How does President Obama please his corporate backers while simultaneously lighting a populist fire? By advocating "a new economic patriotism," where empty protectionist rhetoric is paired with meaty corporate-welfare policies.
"It's time for a new economic patriotism," Obama says in his latest campaign ad. This is his play for Ohio, where both campaigns believe the swing blue-collar vote craves protectionism. While much of Obama's "patriotism" is fluff for the masses, his policies do pack some real economic nationalism in them -- the red meat he gives to corporate America.
Let's start with the fluff. "I want to stop giving tax breaks to companies that ship jobs and factories overseas," Obama regularly says from the stump. He hit on that item in his "economic patriotism" ad. Sounds fine, but what is he actually talking about?
Not much, it turns out. Corporations pay income taxes on their profits. Profits, roughly, are revenues minus expenses. One expense businesses incur is moving labor or equipment to new locations. Obama is proposing that the cost of moving facilities out of the United States shouldn't be deductible. Those costs should count as part of the company's profits.
This targeted tax penalty would raise $14 million per year, or 0.0005 percent of the federal budget, according to the Joint Committee on Taxation.
Corporate income tax payments were about $237 billion last year. So the $14 million in disallowed deductions adds up to less than one penny out of every $100 of income tax U.S. corporations pay.
Harping on how Romney wants to keep "tax breaks for companies that export jobs" is typical Obama spin. First, Obama makes it sound like Romney is proposing some sort of special tax break for outsourcers. He's not -- Romney is merely not supporting Obama's special tax hike. Second, Obama implies that his tax proposal meaningfully affects federal revenue or corporate behavior.
It's easy populism: You rile up the base by talking tough to corporations, but you don't upset your big-business donors, because they know your policy wouldn't make a bit of difference.