Chuck Schumer’s “Outsourcing Tax”

Democratic Senator Charles Schumer of New York, who many say aspires to be the Senate Majority Leader should Nevada’s Harry Reid lose his election or step aside, has proposed a new bit of legislation that may be of interest to SM readers:

In an effort to slow the exodus of U.S. telephone work to overseas services, Sen. Charles Schumer is introducing legislation that would impose an excise tax on companies that transfer calls with American area codes to foreign call centers.

The measure would also require telling U.S. customers that the call is being transferred and to which country.

Companies use call centers to give customers technical product support, answer billing questions or provide other information. They often use several operators.

The fee would be 25 cents for calls transferred to foreign countries. There would be no fee for a domestic call center. Companies would have to report quarterly their total customer service calls received and the number relayed overseas. [BusWeek]

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p>The 25 cent fee isn’t ideal. It is anti-business and too nativist for my taste, but this is a tough economy and the Senator is engaging in a bit of phony “I feel your pain” to protect his right flank. What I really don’t agree with is the second part of the proposed legislation,which requires a company to announce which foreign country the call is being transferred to. Turning that into a law does nothing but encourage the worst in people. What’s next, pass a law that requires the call center worker to use their real names and accents as well?

In a survey of American economists in 2006, Robert Whaples found nearly 90 percent agreed the U.S. should eliminate remaining protectionist tariffs and trade barriers, like the new one Schumer is proposing, that there are lower costs and a net gain from free trade. Most also agreed the U.S. should not restrict American employers from outsourcing work to foreign countries. [BusWeek]

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p>And India of course is the main outsourcing punching bag. It doesn’t matter that Ireland and Israel are the beneficiaries of a great deal of outsourcing as well. Only countries like India and the Philippines get the bad public image.

Please let Schumer know that proposing stupid legislation, just to protect himself from a Republican opponent that is a “terror warrior,” is not the right way to get the South Asian American part of his base to turn out on election day or open their checkbooks for his campaign.

You can contact him here.

24 thoughts on “Chuck Schumer’s “Outsourcing Tax”

  1. It appears that the Democrats will use outsourcing as an issue going into the 2010 midterms.

    It’s Recess — Do You Know Where Your Wedge Issue Is?

    Sure, wedge issues are usually social in nature, but the Democrats stand ready to divide crucial midterm election voters on economic policy. Democratic campaign types are thrilled with the timing of the vote, saying the outsourcing issue gives candidates the perfect platform to repeat Mark Critz’s successful campaign that helped him win the special election in Pennsylvania’s 12th Congressional district earlier this month. One Democrat said the Republican opposition to addressing outsourcing “will be a clear line in the sand” that members are being asked to highlight back home next week.

    Interesting that given all the shenanigans that Wall Street has been up to, and the cheap credit offered by the Federal Reserve, that some woman in Bangalore is viewed as the cause of America’s economic problems.

  2. He is also the guy who asked Hedge Funds to lobby Washington and one of his main staffers left to become a hedge fund lobbyist while raising money for Schumer. I will not be surprised if this goes through. The problem in my mind is when politicians will do or say anything to save their “job”. It is not about the people it is about their careers.

  3. What’s new? Dems have always been the anti-India party. It’s just too bad the other party doesn’t offer anything compelling. I’m hoping the new libertarian populism will bring this down.

  4. “The 25 cent fee isn’t ideal. It is anti-business and too nativist for my taste, but this is a tough economy and the Senator is engaging in a bit of phony “I feel your pain” to protect his right flank. What I really don’t agree with is the second part of the proposed legislation,which requires a company to announce which foreign country the call is being transferred to.”

    I dont see how that matters. The reason calls got transferred overseas was costs – and not just labour costs. If a caller chooses “local” over foreign, their service charges are bound to go up. Differentiated pricing for differentiated services. When I call Telstra for tech support I am happy for my call to go to India – greater chance of getting a fix. When I call Telstra for address moves – I prefer that the call stays local. A real life example. Currently if you are Michael Jordan or someone in the top echelon of customers and you call it goes to the top call center reps. it is the same model

    I have no fear that this anti-outsourcing stunt will hurt India if anything this will show that Americans choose “foreign and cheaper” over “local and expensive”. Bring it on :)

  5. I have no fear that this anti-outsourcing stunt will hurt India if anything this will show that Americans choose “foreign and cheaper” over “local and expensive”.

    Actually, I don’t care at all about hurting India in this regard either. India’s economy is reportedly growing at 8%. I care about the blowback upon South Asian Americans such naked nativism causes.

  6. sigh… if only the world didn’t have those nasty “right flanks” and GOP “terror warriors” — then the Democrats would stop pushing idiotic, protectionist econ legislation.

  7. How exactly is outsourcing good for Americans?

    Umm… comparative advantage? Slept thro’ Economics 101, didya? Lower costs, cheaper goods etc etc? Next, I assume you will ask how exactly cheap goods manufactured in China are good for Americans…

    Actually, I don’t care at all about hurting India in this regard either. India’s economy is reportedly growing at 8%

    I’d recommend getting a clue. For example, about the fraction of India’s economic growth that comes from the service industry.

  8. Abhi, the blog seems a trifle activist. This is just election rhetoric, same as the populist stuff in the last Presidential elections. The country is going through a protectionist phase, and to the extent that people support higher labor costs, so be it.

  9. BTW what shoes does Sen.Schumer wear? If it is not Allen Edmunds or SAS (I assume he is not so lavish as to get his shoes handmade) he is wearing Made in China shoes. And then what about his TV, his umbrella, his PC and a host of other stuff? Is MAde in China OK? I guess so because the likes of Schumer don’t really care ab out manufacturing jobs

  10. Umm… comparative advantage? Slept thro’ Economics 101, didya? Lower costs, cheaper goods etc etc?

    Pagal asked a valid question. Yes economics theory is all very well but i am very sceptical that outsourcing (incl mfg) is such a great deal for Americans!! Massive outsourcing has certainly helped the CEOs and their ilk make money – certainly has helped the poorer countries but as to whether it has helped your lower middle class American is debatable. When most economists did not predict the GFC I daresay that their theories need to be taken with a huge truck of salt.

  11. When most economists did not predict the GFC I daresay that their theories need to be taken with a huge truck of salt.

    you must be one of those people who does not believe in climate change because the local weatherman cannot tell tomorrow’s temperature accurately.

    but as to whether it has helped your lower middle class American is debatable.

    any data at all to back up your claim? (btw, preferably the data isn’t pulled out of your posterior like the rest of your comment).

  12. But whats wrong in trying to get jobs back to the US? Workers in the US are now willing to take lower pays, something is better than nothing!

  13. 3 · psamty on May 31, 2010 3:15 PM · Direct link What’s new? Dems have always been the anti-India party. It’s just too bad the other party doesn’t offer anything compelling. I’m hoping the new libertarian populism will bring this down.

    Psamty:

    The Democrats have done far more pro-Indian measures in the last several decades, and the Republicans have done far more things antagonistic towards India.
    1. The Dems have always been more pro-immigration (legal, of course). Prior to LBJ in ’65, only Northern Europeans especially and other Europeans also were allowed in mass into this country, and only about 100 or so visas were issued to people of Asia. However, LBJ changed all that. Thanks LBJ! 2. Just after LBJ, we had a Republican president named Nixon. He almost declared war on India in ’71. That is, until the Soviets threatened to liberate their ships stationed in the Philippines. Nixon’s Secretary of State, Kissinger, said that “Indians are bastards anyway” and Nixon had his comments on this as well. 3. Reagan, the God who surpasses Jesus for the Republicans, gave the Pakistanis so much money and arms, covertly and manifestly. To be fair, they used this very well for a just cause to help liberate Afghanistan. 4. Clinton actually visited India in March ’00, and many analysts compare this visit to the one that Nixon did in China which helped China become a super power (not over-night). This was like India’s debutante moment. Clinton, however, did NOT spend much time in Pakistan – only 6 hours.
    5. Bush Jr. was great to Pakistan, especially. He was also good to India. He was horrible to Americans just like the Viet Cong were horrible towards Americans.
    6. Obama is going to do a hell lot of good for the Desh. He loves fried chicken, tandoori chicken, halal chicken, and tofurky.

    The Dems have always been good to the Indians, and the Republicans – after they do their dark rituals for Reagan the Concentrator of Wealth – have always done bad for the Deshland.

  14. “you must be one of those people who does not believe in climate change because the local weatherman cannot tell tomorrow’s temperature accurately” dont know about your local weatherperson – mine does predict the weather for the week quite accurately :)
    If my local weatherman did not predict a Category 5 hurricane hitting my home in the next 24 hours I d have no reason to believe him (mine is a she). Economics is at the same stage where chemistry was at in the 16th century – alchemy by another name.

    “any data at all to back up your claim?” – enough to debate krugman and mankiw together :) any “feminist” knows that studies are manipulated to reinforce the existing patriarchy.
    for small nations trade is their survival mechanism eg Oz / Sweden / Singapore. For 200 million plus nations with heaps of natural resources ??

    Outsourcing is great for India / China – just dont know if it is such a great idea for the USA.

  15. The American public would overwhelmingly support Schumer, especially if they hear economists are against him. The question is whether businesses can line up enough funding to kill this in the back room. And that’s probably the point. This isn’t supposed to see the light of day. It’s a fundraiser.

  16. The Dems have always been good to the Indians, and the Republicans – after they do their dark rituals for Reagan the Concentrator of Wealth – have always done bad for the Deshland.

    I’ma feel dirty after pointing this out, but the repubs are the reason why we have such heavy outsourcing to India. One major facet of the neocon agenda was unchecked outsourcing, within and without the federal government. India benefitted hugely from this, whether or not the repubs are “pro-India”…you’re right, they’re pro-money, but India got a piece of their pie.

    Dems have been fiercely protectivist from the get-go. The US is also essentially China-codependent now, so singling out other countries is the orthodox thing to do now for protectionists.

  17. 18 · Darth Paul on June 1, 2010 10:12 AM · Direct link The Dems have always been good to the Indians, and the Republicans – after they do their dark rituals for Reagan the Concentrator of Wealth – have always done bad for the Deshland.

    I’ma feel dirty after pointing this out, but the repubs are the reason why we have such heavy outsourcing to India. One major facet of the neocon agenda was unchecked outsourcing, within and without the federal government. India benefitted hugely from this, whether or not the repubs are “pro-India”…you’re right, they’re pro-money, but India got a piece of their pie.

    Dems have been fiercely protectivist from the get-go. The US is also essentially China-codependent now, so singling out other countries is the orthodox thing to do now for protectionists.

    How do you figure that “repubs are the reason why we have such heavy outsourcing to India”? You seem to assume that India’s very well-being, dignity, and prestige relies only upon outsourcing. My friend, India’s economy is very minorly dependent on outsourcing. India is not an export-driven economy. We’re actually a net-importer.

    Who increased H1Bs from India? Clinton. That’s who.

    Who decreased H1Bs from India? Bush. That’s who.

    Which party is for having hate crime laws? Democrats?

    Which party allows more freedom-of-religion and doesn’t refer to Hinduism as a wicked religion that prays to monkey-gods?

    Finally, which American party advocated to Winston Churchill that India should have its own sovereignity? FDR of the Democrats.

    So go on and call up Dell’s customer support and tell them how much you love your shotgun, your golf clubs, and how America is a Christian nation of wh1te pe0ple.

  18. How do you figure that “repubs are the reason why we have such heavy outsourcing to India”? You seem to assume that India’s very well-being, dignity, and prestige relies only upon outsourcing.

    And how do you figure I assume any of that? I pointed out that under repubs ‘corporations first’ ideology, India (as well as the Philipines and a few other countries) have benefitted, and that’s a fact. But to indulge you a bit:

    Who expanded nuclear cooperation with India? BUSH

    Who (along w/EU and Japan) sanctioned India for the Pokhran nuclear tests? US UNDER CLINTON

    Who sidled right up on the ostensibly anti-terrorism tip when those pesky Paks started acting up? BUSH

    Who backtracked and visited India as an afterthought in Summer of 2009 when the Asian tour was months beforehand? HILLARY CLINTON

    As for the religious issue, I laugh. Jindal, born a Hindu, is now a GOP darling. If you think Dems are sanctimoniously and unanimously anti-racism and pro-religious freedom, I laugh even harder.

    In any case, I don’t love republicans. I don’t even like them, but I understand them: they love wealth. Everything else is secondary. Sounds like PLENTY of Indians I know…

  19. As for the religious issue, I laugh. Jindal, born a Hindu, is now a GOP darling.

    sure… you can be a GOP darling if you are born hindu as long as you convert to christianity… that smacks of tolerance of other religions out of the republican party…

  20. Senator Chuck Schumer is an American politician who should have the interests of the American people and the American nation at heart in work not that of India and Indians. This legislation is good for the American worker so that greedy American corporations with no sense of patriotism cannot walk scot free while making loads of profit by destroying American jobs. Yes for nations like India or the Philippines it may be a bit of a set back but it is good for America and he is an American politician. I am an Indian who lives in India and even I do not understand why this legislation is wrong for America.

  21. This legislation is good for the American worker so that greedy American corporations with no sense of patriotism cannot walk scot free while making loads of profit by destroying American jobs.

    the number of economic idiots out on this comment thread is truly impressive.

  22. A quarter for a call? That’s what the caller would pay for a few minutes use of a street payphone. The 800 system cost the company more than a quarter, so why is this quarter tax so bad?

    As for having to tell the caller the location from which it’s being serviced, after a while most people would not really care.

    Also, just as Japan made a city called “Usa” to be able to mark items as being “Made in Usa” something equally ingenious is likely to come about, such as “you call be in tran sfa to In Dee Uh soo viss sen tah”