I would say that Senator Clinton is mostly speaking nonsense, but the more important point is that NPR listeners would have heard this reported as an effort to help Indiana workers, along with cutting the gas tax over the summer. They never raised any question as to whether this was a serious policy proposal. My reason for saying that the tax code is largely irrelevant to firms' decisions to move jobs overseas is that any tax preferences tend to be a very small factor in location decisions. Firms ship jobs overseas because they can pay workers $1 an hour, instead of $20 an hour in the U.S. They are some quirks here and there in the tax code that can provide frosting for firms that ship jobs overseas, but there are also quirks that encourage them to keep jobs here. If President Clinton devotes a whole 8-year term to eliminating the quirks, it would probably make less difference to jobs in Indiana than a 1 percent decline in the value of the dollar. Of course the value of the dollar soared by close to 30 percent during the Clinton presidency, leading to millions of jobs being shipped overseas. Let's hypothesize that changing the tax code has little or no effect on jobs being shipped overseas, just as cutting the gas tax will have little or no effect on the price of gas this summer. What does that mean about what Senator Clinton was telling working people in Indiana yesterday? Would NPR listeners have any idea of what Senator Clinton was doing with working people in Indiana? Probably not, NPR had to devote much of its air time to Reverend Wright.
--Dean Baker