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Transition 2012

A guide to foreign policy and the 2012 U.S. presidential transition.

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Renewing America: Cheap TVs, Competition, and Potholes

by Toni Johnson
February 29, 2012

A man looks at a flat screen television in Flushing, New York March 27, 2010. (Jessica Rinaldi/Courtesy Reuters)


Whether it is jobs, trade, taxes, business competitiveness, or energy prices, economic issues dominate the campaign trail. This past week on Renewing America, a project which looks at six major domestic issues that affect U.S. influence abroad, CFR Senior Fellow Edward Alden’s blog posts hit on several topics pertinent to the campaign trail.

Alden’s Monday post on the Renewing America blog focuses on trade and jobs. Possibly the most salient point on the mood of voters:

The skepticism over trade is not terribly surprising. The past decade has been a hard one on many U.S. workers, and it has coincided with a rapid expansion of global trade, especially China’s entry into the World Trade Organization. While we all benefit from the cheaper television sets and higher-quality imported electronics that come from an integrated global economy, they are no substitute for a steady job and a reasonable paycheck.

Also possibly affecting the U.S. job market is job offshoring, which some link to U.S. corporate tax rates. President Obama, Mitt Romney, and Rick Santorum have all released visions for reforming corporate tax structure, mostly by cuts to the statutory rate–though Obama also seeks to close most tax loopholes. Alden notes in a post last Thursday:

There is no morally defensible reason for cutting corporate taxes at a time of deepening national debt that will require greater burdens for all Americans, either through higher taxes on income and consumption or lower spending on entitlements, defense, or other government programs. Unfortunately, it is a practical necessity. Technology and trade liberalization have created a global competition for investment. Multinational companies considering their investment alternatives weigh many factors, but the tax burden is high on the list.

Alden also posted on the gas tax Friday. Fuel prices are another issue that has gotten special attention from Gingrich and Santorum on the campaign trail, who have argued for lowering regulatory barriers to domestic drilling. On the gas tax and road infrastructure, Alden notes that three quarters of Americans oppose higher gas taxes (which obviously represent a portion of overall price at the pump). But he goes on to say:

The gas tax is perhaps the clearest, most understandable example of that old maxim: you get what you pay for. People understandably do not like taxes where it is unclear what they are getting in return. The gas tax is the opposite: it pays for the roads we all drive on. Pay more, and the result is less congestion and fewer potholes; pay less and, well, don’t complain over flat tires and traffic jams.

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