The Presidential Campaign

Kerry vows to purge outsource tax break

GREENSBORO, N.C. - Sen. John Kerry pledged Tuesday to eliminate in a "nanosecond" a tax break that U.S. companies get for foreign operations, charging that the "stupid loophole" had forced thousands of manufacturing jobs overseas in the past three years.

"Because of George Bush's wrong choices we're continuing to ship jobs overseas, jobs that have good wages and benefits," Kerry said during a forum on economic issues in the restored Southern Railway Depot in North Carolina. "That's W: wrong choices, wrong direction - and it's up to us to make it right."

Most experts agree that outsourcing isn't to blame for many of the 1.1-million private-sector jobs that have been lost over the past three years. And those jobs that are outsourced aren't driven abroad, by the tax break that Kerry decries; economists say most companies that relocate jobs abroad do so to take advantage of lower wages and production costs. The disputed tax break is intended to equalize taxes on foreign operations to make U.S. firms competitive, not to reward them for moving jobs overseas.

A Labor Department study found that 2.5 percent of layoffs of 50 people or more in the first three months of 2004 were because of outsourcing. "It has some impact, but it is small compared to all of the other things that are changing in our economy," said Charles L. Schultze, a Democratic economist.

Still, Kerry makes the tax break for foreign operations a potent political symbol of his overall critique of Bush's economic policies, and on Tuesday he mocked administration officials for saying the outsourcing of jobs had been a net-plus for the American economy.

"It's bad enough that the jobs are going overseas, but Bush thinks it's a good idea," Kerry said.

Vice President Dick Cheney warned on Tuesday that if John Kerry is elected, "the danger is that we'll get hit again" by terrorists, as the Bush campaign escalated a furious assault on the Democratic presidential nominee that has kept Kerry from gaining control of the election debate.

In Des Moines, Iowa, Cheney went beyond previous restraints to suggest that the country would be more vulnerable to attack under Kerry. "It's absolutely essential that eight weeks from today we make the right choice, because if we make the wrong choice then the danger is that we'll get hit again," Cheney said, "that we'll be hit in a way that will be devastating."

In Missouri, President Bush seized on Kerry's statement Monday that Iraq was "the wrong war in the wrong place at the wrong time," noting that Kerry had borrowed the words of his one-time rival Howard Dean. Kerry "woke up yesterday morning with yet another new position, and this one is not even his own," Bush said to laughter from supporters during a Missouri bus tour. "He even used the same words Howard Dean did, back when he supposedly disagreed with him."