Offshoring - InformationWeek

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IT Leadership // IT Strategy
News
7/16/2004
10:10 AM
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Offshoring

Bush Illo
Kerry Illo

President Bush and Democratic presidential candidate Sen. John Kerry have a rhetorical difference on offshore outsourcing, but neither proposes banning U.S. companies from hiring foreigners to do jobs performed by U.S. workers.

Bush takes a hands-off policy to offshore outsourcing, saying he doesn't want to let the United States retreat into economic isolationism, which would jeopardize 12 million American jobs that he says are dependent on exports.

"Outsourcing is an issue that we face as part of living and working in a dynamic global economy," Bush-Cheney '04 campaign policy director Tim Adams said in an online chat this spring. "The real question is how we prepare American workers to compete successfully in this global economy."

Kerry proposes eliminating tax breaks for companies that outsource work overseas. He would stop letting companies defer U.S. taxes on income earned by certain types of foreign subsidiaries when the net result is to move U.S. jobs abroad, and he would close loopholes that let companies escape taxes by taking advantage of complicated international tax rules that encourage them to shift their headquarters to low-tax havens. "We're going to repeal every tax loophole and benefit that rewards any Benedict Arnold CEO or company for exploiting the tax code to export American jobs," Kerry said in a controversial speech to the AFL-CIO earlier this year. Kerry has since dropped the "Benedict Arnold" tone but has kept offshoring a top issue.

Yet one hard-core critic sees little difference between the candidates on offshore outsourcing and the related issue of H-1B visas, which let foreigners work in the United States. Neither candidate has proposed restricting H-1B visas or preventing companies from using offshore labor or moving operations offshore.

Kerry is "trying to convey the impression that the Democrats are on the side of the IT workers, while the Republicans are pro-H-1B and pro-offshoring," Norman Matloff, a University of California-Davis computer-science professor, says via E-mail. "It's not true. Both parties are solidly pro-H-1B and pro-offshoring. The only difference ... is that the Democrats are pretending to be pro-labor on those issues, while the Republicans are quite openly pro-industry," Matloff says.

On H-1B visas, the Bush campaign is mute. Kerry, who in the past has voted to increase the number of H-1B visas, more recently has cast doubt on whether the number needs to be raised. "It is unclear how diligently employers seeking to fill these positions with noncitizen technology professionals have sought to fill those same positions with U.S. professionals," the Kerry campaign says in an E-mail to InformationWeek. "It needs to be clear to employers that they must seek qualified citizens before reaching out to potential H-1B visa holders."

Illustrations by Hanoch Piven

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