March 19, 2004    Volume 11, No. 6

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A Spirited Debate Over Outsourcing And Trade:
Senate Republicans Dilute Proposal
Aimed At Keeping Government Service Jobs In U.S.


Sen. Christopher Dodd (D-Conn.) has been losing his voice lately speaking emphatically about the loss of U.S. manufacturing and service sector jobs to foreign countries. Dodd was pressing the issue with sound and fury on the floor of the Senate trying to galvanize support for his proposal to require that all federal service contracts be fulfilled using U.S. workers. But his efforts were attacked by Republicans. After two days of debate, the final version of his legislation excluded most federal agencies from the requirement.

Dodd's amendment to the "Jumpstart Our Business Strength (JOBS) Act," which is being considered as a replacement for the Foreign Sales Corp, generated a spirited debate over how Democrats and Republicans view the economy and international trade. In the end, the Republicans prevailed, arguing that restricting government procurement to U.S. companies and workers would create retaliation among trading partners. They argued that such legislation was "isolationist" and would likely cost the U.S. economy more jobs than it protects. Dodd's proposal was eviscerated.

As it was originally written, the amendment restricted any organization using federal tax dollars from shipping jobs offshore. All federal funding going to states and local governments would be impacted. "I realize it is a loud shout at this moment and I know others will argue that maybe it is louder than it need be," said Dodd on the Senate floor early in the debate. "But I do not know any other way to express my deep concern about what is happening in my state and all across this country if we do not begin to say that at least with taxpayer money, you are going to have to act differently. You may decide to do it on your dime, but you are not going to do it on the dimes of my taxpayers. You do not need to do that in order to survive."

Dodd pointed out that the Senate had just spent the past five weeks debating medical malpractice, immunization for gun manufacturers and pension reform, "but we have not spent five minutes debating the issue of what is happening to American jobs," he said. "This is a big issue. The American people are outraged that we have nothing to say when it comes to outsourcing of jobs to other nations and we are not standing up and defending our own workforce."

Senator Ted Kennedy (D-Mass.) took to the floor and delivered a blistering attack on President Bush and his economic record, noting the number of jobs that have been lost under his watch. Kennedy pointed out that Vice President Dick Cheney said that the " 'economy is in very good shape' and that if 'Democratic policies had been pursued over the last two or three years we would not have had the kind of job growth that we've had.' Job growth?" Kennedy stormed. "Someone should tell the Vice President that we have lost over two million jobs in the Bush economy."

Kennedy's asperity in turn spurred Sen. Orrin Hatch (R-Utah) and other Republicans to lambaste the Democrats, whom they described as being partisan and "afraid" of international competition. "We are all concerned about preserving American jobs, but we need to make sure the cure is not worse than the disease," Hatch said.

Sen. Judd Gregg (R-N.H.) said Dodd's amendment, titled the United States Workers Protection Act, "basically opens a trade war" and that more than six million jobs created in the United States by foreign companies could be at risk.

"This is precisely the point," Sen. Mitch McConnell (R-Ky.) responded. "I think retaliation would be the order of the day. We do not want to do anything to jeopardize the existence of Toyota or 50 or 60 supplier plants that have come into my state."

Gregg characterized the Dodd amendment as being a "stalking dog -- colored in fairness and reasonableness, but as a practical matter, its effect will be to create retaliation. I guess my question is this. Are we a nation that believes we can compete in the world or aren't we? Are we a nation that believes our people are smarter, brighter and more productive than anybody else in the world or aren't we? My question is, are we so fearful of our capacity to compete as a nation that we must put forward this new concept that we hear pattering from the other side of the aisle toward us of protectionism or are we a nation that competes and competes well?"

Sen. Charles Grassley (R-Iowa) took to the podium: "We have been hearing from the defeatist wing of the Democratic Party," he lectured. "I am not prepared to be a defeatist in international trade. I intend to wear the badge 'Made in America' with honor, as it has been for decades and decades. What does the political wing of the Democratic Party want? Do they still want people making buggy whips when we don't have buggies anymore? Times change, but the defeatist wing of the Democratic Party has lost confidence in America. They don't think 'Made in America' is a badge of distinction anymore."

Democrats pounced back, charging that Republicans agree with the views expressed by the chairman of the White House Council of Economic Advisors (CEA), who said outsourcing jobs was beneficial to the United States economy.

Sen. Richard Durbin (D-Ill.) said his Republican colleagues "are scared to death of this amendment. They do not want to vote on it because in their heart of hearts, they obviously agree with [CEA chairman] Mr. Mankiw. They think the outsourcing of jobs overseas is a healthy thing. I would defy any of my colleagues to go home to Main Street and defend it. Say to the people that the 4,000 jobs that leave IBM and go to India is a good thing for America."

The Republicans then proposed an amendment to the Dodd amendment requiring that the Secretary of Commerce certify whether the Dodd amendment would cause the loss of more jobs than it would save. If Commerce Sec. Don Evans found there would be more harm than good, then the proposal would not go into effect.

Democrats took offense. Sec. Evans "will certify exactly what [the administration] told us," Durbin stormed. "They believe in outsourcing. They think it is healthy to have outsourcing of jobs overseas. Do my colleagues expect the President and the Secretary of Commerce to defy his economic advisors? No way! The amendment guts the Dodd proposal."

The amendment to the amendment, requiring the Commerce Secretary's certification 90 days after the bill's passage, was included by Dodd in the final version.

After almost two days of discussions, Dodd pleaded for a vote. "I have been on the floor with my amendment for 24 hours and all I want is a vote," he said. "If you think outsourcing is a good thing and many people do, then vote against my amendment. I am not trying to be difficult. I have offered amendments before and lost before. I am not shocked when I bring up an amendment and I lose."

But it was not to be. Making their way into the chamber for the first time in days, Sens. John McCain (R-Ariz.) and John Warner (R-Va.) took to the microphone. With great ardor, they ripped the amendment apart on grounds that it would cripple the nation's defense. Noting that the amendment had been "debated ad nauseam," McCain said: "Straight talk -- I do not support the amendment offered by the Senator from Connecticut. If we do not allow the purchase of foreign-manufactured defense equipment, then sooner or later they will retaliate by not purchasing ours. This could have a significant effect."

McCain pulled out a letter from Michael Wynne, acting undersecretary of Defense, which said the provision "would impact our ability to sustain our troops stationed overseas."

From a military perspective, the Dodd amendment was an extension of the "Buy American" debate that lasted six-months last year, added Warner. Those provisions were soundly defeated and the Dodd amendment should be defeated for the same reason: "This will do incalculable damage to our national security, undermine our relationship with our allies and violate many of our trade agreements with respect to defense procurement," he said. "The Dodd amendment will spark a trade war in aerospace and defense trade, one of the few remaining areas that the United States has a manufacturing trade surplus. It will lead to the destruction of the U.S. aerospace industry and the loss of thousands of jobs that will migrate overseas." Warner compared the bill to the Smoot-Hawley and the Buy American Act of 1933 that "extended the misery" of the Great Depression.

Dodd left the chamber and quickly rewrote his amendment stating that it "shall not apply to any procurement for national security purposes entered into [by] the Department of Defense or any agency or entity thereof." It named the Army, Navy, Air Force "or any agency or entity of any of the military departments" as being exempt from the proposal. It also excluded the Department of Homeland Security, the Department of Energy "or any agency or entity thereof with respect to the national security programs of that department or any elements of the intelligence community."

Dodd reiterated that his was a modest proposal, which, by the time the debate ended after two full days, had become far more modest. A vote was called and the much changed amendment passed by a margin of 70 to 26, with all those voting against being the following Republicans: Alexander (Tenn.), Allard (Colo.), Bennett (Utah), Brownback (Kansas), Burns (Mont.), Campbell (Colo), Chambliss (Ga.), Cochran (Miss.), Cornyn (Texas), Craig (Idaho), Crapo (Idaho), Enzi (Wyo.), Fitzgerald (Ill.), Gregg (N.H.), Hagel (Neb.), Hatch (Utah), Kyl (Ariz.), Lott (Miss.), Lugar (Ind.), McCain (Ariz.), Nickles (Okla.), Roberts (Kansas), Stevens (Alaska), Sununu (N.H.), Thomas (Wyo.), and Warner (Va.).


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