Manufacturing Doesn't Need Special Tax Treatment

In this post on manufacturing's declining share of GDP

By James Kwak A couple of days ago I criticized Mitt Romney for thinking that eliminating the deductions for mortgages on second homes and for state and local taxes would pay for his 20 percent rate cuts. But there’s a more important general point to be made.

Guest blog post by Dr. Rebecca Blank, Acting Secretary of the U.S. Department of Commerce.I just returned from the White House Business Council American Economic Competitiveness Forum on Manufacturing where I had an opportunity to hear from a group of American manufacturers—representing businesses of all sizes from across the country—about how the Obama Administration can continue to support them as they build things here and sell them everywhere. As we have seen in recent months, manufacturing is one of the bright spots for our economy. Over the past 2 ½ years, more than half-a-million manufacturing jobs have been created in the U.S. – the strongest job growth in that sector since the 1990s.  In fact, just last month, an additional 25,000 new manufacturing jobs were added.In terms of production, manufacturing output is up 20 percent since 2009, and increased again in July. One manufacturing sector that has been consistently strong is the motor vehicles and parts industry, which has added 165,000 jobs since June 2009— a sector that might not even exist in the US today if not for the assistance this Administration gave to the U.S. auto industry in 2009.This matters because we know that manufacturing jobs are good jobs that pay more than average and provide greater benefits. They strengthen economic security for middle class families.There is a powerful link between America’s ability to make things and America’s ability to innovate, compete, and create good jobs. We have come to realize that you can’t separate innovation and production—they have to sit near each other.  Manufacturers perform 70 percent of all private sector R&D, investing in and producing technological advances that accounted for 90 percent of U.S. patents.  Economic research indicates that innovation – in new products or new processes – was central to three-quarters of the nation’s economic growth since World War II and it is not an accident that the manufacturing sectors where America is most competitive are all advanced manufacturing, where new technologies, new products or new production processes are central to the success of specific firms.

A COLLEAGUE at Democracy in America cites Paul Krugman writing:What do I mean by saying that this is already a Republican economy? Look first at total government spending — federal, state and local. Adjusted for population growth and inflation, such spending has recently been falling at a rate not seen since the demobilization that followed the Korean War.

By Diane Mermigas:The fledgling mobile transactions market, which some experts expect to reach $1 trillion globally by 2015, is about to get a hyper-boost from Facebook (FB), Twitter, Square and other social media players that consider e-sales the new end game.

UT-San Diego -- “When you look at the full cost of doing business abroad, U.S. factories can compete on price, delivery and quality. People would be surprised to learn how many things we still manufacture in the U.S.

My forthcoming documentary, Crotty's Kids, shows how debate and mentorship improve inner city dropout rates. In previous posts, I've noted how solving the urban dropout epidemic, particularly if dropouts finish high school and graduate college in a STEM field, will dramatically improve our unemployment and deficit crises. Now it seems that my L.A.

John Fernald and Kyle Matoba of the San Francisco Fed have just released a utilization adjusted total factor productivity series. The importance of this development is clearly laid out by the authors: This Economic Letter looks at potential output from the perspective of growth accounting, which assesses some of the key supply-side factors determining sustainable, noninflationary potential output.