Obama begins selling State of the Union message in Iowa

President Obama preached a message of hope to factory workers on Wednesday as he began a sales pitch for his plan to boost U.S. manufacturing through changes to the tax code.

Speaking to employees and owners of a conveyor belt plant in Cedar Rapids, Iowa, Obama talked about the rising cost of doing business in China and predicted that more American companies will see the wisdom of setting up shop at home.

“Wages are going up,” Obama said of the Chinese economy, and it “starts becoming cost-prohibitive” to operate there.

“Meanwhile,” he said, “America is getting more productive.”

As he spoke, aides to the president were detailing his plans for encouraging domestic manufacturing with tax incentives -- basically by rewarding those who create jobs at home and taking away tax breaks to those who take jobs overseas.

Obama wants to set up a worldwide minimum tax that U.S. companies would have to pay as they do business in countries with dramatically lower rates of taxation.

The larger message is a welcome one for many voters, especially those in the industrial states that have seen a steady decline in manufacturing over the last two decades. Not coincidentally, those states are critical in Obama’s reelection strategy, and his first stops to sell his new manufacturing plan include Iowa and Michigan.

Critics question whether Obama’s plan would make a big difference, even if he could get a divided Congress to go along with it in this election year. The cost of labor may be rising in other parts of the world, but it’s still generally lower than in the U.S.

But economic advisors to the president argue that it’s worth a try, that tweaks to the tax code might actually nudge some executives toward locating at home rather than abroad.

The tax code as it is now written “gives a large push” to those who want to go overseas, said Jason Furman, a key economic advisor to the president.

Obama is due to speak at an Intel factory in Phoenix later Wednesday afternoon.