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Bush Economist: Outsourcing Remark Misunderstood

President Bush's chief economist, who stirred controversy by suggesting that shipping U.S. service jobs overseas could be good for the economy, said Tuesday his comments were "far from clear and were misinterpreted."

N. Gregory Mankiw (search), author of one of the most popular college textbooks on economics and current chairman of the president's Council of Economic Advisers (search), said nothing he said should have been construed "as praising U.S. job losses."

"Nothing could be further from my view," Mankiw said. "Creating an environment for robust job creation is the paramount goal of the president" and his economics team.

Mankiw's speech Tuesday represented the administration's latest effort at damage control for his remarks last week, which brought criticism not only from Democratic presidential candidates but also from Republican House Speaker Dennis Hastert.

Hastert called Mankiw a "brilliant economic theorist" but chided him for not understanding that "we can't have a healthy economy unless we have more jobs here in America."

In an appearance Thursday in Pennsylvania, Bush himself had to deal Mankiw's comment that outsourcing U.S. service jobs abroad was "just a new way to do international trade."

Under attack from Democrats for sluggish job growth, Bush told an audience in Harrisburg that he knew that "because jobs have gone overseas," people are looking for work in the United States. He insisted his economic policies were designed to create more jobs at home.

Democratic National Committee Chairman Terry McAuliffe (search) said Tuesday that Mankiw's earlier comments represented the point "where the president's credibility gap meets his job gap. The American people know that exporting jobs is disastrous for our economy as well as our families."

Mankiw, a former Harvard economics professor, said Tuesday he had learned a lesson about the use of language from his missteps last week.

"Economists and noneconomists speak very different languages," Mankiw said in a speech to an audience of economists.

"Last week, some of the comments I made about the benefits of international trade were far from clear and were misinterpreted," Mankiw told the National Economists Club (search).

He said that any lost job "is an awful experience" for the workers involved and for their families. He said the Bush administration understood that and was pushing programs that emphasize retraining of workers who lost their jobs due to global competition.

Mankiw said the administration was focused on creating those new jobs, but the administration believed the best way to create them was not through erecting protectionist barriers but through promotion of open markets and free trade.

Mankiw made only passing reference to the portion of the president's economic report released last week that drew the most fire. In the section on trade, the report noted the new trend to offshore outsourcing of service jobs such as by establishing call centers in India to handle customer service calls from America.

This trend has raised alarms among many white-collar workers who fear they could be subjected to the same global competition that blue-collar factory workers have experienced during 42 consecutive months of manufacturing job losses. The nation has lost one out of every six manufacturing jobs over the past 3 years, 3 million manufacturing jobs that many fear may never come back.

The president's latest economic report said the outsourcing of service jobs had the same economic impact as buying imported manufactured goods that could have been made in America.

"When a good or service is produced more cheaply abroad, it makes more sense to import it than to make or provide it domestically," the president's economic report said.

In his remarks Tuesday, Mankiw said, "History teaches that a retreat to economic isolationism is a path to economic decline."

Instead, Mankiw said the government needs to create an environment where free market forces could create globally competitive jobs in the future.

"Like the president, I have great confidence in the future of the American economy," Mankiw said.

The administration has found itself under increasing attack for its trade policies in light of a trade deficit that hit a record $489 billion in 2003, including a deficit of $124 billion with China, the largest imbalance ever recorded with one country.

Senate Democrats, led by Minority Leader Tom Daschle of South Dakota and Edward Kennedy of Massachusetts, held a news conference last week to propose new protections for workers whose employers send their jobs overseas.

Their bill would require outsourcing companies to tell employees and the federal government where the jobs are being sent, how many and why.