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Sen. Fritz Hollings Headshot

People Are Shocked to Learn...

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People are shocked to learn:

(1) That almost a year before the recession, in February 2007, the Princeton economist, Alan Blinder, estimated that in ten years we would be losing 30 to 40 million jobs to off-shoring. That's about 300,000 jobs a month lost to off-shoring.

(2) President Obama stimulates to save or create jobs lost from the recession and totally ignores the 300,000 jobs lost to off-shoring.

(3) President Bush and the Federal Reserve stimulated the economy $7.5 trillion during his eight year term, and household debt at the same time stimulated the economy another $7 trillion for a total of $14.5 trillion stimulation. President Obama stimulated the economy his first year over $1 trillion, and we have already stimulated the economy this year $1 trillion, $142 billion (6/9/10) with four months to go. So we have borrowed and stimulated the economy over the past nine and a half years $16 trillion, $642 billion and the private sector is only creating 41,000 new jobs a month.

(4) Stimulation is spent. We keep bailing the economy boat as fast as we can with stimulation and refuse to plug the off-shoring hole in the bottom.

(5) Corporate America wants to keep the off-shoring hole in the bottom of the economy unplugged. In short, it rather produce in China than the United States. Producing in China, there is no hassle over labor, health costs, safety rules and environmental costs. The profit is almost guaranteed and there is no legacy cost. So Corporate America is only interested in stimulating consumption in the United States so that its Chinese production can be consumed in the United States. Looking at imports, the little stimulation experienced is in China, not the United States.

(6) The economists for Corporate America, Wall Street, the big banks and the financial community, all act like globalization or off-shoring is a given. Nothing can be done. We in the United States have to reconcile the fact that anything can be produced anywhere and our environment, safety, and standard of living, will have to be adjusted downward in order to survive.

(7) Corporate America wants to keep its stock up on Wall Street with off-shored profits. To keep its stock up and continue off-shoring, Corporate America and its economists, its entities, like the Business Roundtable and the United States Chamber of Commerce, and its editorialists and its political pundits, all engage in a charade of "free trade," "protectionism," "don't start a trade war."

(8) As Henry Clay stated on the floor of the United States Senate in 1832: "Free trade! Free trade! ... It never existed; it never will exist ...." And as Teddy Roosevelt stated: "Thank God, I'm not a Free Trader." Globalization is nothing more than a trade war with production looking for a cheaper country to produce.

(9) Countries in Europe and the Pacific all engage in the trade war, which has developed not only for production and jobs, but investments, research, technology and development. Intel has left Silicon Valley for China, and Microsoft research is in China. Germany, with its 19% VAT, recently announced the production of windmills in Charleston, S. C. With parts produced in Germany and exported at a 3% cost to Charleston, German production in the United States enjoys a 16% advantage over domestic production. Highballing the cost of producing parts in Germany, little income tax is paid for production of its windmills in the United States. Germany has established a beachhead to take over the energy jobs that the President and Congress keep saying we ought to develop.

(10) The United States has to come in from the cold in the trade war and engage or compete in globalization.

(11) Fortunately, we have trade laws in place to protect our economy. And President Obama can move immediately with a change in our tax laws and enforce our trade laws and make it profitable for Corporate America to produce in the United States:

(a) President Obama could move like President Nixon in 1971 with an import surcharge to repair our devastating deficit in the balance of trade; and put the world on notice that the United States has come in from the cold in the trade war and now will compete in globalization.

(b) President Obama can call for the elimination of the corporate tax to be replaced with a 2% VAT and, not only receive more revenues, but eliminate a big incentive to off-shore and promote exports.

(c) President Obama, like President Kennedy in 1961, could enforce the War Production Act of 1950, making sure that the United States did not have to depend on foreign supply for materials necessary for our national security, but have a domestic production and supply creating millions of jobs.

(d) President Obama doesn't have to wait for Corporate America to go bankrupt needing a bailout, but under Section 201 of the Trade Act could move with tariffs or import quotas to protect vital domestic production that is endangered.

(e) As other countries require in the trade war, enforce "Buy American" on government contracts.

(12) Unfortunately, if the President or Congress moves to change our tax laws or have our trade laws enforced, coming down on the head of the President and Congress in opposition will be Wall Street, the big banks, the financial community, Corporate America, and their economists, editorialists, political pundits, and their entities, like the Business Roundtable and the United States Chamber of Commerce, crying "free trade," "protectionism," "don't start a trade war." This is the crowd that will contribute to your re-election if you are for "free trade" and do nothing. And this is the crowd that will contribute to defeat you if you are for competing in globalization and do something.

(13) That under the Constitution, all trade and tax laws must originate in the House of Representatives and no House Member will introduce a tax or trade bill unless sanctioned by the President. Our only hope is for President Obama to call for a change in our tax laws and enforce our trade laws to protect the economy and make it profitable for Corporate America to produce in the United States in the trade war. But Corporate America objects.

People will not be shocked if the President and Congress continue to do nothing.

Read more commentary by Senator Hollings at Citizens for a Competitive America.