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Bush adviser backs off pro-outsourcing comment

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WASHINGTON (CNN) -- One of President Bush's top economic advisers sought Thursday to clarify remarks he made earlier in the week that seemed to suggest he thought outsourcing American jobs is good for the economy.

Gregory Mankiw, chairman of the president's Council of Economic Advisers, said Monday in a White House briefing on Bush's 2004 Economic Report that outsourcing of jobs by U.S. companies is something that is "probably a plus" for the economy in the long run.

"Now, to get back to the question about outsourcing, I think outsourcing is a growing phenomenon, but it's something that we should realize is probably a plus for the economy in the long run," Mankiw said.

Speaking in Harrisburg, Pennsylvania, President Bush tried Thursday to quell the potential controversy simmering over Mankiw's statements.

"People are looking for work because jobs have gone overseas and we need to act in this country. We need to act to make sure there are more jobs at home," Bush said as he touted his "21st century" job plan in a state that has lost 85,000 jobs since Bush took office.

Bush did not mention Mankiw by name, but two Bush advisers conceded privately the president's intention was to distance himself from Mankiw's remarks.

Democrats on the campaign trail and Capitol Hill immediately seized on Mankiw's comments, and a Bush source said the White House heard private concerns from Republicans, too. Those included House Speaker Dennis Hastert, R-Illinois, who ventured a rare criticism of the Bush White House.

"His theory fails a basic test of real economics," Hastert said Wednesday.

In a letter to Hastert on Thursday, Mankiw said his remarks had been misinterpreted.

"My lack of clarity left the wrong impression that I praised the loss of U.S. jobs. ... It is regrettable whenever anyone loses a job," Mankiw's letter said.

"We are used to goods being produced in one country and transported to another on ships and planes. We are less used to services being produced in one country and sent abroad on fiber optic cable."

Mankiw said in his letter that all economic changes "can cause painful dislocations for some workers and their families," but he said the goal of economic policy should be "not to deny change but to help workers prepare for the global economy of the future."

Hastert issued a statement in response, saying he appreciated Mankiw's clarification.

"My concern was that Mr. Mankiw left the wrong impression about our agenda. I know that President Bush shares my belief that we need to create a better environment for job creation here in the United States," Hastert's statement said.

With job recovery lagging, unemployment is a top issue this election year and of deep concern to the Bush campaign team.

Sen. Rick Santorum, R-Pennsylvania, said outsourcing jobs overseas is "a bad thing," but conceded it may be inevitable at the moment.

"I would say ... that moving jobs overseas is a reality of global competition," Santorum said. "If you come from Pennsylvania, we've lost a lot of jobs from global competition. I think that's just a truth, if you will."

But Santorum said Bush's jobs plan and tax proposals should address the problem.

"I was with the president today, and I think he made the point very, very strongly that the key for this administration is creating jobs in this country and training workers so that [outsourcing jobs] doesn't have to happen," he said.

Senate Democratic Leader Tom Daschle, D-South Dakota, called Mankiw's comments "Alice in Wonderland economics."

"America has lost 2.9 million private sector jobs since January 2001. Nearly every state in the nation has lost manufacturing jobs, and, contrary to the administration's economic theories, there is nothing good about it," he said at a briefing to discuss a new proposal to fight job outsourcing.

"The president's economic report is an insult to every hard-working American. It's unpatriotic economics, and he should apologize for it," said Sen. Edward Kennedy, D-Massachusetts, at the same briefing.

The new proposal would "require companies that send jobs overseas to provide notice to [their] employees and the Department of Labor," Daschle said.

"Companies that export U.S. jobs would be required to disclose how many jobs are being shipped overseas, where they're going and why. This would provide valuable information for policy makers and, hopefully, encourage employers to think twice before they move jobs out of America."

Bush's comments came during his 25th visit to Pennsylvania, one of the states he lost in the 2000 election.

The president visited Harrisburg to talk about his jobs initiative, which is aimed at retraining workers for high-tech jobs.

"I don't worry about numbers, I worry about people," Bush said. "There are still some people looking for work because of the recession."

CNN's Dana Bash and Joe Johns contributed to this report.

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