President Barack Obama said manufacturers must be rewarded for bringing jobs back to the U.S. from overseas and expanding at home to set a foundation for job creation and growth.
Following up on last night’s State of the Union speech, Obama today expanded on his proposals for encouraging manufacturing and energy production. He said the actions his administration already has taken are helping the U.S. recover from the recession.
“Today, three years after the worst economic storm in three generations, we are making progress,” Obama said in Cedar Rapids, Iowa.
He spoke at Conveyor Engineering & Manufacturing, which makes screw-type conveyors for moving materials such as feed, grain and chemicals for farming and processing facilities and which Obama said represents the kind of home-grown industry the U.S. must encourage.
Accelerating the recovery and trimming the jobless rate, which was 8.5 percent in December, will be crucial to Obama’s chances of winning a second term in November. The two leading candidates for the Republican nomination, Mitt Romney and Newt Gingrich are making criticism of Obama’s stewardship of the economy a focus of their stump speeches.
Engine of Growth
Manufacturing has been an engine of growth for the U.S. Output climbed 0.9 percent last month, the biggest gain since December 2010, according to Federal Reserve data. U.S. manufacturers have added more than 300,000 jobs since December 2009, the White House said in a fact sheet, growing for the first time since the late 1990s.
The manufacturing measures are part of what Obama called a “blueprint for an economy that’s built to last.” It was part of a list of initiatives the president laid out in his address that included expanding domestic energy production, bolstering job training, aiding homeowners with underwater mortgages and streamlining government operations.
Manufacturing was highlighted by Obama at a stop later in the day in Chandler, Arizona, about 20 miles (32 kilometers) southeast of Phoenix, where Intel Corp. (INTC) has a manufacturing plant. The world’s largest chipmaker says the facility employs 9,700 people and is building another $5 billion microprocessor plant.
To give companies an incentive to create manufacturing jobs in the U.S., the president proposes to require that companies pay a minimum tax for profit earned overseas, a step that may offset the lure of low tax rates offered by some foreign countries.
Companies would be banned from taking a deduction on taxes and would be offered a 20 percent tax credit, an amount subtracted directly from taxes owed, if they brought jobs home, according to the administration’s fact sheet.
Obama also is proposing $6 billion in new credits over three years for companies that invest in facilities or production in communities that has had major job losses.
He also again is calling for reauthorizing a measure that lets businesses expense the full cost of investments in equipment and making permanent a research and experimentation tax credit.
The details of the plan will be included in the fiscal 2013 budget Obama sends to Congress on Feb. 13.
The president repeated his State of the Union message on taxes, saying that those who make $1 million or more a year should pay at least a 30 percent rate.
Obama said unfairness in the tax code is symbolized by Warren Buffett’s secretary, who pays a higher effective tax rate than her billionaire boss. Buffett’s secretary, Debbie Bosanek, watched the State of the Union address as a guest first lady Michelle Obama in the House gallery.
“Does that make any sense?” Obama said in Iowa. “Do we want to keep these tax cuts for folks like me who don’t need them?”
The minimum tax rate, known as the Buffett rule, was inspired by a New York Times op-ed essay in August in which the chairman of Berkshire Hathaway Inc. wrote that in 2010 he paid a lower tax rate -- 17.4 percent -- than “any of the other 20 people in our office.”