McCain cries hypocrisy on outsourcing

Democratic nominee Barack Obama slammed John McCain this week over the outsourcing of American jobs, but McCain fired back by accusing the Illinois senator of hypocrisy.

McCain’s charge stems from the fact that the Obama campaign leases its 30,000-square-foot Chicago campaign headquarters from one of the nation’s most aggressive outsourcers: Accenture. The consulting firm has helped companies move thousands of jobs overseas and has based its own headquarters in Bermuda, which allows it to pay less in taxes than its competitors.

{mosads}Accenture had 35,000 employees in India — 5,000 more than in the U.S. — as of the summer of 2007, according to its own estimate. It has also earned substantial revenues from advising other American companies on how to boost profits by moving employees to “low-cost countries.”

“Accenture has a very big presence overseas in low-cost countries,” said Ron Hira, a professor of public policy at the Rochester Institute of Technology and the author of Outsourcing America. “It’s certainly one of the leading outsourcing firms.”

Accenture describes itself as “a global management consulting, technology services and outsourcing company.”

The company called the sublease a “straightforward, commercial transaction.”

“Accenture held a contract on two floors at 233 N. Michigan Ave., formerly called One Illinois Center,” said company spokesman Jim McAvoy. “In early 2007 we were approached by our real estate broker with an offer to sublet. After negotiations began, our real estate team learned the tenant was Barack Obama’s presidential campaign. The sublease agreement we reached is a straightforward, commercial transaction at market rates.”

An Obama aide downplayed the campaign’s business arrangement with Accenture, asserting it had no impact on Obama’s policy positions.

But McCain spokesman Tucker Bounds charged Obama with hypocrisy.

“It’s classic Barack Obama — all talk,” he said. “Whether it’s equal pay for women or reforming Fannie and Freddie, what Barack Obama says can sometimes be quite different from what he’s actually done.”

Obama spokesman Ben LaBolt said McCain is the candidate who deserves criticism because of outsourcing.

{mospagebreak}“John McCain has voted to give tax breaks to corporations that ship American jobs overseas, and as president he would continue to reward outsourcers,” said LaBolt. “Barack Obama would end tax breaks for corporations that ship jobs overseas and he has announced a plan to create incentives for companies to create jobs right here in America.” The Obama campaign also highlighted McCain’s ties to former Hewlett-Packard Chairwoman Carly Fiorina, an outspoken defender of outsourcing.

Fiorina, a senior McCain adviser, once declared, “There is no job that is America’s God-given right anymore.”

And she was once also quoted as calling the outsourcing of American jobs “right-shoring” and warned about the country becoming distracted with “short-term financial and employment concerns.”

Scrutiny of Fiorina may increase in the wake of news this week that Hewlett-Packard would lay off 24,600 American employees. Analysts expect the company will replace those workers with low-cost employees overseas.

{mosads}Sen. John Kerry (D-Mass.) raised the issue of corporate outsourcing repeatedly during his 2004 presidential run, even going so far as to compare CEOs who outsourced jobs to Benedict Arnold.

Obama has been less outspoken. Yet in recent days “outsourcing” has become a more prominent attack line against McCain as financial turmoil has sent the stock market tumbling and increased voters’ concern about the economy.

At a rally in Colorado on Monday, Obama declared, “Unlike John McCain, I will stop giving tax breaks to corporations that ship jobs overseas and I will start giving them to companies that create good jobs right here in America.”

The Obama campaign repeated the charge in a television ad launched this week in battleground states that discusses the closure of a Corning plant in Pennsylvania.

“Hundreds lose their jobs,” a narrator intones. “Washington sold them out, with the help of people like John McCain. He supported tax breaks for companies that ship jobs overseas.”

Obama’s criticism focuses on an economic plan that McCain unveiled in July. The GOP nominee’s proposal would not repeal a law that allows companies to defer taxation on overseas profits. McCain is expected to offer more details of his plan on Friday. While the rhetoric on outsourcing has heated up, experts question whether voters are hearing about the issue in a meaningful way.

“Obama has criticized the process of outsourcing, I don’t think in the same direct way that Kerry did, but I don’t think Obama has much of a plan,” said Professor Hira, who characterized McCain as a proponent of outsourcing.

“Is either candidate going to do anything useful?” he asked.

Denis Simon, a professor of international  affairs at Penn State University, said that it’s misleading to portray outsourcing as a good thing or a bad thing. He insisted it’s a fact of life in today’s globalizing economy.

Simon, who directed Accenture’s China strategy group in the 1990s, said that the company often helped client firms understand their business structures and identify which jobs could be moved overseas to improve efficiency.

Simon has said outsourcing skilled research and development jobs to other countries has allowed companies such as General Electric to stay competitive by maximizing innovation for each dollar spent.

“I think this debate has been miscast,” said Simon. “You can’t debate outsourcing as yes or no. The question is, ‘What can we do to maintain high value-added jobs in the U.S.?’ ”