Calif. lawmaker proposes 'Made in the U.S.A.' rebate

June 1, 2012 7:09:20 PM PDT
Members of Congress on both sides of the aisle say they want to bring manufacturing jobs back from overseas, but a local lawmaker's plan to do just that is bottled up and going nowhere.

Rep. Mike Honda, D-Calif., figures one way to get businesses to set up manufacturing plants in the United States is to give consumers an economic incentive to buy American. He's proposed a national rebate -- money back on certain items made in the U.S.

When the president came to Silicon Valley last year he asked the late Steve Jobs what would it take to make iPhones in the United States.

Entrepreneur Kevin Surace says that is the wrong question.

"The government should not be in the business of picking companies," he said.

Surace, the chairman and co-founder of Serious Energy, a company that makes advanced building products and energy saving software, says there is another way to get companies to build things here.

"Not just U.S. companies, but companies from all over the world to come back to the U.S., hire our people and add value to goods and mostly goods here," Surace said.

Surace helped author a bill currently in Congress to essentially pay consumers for buying products built in the United States.

"You know when you give an incentive to come back here and build here, people find a way to make this very productive," Surace said.

The incentive would be a tax credit of up to 20 percent of the cost of the item.

"And it might be solar panels and it might be jet engines it's not for me to pick," Surace said.

So who would pick the products that would come with a tax credit?

"We would look at having a group of scientists and folks that are non-partisan that would look at the emerging technologies and try and determine eight-ten, what we call disruptive technologies, that could be built here," Honda said.

Honda says the plan doesn't cost the government anything because the tax credits to consumers would offset by the normal increase in revenue from companies set up factories and from the workers they employ.

But among economists, many are skeptics.

"Where I'm more skeptical is the notion that the government should single out one sector over another and favor that sector," UC Berkeley economist Enrico Moretti, Ph.D., said.

Moretti has just written about this topic in a new book.

'There is little economic justification for favoring, say, a part of manufacturing over the other parts of the labor force," Moretti said.

Former Labor Secretary Robert Reich says it's a nice idea.

"I applaud the effort to bring manufacturing back to the United States, create good manufacturing jobs," he said. But Reich says it's unrealistic to think companies would relocate simply because of a consumer rebate.

"Most of the big fast growing markets for manufacturing goods from American companies are not in America, they're in China, they're in India, thats why their factories are there," Reich said.

And it's not only that's Chinese workers will work for less money; they can also be called back in the middle of the night to rework a product, like when Steve Jobs decided to replace the iPhones plastic screen with non scratch glass. The change was accomplished within a matter of hours, just one of the reasons Jobs told the president over that dinner in 2011 that the iPhone jobs wouldn't be coming back to the U.S.

Honda's bill is stuck in committee without a single Republican co-sponsor. The congressman admits the bill will likely die unless Democrats take back the House of Representatives.

"I think it's one of the major pieces if we don't get cooperation from the other side," Honda said.

In the meantime there are steps that economists say would promote the economy without picking winners and losers. The No. 1 suggestion is to increase the research and development tax credit.


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