32 hours over 4-year period. (B) Address job outsourcing by abolishing free trade. Rescind NAFTA and WTO. Create new system of tariffs targeted to individual employers. As emergency measure, impose tariff on imported products whose rate equalizes the cost advantage in low-wage countries. Long range, work with other nations to use adjustable tariffs as a tool to encourage firms worldwide to raise pay, cut work hours, and operate in environmentally sound ways.

McGaughey for President Campaign Candidate cell phone (612) 280-0111

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