Bill Aims to Punish Companies Offshoring U.S. Jobs

Looking to discourage U.S. companies from moving jobs offshore, a Vermont congressman has introduced a bill that would hit companies in the wallet for taking away American jobs.
Looking to discourage U.S. companies from moving jobs offshore, a Vermont congressman has introduced a bill that would hit companies in the wallet for taking away American jobs.

The Defending American Jobs Act of 2004 would bar companies from receiving federal grants, loans and loan guarantees if they layoff U.S. workers and hire foreign workers in their place. Just announced yesterday, the bill, sponsored by Rep. Bernie Sanders (I-Vt.), already has gained 50 Democratic co-sponsors and three Republicans.

''It is absurd that the government continues to give these companies corporate welfare off the backs of the workers who are losing their jobs,'' says Joel Barkin, a spokesman for Sanders. ''This legislation says that if the Motorolas or GEs of the world want to offshore work to India, china and Mexico, they're not going to continue to get government handouts to do it.''

Barkin says Sanders has been concerned about the dramatic loss of manufacturing jobs that have moved overseas for many years. The congressman has sponsored bills, most of which have failed, to challenge that trend. This new effort is sparked by the continued offshoring of manufacturing jobs and the rising loss of high-tech jobs, as well.

Offshoring is affecting Sanders' own constituents.

IBM is the largest private employer in Vermont. In 2001, IBM laid off 15,000 U.S. workers, while signing a deal to train 100,000 software specialists in China. That year, IBM received more than $20 million in what Barkin calls corporate welfare, or federal loans and grants from the U.S. Export-Import Bank.

Likewise, according to Sanders office, Motorola laid off 42,900 workers in 2001, and invested $33 billion in China, while receiving close to $200 million in corporate funds from the U.S. Export-Import Bank.

''In my view, it is an insult to the middle class of this country, that American taxpayer dollars are being used to provide loans, loan guarantees, grants, tax breaks and subsidies to huge and profitable corporations who then say to the American people, 'Thanks for the welfare, chumps,'' Sanders said in a written statement. ''But we're closing your plant and taking your job to China.''

Today, U.S. companies that apply for federal grants, loans and loan guarantees are not required to report the number of U.S. and foreign workers that they employee and how those numbers have increased or decreased. This piece of legislation, if passed, would call for public disclosure of how many workers they have in the U.S., how many outside of the U.S. and a brief description of their wages.

If these companies lay off a greater percentage of U.S. workers than they do overseas, they would be prohibited from receiving future taxpayer assistance from the federal government until they went back to the same employment level that they had when they first applied for government assistance.

''American workers are helping to pay for their own outsourcing,'' says Barkin. ''We say if you want to get this money for government programs, then you have to release information about how many workers you're offshoring every year.''

Not everyone, however, thinks that federal legislation can turn the tide on offshoring.

''This sort of thing is a typical political reaction to people not liking an economic trend, and wanting the government to do something about it,'' says Gordon Haff, an analyst for Illuminata, a Nashua, N.H.-based industry analyst firm. ''When the government tries to pass laws to legislate economics, they usually end up doing more harm than good... You can artificially pass a bunch of does and don'ts but it doesn't change the fact that something is cheaper to produce elsewhere.''

Haff adds that increasing U.S. productivity is the answer to slowing offshoring, and that can't be changed with legislation.

Barkin counters that federal monies shouldn't be going to companies that are laying off the U.S. taxpayers feeding that pool of loans and grants.

Sanders was joined at Wednesday's press conference by Reps. Peter DeFazio (D-OR), John Conyers, (D-MI), Jerry Nadler (D-NY), Ted Strickland (D-OH) and Major Owens (D-NY).

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