Outsourcing Targeted in 2004 Campaign

"Outsourcing" has become part of the presidential campaign lexicon this season as the parties argue over the lackluster job growth during President Bush's term in office.

John Kerry (search) has been hard at work bashing Bush for his administration's support of outsourcing — or sending jobs overseas — a new study released Tuesday shows that high-tech companies who have outsourced 104,000 jobs are planning to create 317,000 new American jobs by 2008.

A study by the Information Technology Association of America (search) shows that while 3 percent of U.S.-based jobs were lost as a result of outsourcing, that's fewer than the number lost in the dot-com meltdown of 2000. The money saved also helped companies hire 90,000 new workers in 2003.

"There is no doubt that the slow creation of jobs during this recovery is a hot political topic," ITAA President Harris Miller said in a Web chat Tuesday. "It is easier to blame factors such as offshoring - where you can point your finger at someone or some country - than to blame general economic notions such as 'business cycle' or 'telecom bust.'

"It is hard for a television station to show a picture of an economic cycle. It is easy to show a picture of a Filipino or Indian or Irish IT worker. So I expect that unless we see a quick, dramatic drop in unemployment, which no one is projecting, than the offshoring issue will be a major topic between the parties right through November and beyond," Miller added.

But some groups argue outsourcing may hurt U.S. competitiveness.

"There is little doubt that U.S. companies are reaping short- term benefits from offshoring," said Ron Hira of the Institute of Electrical and Electronics Engineers. "It's not as clear, however, whether the U.S. economy - especially at a time of little or no job creation -- benefits from it."

Voters are definitely tuned in to the jobs issue.

The latest Fox News poll found that by a 50-27 percent matchup, voters think Bush would do a better job of protecting the nation from terrorist attacks than Kerry. But Kerry is seen by 48 percent as the candidate better able to protect and create jobs in the United States than Bush, who polled higher among 31 percent of those surveyed.

"I think that they're beginning to understand more as they're beginning to see more news about outsourcing and I think there's a lot of sensitivity now about job loss," said Cassandra Butts, senior vice president and coordinator for economic policy at the Center for American Progress (search).

"It's obviously just a component of the job loss issue but it's a component that's getting a lot more attention."

The manufacturing sector started sending work abroad in the 1980s but now, an increasing number of white-collar, high-tech sector positions, manufacturing jobs and telephone call centers are offshore - primarily in India and China.

"You'll clearly hear Iraq mentioned in a lot of political ads this year, but references to India may be a close second - all because 'outsourcing' (search) has become a key buzz word in the national debate about jobs in this country," said Erik Potholm, partner at Stevens Reed Curcio and Potholm, a Republican media consulting firm.

"Candidates and campaigns better develop messages and responses to the 'outsourcing' question because voters have big, big concerns about it, especially in key battleground states. And the issue isn't going away anytime soon."

Kerry, a four-term Democratic senator from Massachusetts, consistently reminds voters that more than 2 million jobs have been lost during Bush's White House tenure. He promises to keep more jobs at home by taxing offshore businesses of U.S. corporations to cover other parts of his tax-reform plan.

"This administration thinks outsourcing is just dandy … I don't think it makes sense, George Bush does," Kerry said in a campaign speech Tuesday. "And when I'm president, we will take away any incentive for Americans to pay for the loss of their own jobs."

Kerry even has a name for corporations that send work overseas while still taking advantage of U.S. tax benefits: Benedict Arnold corporations.

The Bush-Cheney campaign, meanwhile, is painting Kerry's views on outsourcing as isolationist and argues that keeping markets open is key to keeping America competitive.

"I think it would be absolutely wrong for America to be so pessimistic about our ability to compete that we become economic isolationists," Bush said Tuesday. "I believe this nation can compete anywhere, anytime, anyplace so long as the rules are fair."

"It's one aspect of trade, and there can't be any doubt about the fact that trade makes the economy stronger," added Treasury Secretary John Snow (search). "You can outsource a lot of activities and get them done just as well at a lower cost. If we can keep the American economy strong and growing and expanding, we'll create lots of jobs."

One economic analyst said that the number of IT jobs lost to outsourcing is greater than in other industries, and is really responsible for only a small fraction of the jobs lost in the last three years.

"There's a tendency to blame offshore outsourcing for all of our labor problems in the U.S. economy today," said Nariman Behravesh, chief economist for Global Insight, which conducted the ITAA study. But "we think it's a very small share, it's most pronounced in this [IT] industry … in terms of overall job loss, it really is tiny," he added, saying it may be as little as 2 to 5 percent

According to a DiamondCluster International survey of 182 companies recently released, 86 percent plan to increase the use of offshore outsourcing firms, giving Kerry ample ammunition to continue hammering away at Bush.

But one Republican analyst said the president's economic message is stronger than Kerry's, and poll numbers are already beginning to reflect a shift toward recognizing that.

"[Bush's] message was essentially not getting out at all … now the polls are beginning to turn differently," said Republican strategist James Lake. "I think the continuation of this campaign will see this president and the campaign aggressively get the message out about the economy and the tremendous job the president is doing on terrorism and I think it's those things that are going to make a difference."