OPINION:Irish worries about aspects of Obama's budget and possible ending of tax breaks for US companies based here are misguided, writes ROBERT FAUCHER
BARACK OBAMA recently unveiled his first budget as president of the United States. Through it, the president showed his clear intent to break with the past 30 years and walk down a new road of commitment for the development of America.
Discussion about the budget has been voluble. The budget has been lauded by the some Americans as the greatest legislation since Roosevelt’s New Deal, and has also been panned by others as unrealistic and full of shortcomings.
The one thing everyone agrees on is that it is something completely different.
The reception in Ireland has been equally mixed. Concern about what the budget will mean for Ireland seems to have become a key point of conversation.
Many in the Irish press have focused on one line in President Obama’s speech: “. . . we will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship jobs overseas.”
They have combined this statement with an obscure report out of the US Congress’s general accountability office that seemed to place Ireland on a list of tax havens due to Irish practices that date back several years.
They have conflated both to mean that President Obama somehow views Ireland as a tax haven and that his new policies will have an adverse affect on Ireland.
The truth is that there is a lot of benefit for Ireland to be found in the pages of the new US budget and the issue of Ireland as a tax haven is a red herring. President Obama does not have such a list of international tax havens, nor has he requested one.
No country’s economy can operate in a vacuum. All the world’s economies are interdependent. As the world’s largest economy, the US remains one of the driving forces behind the global economy.
A strong US economy means a stronger global economy, and that means more money for investment and growth in places like Ireland. There is a domino effect for recovery just like the domino effect we saw in the credit crisis. However, that is a big picture idea. Let’s talk about some specifics that could have a direct impact on Ireland.
President Obama has committed billions of dollars to bolstering energy infrastructure, improving energy efficiency, and tapping renewable energy sources. What impact does that have on Ireland?
If Ireland goes forward with the development of its own renewable energy into a viable industry it can mean a great deal of investment from US firms and the creation
of many jobs, here in Ireland as well as in the US.
President Obama has earmarked billions of dollars for medical research. The money is, of course, for programmes in the US. However, medical research, just like energy, is an international issue that benefits from cross-pollinisation. Ireland has already seen major advances in medical research which will result not only in new medical techniques but new businesses, jobs and growth. This is an area of rich potential co-operation between the US and Ireland.
Obama has pledged $800 million for the next generation of air traffic control. How can that contribute to the Irish economy? Ireland is already well-placed as a potential hub for European air traffic going into the US.
Ireland is the only country in Europe that has immigration pre-inspection at Dublin and Shannon airports.
This summer a new programme for full customs and immigration pre-clearance is ready to come online at Shannon. That means people from Europe can clear immigration and customs, and fly to any airport in the US as if it were a US domestic flight.
Ireland will get major economic benefits out of that programme – hotel stays, increased airport revenues and the development of new service enterprises in the airport regions.
Banking reform is the central concern for many people. It is huge and affects everyone. At this point it should be no surprise to anyone that the big banks are multinational. Reform of the US banking and financial systems will have a global impact, not just a domestic impact. Credit availability means growth. Credit availability based on solid lending techniques means growth long into the future. Ireland certainly needs such credit availability, and will likely benefit from foreign investment now on hold.
Infrastructure spending may sound like something that would be totally domestic for the US. The president has said that infrastructure improvements will create hundreds of thousands of new jobs in the US. Employed people are people who will have money to buy imports from Ireland which means jobs in Ireland. The companies which benefit from the infrastructure projects have money to invest in improving their companies and, possibly, investing overseas. President Obama has said that he wants to improve high-end infrastructure, such as improvements in information technology. This is an area where Ireland has already proven that it can contribute.
Rather than focus on a single line in a speech by President Obama, I encourage the Irish people to look at the whole package.
A stronger US means a stronger Ireland. President Obama has encouraged us to look at the big picture and think about long-term growth and benefits instead of short-term growth. I encourage the Irish to follow President Obama’s lead: see the big picture of co-operation and growth for both of our countries and celebrate our ties on St Patrick’s Day at the White House as a symbol of our deep commitment to move forward to a strong economic future for both our countries.
But, if we are going to choose just one sentence from President Obama’s speech we should make it this one: “Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity.”
Robert Faucher is charge d’affaires ad interim (acting ambassador) at US Embassy in Dublin