Job One for McCain or Obama: Jobs
As Barack Obama and John McCain move into the next stage of the Presidential campaign, there's one economic question they won't be able to escape: What should Washington do to reverse the decline in manufacturing jobs? How each candidate answers that question might help decide which one wins.
Manufacturing's political importance in this election year depends partly on geography. The crucial swing states of Indiana, Michigan, Ohio, and Pennsylvania have seen their manufacturing bases implode. Altogether, they have lost 200,000 factory jobs in the past two years alone.
Equally important for the candidates, helping manufacturing seems like an easier prospect than, say, fixing health care. Up to now the cost advantage of China was so great that Washington could do little, short of heavy-handed trade restrictions, to stop the erosion of factory jobs. But the combination of the falling dollar and rising shipping costs has created an environment where government policy could finally make a difference.
McCain favors broad tax cuts to give a boost to all corporations, not just manufacturers. "Serious reform is needed to help American companies compete in international markets," McCain said in a June 10 speech. His program includes a reduction in the corporate income tax and allowing companies to write off their investments in equipment faster. "U.S. manufacturing just needs what every other sector needs—an improved environment for doing business," says Daniel T. Griswold, a trade expert at the conservative Cato Institute.
Obama proposes a more active approach to helping manufacturing. In a June 16 speech in Michigan, he advocated "a competitiveness agenda built upon education and energy, innovation and infrastructure, fair trade and reform."
This long list reflects the diversity of ideas among Democratic policy experts. A recent report from the Brookings Institution, a liberal think tank, suggests government support for the growth of regional "clusters" of companies in the same industry. Washington would provide grants to help existing companies collaborate on new products and technologies so that they could better compete globally. In addition, money would be spent on improving infrastructure and providing training for workers.
Another pro-manufacturing idea that has found its way into the Democratic campaign is funding the development of "green" technologies as a way to create jobs. Obama's Web site trumpets his support for "assistance to the domestic auto industry to ensure that new fuel-efficient vehicles are built by American workers."
Beyond what the candidates are advocating, there are plenty more proposals floating around, including increased grants and loans for high-tech startups, greater national funding for research and development, and using environmental regulations to slow imports from polluting manufacturers overseas. But no matter who wins in November, one thing is sure: Washington will likely try to do something to get factory jobs growing.