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Monday, 22 November 2010 21:38

Bush Excessive Tax Cuts for Wealthy Go to Help Create Jobs Overseas, Not in America

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EDITOR'S BLOG FOR BUZZFLASH/TRUTHOUT BY MARK KARLIN

When the wealthiest Americans use their excessive tax breaks to invest offshore, they do nothing to create jobs for Americans.

And that appears to be just what many of them are doing.

According to a November 20 article in The New York Times,"Well-heeled American investors have been doing something lately that they resisted for decades - becoming more like their European, Asian and Latin American counterparts and substantially diversifying their portfolios outside their home country."

The Times adds, "The people putting as much as 40 percent of their portfolios into nondollar investments are quite wealthy."

Even if they invest much of their Bush tax cut windfalls in American stocks, bonds, and hedge funds, they are doing little to create jobs, although they are receiving a lot of profit. Much of today's large corporate profitability comes from off shoring jobs to the cheapest labor markets and downsizing American jobs to the maximum amount.

Increasingly, American corporations that do sell goods have them manufactured overseas (the vast majority of consumer electronic technology is made and assembled abroad), making profits from domestic consumer purchase of items produced outside of the United States. In short, increased consumer demand in many economic sectors means more jobs abroad, fewer at home, and increased working- and middle-class debt in America.

The sorry state of the US economy that politicians of neither party will address is stunning. According to an expert quoted by the Times, "the United States contributed 40 percent of global gross domestic product 15 years ago and now contributed 21 percent. He predicted that that figure would fall to 12 percent in another 15 years. Going along with this is the shrinking market capitalization of American stocks compared with global stocks."

By financing tax cuts for the wealthy through a growing deficit, we are just helping to accelerate the decline in American economic power and the net outflow of jobs from the US.

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