Phyllis Schlafly

The indignation of Americans is growing rapidly about the U.S. Air Force granting a French company a $35 billion tanker-aircraft contract that could eventually grow to $100 billion and is estimated to create 100,000 jobs in Europe. French government subsidies are one of the factors that enabled the lucky company, EADS N.V., to underbid Boeing.

Rep. Duncan Hunter, R-Calif., the ranking Republican on the House Armed Services Committee, is leading the battle in Congress to overturn this decision. He thinks it is outrageous that U.S. taxpayers should be paying to create jobs in foreign countries.

It is bad enough that the United States has been hemorrhaging millions of manufacturing jobs that are critical to sustaining our middle class. It's even worse that government policies are deliberately outsourcing jobs that are critical to our national security.

All during the administrations of Bill Clinton and George W. Bush, U.S. negotiators signed trade agreements that allow foreign competitors to create and maintain unfair border-tax schemes that discriminate against U.S. manufacturers and service providers, and give foreign competitors a dramatic advantage in the U.S. market. The principal border-tax scheme used against the United States is the value-added tax.

When foreign manufacturers export their products to the United States, the value-added taxs they paid are generously rebated by their governments. Isn't that cool? General Motors Corp., Chrysler LLC and Ford Motor Co. would surely be in better shape if the U.S. government rebated the heavy U.S. taxes they have paid.

But that's only half the story. When U.S. manufacturers try to sell products in foreign countries, they are required to pay border taxes not only on the value of the product itself, but also on the value of all transportation, insurance and other costs.

The bottom line is that these border-tax schemes heavily subsidize the products other countries sell to the United States, while erecting a high tax barrier against U.S. goods sold overseas. The combination of foreign government export subsidies and import taxes amounted to a $428 billion disadvantage to U.S. manufacturers and service providers in 2006.

My late good friend, Sen. Everett Dirksen, R-Ill., used to quip about government policies by saying, "A billion here, a billion there, and soon we'll be talking about real money."

The border-tax problem does, indeed, involve real money. In 2006, it was four times as costly as the Iraq war (Value Added Tax: $428 billion; Iraq war: $101 billion, according to Congressional Research Service figures), and two times greater than the U.S.-China trade deficit ($232 billion).


Phyllis Schlafly

Phyllis Schlafly is a national leader of the pro-family movement, a nationally syndicated columnist and author of Feminist Fantasies.
 
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