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Last updated: September 30, 2010 at 15:04 pm

Anti-offshoring bill blocked in Senate – Obama’s anti outsourcing rhetoric stopped in its tracks?

Barack Obama has been critical of Indian outsourcing industry even before he came to the fold as the President. Be it in education or in the outsourcing industry he has always looked for opportunities to try to better Indians or go one up as the case may be. Nothing wrong with that – Except for the fact that outsourcing is something which even the US companies have encouraged over the years for a variety of reasons like low costs, better skills etc. which are already known.

And so in his intensifying movement against outsourcing, the Anti Offshoring Bill was brought into the picture.

Some of the provisions of the “Creating American Jobs and Ending Offshoring Act” include: –

  • Providing businesses relief from the employer’s share of the Social Security payroll tax on wages paid to new US employees in the event those jobs had returned to the US from an overseas location
  • Preventing businesses from ‘deferring’ US taxes on income they make from foreign subsidiaries (Under the current law, US organizations can defer paying tax in such scenarios until that income is brought back to the US)
  • Providing relief in payroll tax

The bill needed at least 60 votes to be passed. But instead, the Republicans blocked the passing of the bill with a 53-45 vote.

This bill was destined to fail because instead of “Creating Jobs” as it proclaims, it was actually doing completely the opposite. Its approval would have restricted jobs in the US as well as denied tax breaks to US companies which moved jobs overseas.

The bill spoke of protectionist and regulatory policies in an era when the world is becoming a smaller place and globalization is the name of the game. For economies and businesses to grow, these kinds of policies are a strong deterrent. The relief in payroll tax may give some benefit to US companies for hiring locally. But it cannot play a game changer in the outsourcing industry.

It’s nice to know that better sense and vision of thought has prevailed among the majority of the Senate members. But who knows, when someone else comes up with such a bill next time?

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