The debate over Republicans' insistence on continued tax breaks for the super-rich and the corporations they run should come to a screeching halt with the report in Tuesday's Wall Street Journal headlined "Big U.S. Firms Shift Hiring Abroad." Those tax breaks over the past decade, leaving some corporations such as General Electric to pay no taxes at all, were supposed to lead to job creation, but just the opposite has occurred. As the WSJ put it, the multinational companies "cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show."
General Electric, which was bailed out by taxpayers and which stored so much of its profit abroad that it paid no taxes for the past two years, was forced to tighten up, but while cutting its foreign workforce by 1,000 it cut a far more severe 28,000 in the United States. Jeffrey Immelt, the CEO of GE, recently appointed by President Barack Obama as his chief outside economic adviser, admits that this does not involve poorly paid work that Americans don't want, but instead prime jobs: "We've globalized around markets, not cheap labor. The era of globalization around cheap labor is over. Today we go to China, we go to India, because that's where the customers are."
There is a bitter irony in that statement given that consumer purchasing power is down in the U.S. thanks to the devastating collapse of a housing bubble GE Capital fed with suspect mortgage financing that provided the company with well over half of its profits before the crash. The loss of well-paying jobs at multinationals like GE to other nations -- 54 percent of the GE workforce is foreign -- exacerbates the plight of U.S. consumers while making the foreign customers even more attractive.
Of course it will be argued that multinational corporations have the
right to arrange their business as they see fit in order to maximize
profit. But if that is the case, do beleaguered American taxpayers have
to foot the bill? When those corporations run into trouble overseas
because of financial hustles or hostile locals and need the diplomatic
and military might of the U.S. government to protect their interests
abroad, it is again the U.S. taxpayer who must pay to maintain this new