Monday, February 23, 2009

‘Buy America’ in Stimulus (But Good Luck With That)

(New York Times – Louis Uchitelle)

The “Buy America” clause in the $787 billion stimulus package signed into law on Tuesday has a certain quaintness to it. Far more than in the past, the phrase has come to mean “Buy America – if it is still made here.”

Take the $43 billion earmarked for green technology. Most of the nation’s solar panels and wind turbines are imported, mainly from Europe and Asia, and the new law waves aside Buy America restrictions if “the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities.”

The provision will apply mainly to the nearly $150 billion that will be spent on infrastructure projects, including green technology. Supporters of the original measure hoped that all of the “iron, steel and manufactured goods” used in the various projects would be made in the United States. But the legislation signed by President Obama is full of exceptions that quiet even the fiercest critics of that original plan.

“We are not happy with any Buy America provision, but we can live with this one,” said Martin A. Regalia, chief economist for the United States Chamber of Commerce, which represents many multinational companies that have moved manufacturing offshore for products likely to be used to build or repair highways, bridges, schools, rapid-transit systems, waterways and homes.

Most of the support for a clause to protect American businesses came from small manufacturers, with operations concentrated in the United States. But even they no longer make much of the machinery and materials likely to be needed for a wave of investment.

Trade data tell the story. By late last year, 37% of all manufactured goods sold in America were imported. That was more than double the percentage in 1991, according to Commerce Department data, and nearly four times the level in 1978. Buy America had far more impact in the 1930s and in the early 1980s, two other periods in which Congress enacted similar measures with the goal of generating good jobs in manufacturing and lifting output. Read more here.