General Electric (GE) is using it’s huge non-U.S. profits to invest in other countries. Six other corporations, including Intel, are doing the same. All seven sit on Obama’s advisory council for jobs and competitiveness. Robert Reich says it’s a “sure signal” they are “betting less on America.”
As a group, multinational companies with current or former chief executive officers on Obama’s jobs council have, over the past four years, almost doubled the cumulative amounts they’ve reinvested overseas, according to data compiled by Bloomberg.
By doing so, companies may be able to take advantage of faster-growing markets or lower production costs, and they can defer U.S. income taxes on profits from overseas sales. Underscoring the difference between corporate interests and the national interest, they’re also investing money elsewhere that could be helping the U.S. economy, said former U.S. Labor Secretary Robert Reich.
“That’s a signal that they are betting less on America,” Reich said. “We’ve got to understand there’s a fundamental difference between the competitiveness of these companies and the competitiveness of America and American workers.”…
Former Caterpillar CEO Jim Owens (who Obama previously misquoted to pat his own back) suggest Obama should also consult with CEO’s like himself
Jim Owens, former Caterpillar Inc. (CAT) chairman and CEO, who isn’t on the council, said large U.S.-based companies generally are expanding overseas investments as economic growth rates in emerging markets offer better opportunities. Executives from those companies can offer the Obama administration useful advice on making the U.S. more competitive, he said.
Owens has recently been critical of U.S. Tax and Trade policies and Congress “who for political populist reasons are against trade.”
GE is the largest U.S. corporation based in this country (read for more details on the story below):
General Electric is the biggest corporation based in the United States, and it had a very successful 2010, with billions of dollars in profits.
But it paid nothing at all in taxes in the United States. As David Kocieniewski writes in The Times, the company actually claimed a tax benefit of $3.2 billion.
After lobbying Washington to illegalize incandescent light bulbs, General Electric has closed all US plants producing incandescent bulbs and opened factories in China to manufacture florescent bulbs. Fluorescent bulbs are touted as more energy efficient, but manufacturing them is more labor intensive. Labor costs are cheaper in China than the US.
Part of the legislation to eliminate incandescent bulbs will go into effect in 2012, and the bulbs will be banned in the US completely in 2014.
GE closed their last incandescent plant in Winchester, Virginia in September 2010.
Bringing home the bacon to shareholders is proper corporate policy, but at some point, we must get the taxation and the tax codes right, perhaps allowing us to keep jobs at home.