A Project of The Annenberg Public Policy Center

Obama’s Trade Trickery

An Obama ad implies that a Pennsylvania plant sent jobs overseas and says that McCain is to blame. That's wrong.


Summary

An Obama-Biden ad ties McCain to the closing of a plant in Pennsylvania. Its assertions are misleading and false:

  • The ad says McCain "sold … out" workers whose factory closed. But there was nothing McCain, or anyone could have done. The factory was making parts for televisions that are becoming obsolete. The company in question has called the ad "misleading."
  • It implies jobs were sent to China by saying that workers were paid to "disassemble the plant and ship the equipment to China" and that McCain "supported tax breaks for companies that ship jobs overseas." But the only things shipped to China were the parts.
  • It's misleading to imply that McCain's support for the tax code in question is to blame for companies sending jobs overseas, as we've said before. The Obama-Biden campaign refers to a dynamic of U.S. tax code that allows companies to defer paying corporate income taxes on money they earn overseas and leave overseas. But the relationship to lost jobs is tenuous.

Analysis

The Obama-Biden campaign is running an ad that tells the story of the closing of a Corning plant in Pennsylvania and alleges Sen. John McCain was involved. But this story is a tall tale.

[TET ]

Obama-Biden Ad: "Sold Out"

Obama: I'm Barack Obama and I approve this message.

Announcer: Corning shuts down it's plant in Pennsylvania. Hundreds lose their jobs. Then the workers are rehired to disassemble the plant and ship the equipment to China. Washington sold them out with the help of people like John McCain. He supported tax breaks for companies that ship jobs overseas. And voted against cracking down on China for unfair trade practices. We can't afford more of the same. [/TET]

Technology Killed the TV Plant

Sen. Barack Obama earlier used the Corning plant as grist for mailers against Sen. Hillary Clinton during their heated primary contest. The liberal Talking Points Memo said then that the implication in the attack was wrong. We don't see any difference this time around.

The ad says a Corning manufacturing plant in Pennsylvania closed and "hundreds los(t) their jobs. Then the workers are rehired to disassemble the plant and ship the equipment to China." That's all correct. But then the ad goes astray by saying that "Washington sold them out with the help of people like John McCain."

When the plant closed in 2004, it wasn't politicians or trade practices that "sold them out." Rather, the culprit is that unforgiving foe: new technology. The plant was closed because it made cathode ray tubes, which are used in conventional televisions. But the cathode ray tube is a dying technology, and Corning no longer makes it. Conventional TVs are being displaced by new plasma and LCD televisions as the prices of these products decrease.

The Corning company itself is displeased with the ad, because of its implication that American jobs were sent abroad. The ad says that workers shipped "the equipment" to China (that's true) but adds that McCain's involvement was that he "supported tax breaks for companies that ship jobs overseas." Corning spokeswoman Kelli Hopp-Michlosky told us the ad is "misleading":

Hopp-Michlosky: The ad's facts themselves are true, but are presented out of context so that the underlining message is misleading. Corning closed a plant, and a business altogether and we know longer make CRTs. Yes the parts were taken down and sold to a manufacturer in China, but we have learned that the company lost funding and those parts have never been used to create more CRTs or jobs.

Local Pennsylvania news stations have noted the false implication of the ad as well. Hopp-Michlosky told NBC affiliate WETM that Corning has contacted the Obama campaign "expressing our displeasure and presenting all the facts so they see how misleading the ad appears. We will continue to speak with them on this."

[TET ]

Obama-Biden Ad: "Shaky Economy"

Obama: I'm Barack Obama and I approve this message.
Woman 1: The economy is very, very shaky.
Woman 2: In just my own neigborhood, I've seen two foreclosures.
Man 1: McCain's policies are the same (inaudible) of President Bush
Narrator: Bush-McCain Economics: Tax breaks for companies that export jobs, but nothing for 100 million households. A plan to privatize social security. Cutting benefits and piling up debt.
Man 1: I can't understand why we would want four more years of this.
Woman 2: It's the same thing over and over again and expecting a different outcome.[/TET]

Tax Breaks for Outsourcing?

The Corning ad repeats a claim Obama has made frequently, for example, in an ad called "Shaky Economy," which has run in nearly a dozen states this month. It says that McCain supports "tax breaks for companies that export jobs." But no matter where or how many times it's said, it is still misleading.

To start, the Obama campaign is referring to a long-standing aspect of the federal tax code that allows U.S.-based multinational corporations to defer paying U.S. corporate taxes on profits made overseas if the profits are left there, too.

McCain cast three votes against amendments to budget and spending bills that the amendments' Democratic sponsors said were intended to address this, in 1995, 2004, and 2005.

But this tax provision isn't the main reason companies decide to set up shop abroad.

Back in 2004 when we criticized John Kerry for using a similar iteration of this claim against President Bush, we pointed out that Christian Weller, a senior fellow at the Democratic-leaning Center for American Progress, had said taxes "are a very small part" of companies' decisions to move jobs offshore. Those at a 2005 Brookings Institution summit on trade also said taxes had little to do with outsourcing. Joel Slemrod, a tax expert at the University of Michigan's business school, summed it up by saying: "For those who see [offshoring] as a problem, this is not a solution."

During the Democratic Primary, we found Obama and Hillary both using this claim as a piñata. And our colleagues at Politifact.com found Joe Biden peddling it on the campaign trail.

– by Justin Bank

Sources

"Cathode-Ray-Tube TV Format Dying Slow, Quiet Death," AP. 23 Oct 2006.

Graham, Katie. "Corning Inc. blasts Obama ad." NBC Affiliate WETM 18. 18 Sept. 2008.