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  • Guest Blogger: Rep. David Dreier (R-CA) on Buy American

    When it comes to legislative PR, it doesn’t get much better than “Buy American.” What could possibly be more patriotic than buying American-made products? During tough economic times, mandating that government contractors use only goods with the Made in the USA label doesn’t just sound like good policy, it seems like plain old common sense. We all want to create American jobs and promote American manufacturing.

    So when a dramatic expansion of Buy American regulations was included in the “stimulus” bill, it may have sounded like a great idea on its face. The challenges with this policy only become apparent when we look beyond what sounds good and examine how these provisions actually work in the real world.

    While federal agencies are accustomed to and equipped to deal with the substantial bureaucratic red tape that comes along with complying with the Buy American Act, few states and no local governments have any experience with the administrative and legal implications of these complicated regulations. The resulting confusion and uncertainty have caused a number of state, county and municipal projects to grind to a halt. In many cases, project managers have had no choice but to shut down badly needed construction and infrastructure projects while the lawyers work out the mess. Even those projects that have resumed work have faced escalating costs.

    Delays, cost increases, endless legal reviews – this is the antithesis of an economic stimulus. What’s more, the unintended consequences of the onerous new regulations are having a compounding effect because they apply to entire projects, even if the stimulus funding only accounts for a tiny fraction of total funding. As the ensuing delays drag on, job creation is held back.

    Furthermore, many American companies are finding themselves shut out of the competitive bidding process. If a U.S. producer with facilities here in the U.S., run by American workers, relies on a global supply chain for just one small part of its manufacturing process, the manufacturer can be prevented from competing for government contracts under the expanded regulations. Even those products and companies that technically qualify are often shut out of consideration, simply because fear of litigation has led many local governments, unaccustomed to these confusing new regulations, to exclude them out of an abundance of caution. When “Buy American” punishes American companies, something isn’t working.

    The greatest harm to American workers could come down the road, as our trading partners begin to retaliate against us for putting these regulations into place. 95% of the world’s consumers are outside of the U.S. It’s no wonder that American manufacturing depends upon exports to grow and create new jobs in the U.S. If our manufacturers lose access to those export markets, the result will be more lost American jobs.

    “Buy American” sounds like a great idea. But the reality is that in practice, the expansion of Buy American has had an anti-stimulus effect on our economy and our job market, has hurt American companies, and threatens to damage our ability to support job creation through exports. Rather than imposing substantial new regulations that stymie job growth and invite a trade war, Congress should be jumpstarting our trade agenda, opening new markets for American producers and paving the way for export-led job creation. That would be true economic stimulus.

    The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.

    Posted in Economics [slideshow_deploy]

    20 Responses to Guest Blogger: Rep. David Dreier (R-CA) on Buy American

    1. Kevin- Colorado says:

      Exactly

    2. Mike Dodson, Midland says:

      The Law of Unintended Consequences, hard at work. Or, is it something else — like union payback for helping out during the campaign? Starting a trade war can cause a glut of "unintended consequences," like China deciding to cash in a bunch of our bonds. Can you spell national bankruptcy?

    3. Don, So. Cal says:

      More to the point, the government should remove the obstacles that prevent US companies from effectivly competing with their over-seas competitors. If the reason to "Buy American" is because we want to support American businesses and by extension the American people, then support them! Lower tax rates for everyone: the individuals, the Mom and Pop stores, and the "Evil Corporate Giants" who, incidentally, employ thousands of Americans. You can't kill business without killing those who depend on them. The bigger the business, the more people are affected.

      Everyone is familiar with the example of the customer, who yells at the store manager, who then yells at the employee, who goes home and gets mad at his wife, who takes it out on the kid, who then kicks the dog. Well, taxes are a big stick and it seems like everyone is taking a beating. Especially the dog.

    4. Freedom of Speech, T says:

      This subject is also covered in any basic economics class.

      I am no economist but I know the concept of attaining "equilibrium". In short, it is simply a balancing act.

      So, since we now have a global economy, and many parts are manufactured by other countries, any sensible person would understand that if WE say buy American other countries WILL retaliate. It is called trade wars. It benefits no one. It is NOT good policy ANYTIME but especially now, in our ongoing national economic and financial dilemna.

      I ask again, WHO is advising Obama?

      No matter what their economic philosophy, the President's economic advisors KNOW this is not helpful.

      Then again, maybe it is not about economics…

    5. stunan, Tucson AZ says:

      I recommend all who are interested in this subject to read "Mad About Trade" by Daniel Griswold. It realy explains the global market place.

    6. philip says:

      It is almost impossible to buy american most products we purchase are made out of this country like china and other countries. if you work for most american corprate compnies they claim to be globel not just american co. I do disagree with obamas plan.

    7. Leon, Durango, CO says:

      Talk about disincentives for Americans, I created millions of dollars of value with my own hands building factories as an electrician. I got paid a tiny fraction of my production. That wouldn't be so bad but then the government took my capital when I had money (graduated income tax) and fostered the greed that took the rest. I figure I created $25 million in economic value and have nothing to show for it. Communism doesn't work because we are starved for capital. The dependency on banking was caused by the disincentives for saving and individuals accumulating capital. I have great ideas with no cash to back them up.

      Our System has not been capitalist for some fifty years. It does not help to have the zero percent interest rate from our central bank and 2% interest on our savings. Capitalism has been nullified at its source, American individuals.

    8. Lwesson, Tejas says:

      Could we not require a certain percentage to qualify for Buy American??? I think that Rep. Dreier is spinning a subterfuge or reasons to throw out the concept of favoring American products so as to fully embrace the GLOBAL CABAL of TRADE whereby Americans have to compete with Third World CHEAP labor. The ultimate benefactor will not be Americans per se but rather those that are really more Internationalists that make profit from such a cozy protected environment.

      The United States in the meantime continues to be de-industrialized. Who does that benefit? Those who see the US as a treat to the New World Order.

      As per the notion that trade protection is silly or bad, those that subscribe to that do not look to all the history where the US did just that and prospered! Dreier, you are just a useful shill. Congratulations. Another reason that the Republican Party has lost it's resonance with the American people but not the Internationalists. You have their vote!

    9. Pingback: David Dreier (R-CA) is Right on "Buy American"

    10. Louis L Cesar F Levy says:

      America is Big enough to INCREASE internal economical trade and exchanges if TAXES are LOWERED, more small business promoted without however shunning international markets. This is Perfectly feasible if The Will Exist. Good charity starts always by oneself and as someone said, globalists and others internationalists do not at all want America to prosper because if you investigate thoroughly their motives…well you will find…our ENEMY manipulating in and out here and there.

    11. Al, The Villages, Fl says:

      The problem is that of determining what is "American" given that almost, if not all, items are made in foreign countries or have components made in foreign countries. Additionally, some foreign countries have factories here (Toyota's plants in Indianna for example) so what is "American"? The union defines "American" as anything, even foreign made items, that are assembled here in the U.S. (or made here of course). Therefore the Toyota truck made in the SW is considered "American" but the Sienna, made in Indianna, apparently is not (must be a non union shop). Don't count on the unions to be helpful in this endeavor.

    12. MrShorty, Arizona says:

      Lwesson, Tejas

      By your comments I can only guess that your understanding of the international marketplace and the manufacturing process comes from lessons learned in grade school. Most manufactured items require hundreds if not thousands of parts and materials to produce the final product. Not to mention the extensive production equipment and testing equipment that are necessary to produce a sound and safe product. These materials and production equipment are normally sourced in the international marketplace for best value to improve the profitability of the company. With over 30 years in corporate management, I can only attest for the attitudes of the companies I worked for, and my personal objectives that most companies want to buy products and materials produced in their own country. The reality of the real world is that most products have some element of “non-indigenous” parts in their manufacturing process.

      To put it into perspective, I challenge you to evaluate every product you purchase to ascertain that everything in it is “Made in America”. Good Luck!!

    13. Bobbie Jay says:

      Only if there is a disclaimer stating non-union mfg. Otherwise we'll do without.

    14. Pauline, Kingman, AZ says:

      Instead of union paybacks and bridges to nowhere, our government should be concentrating on bringing industries back to the US; textiles, steel, appliances, to name a few. A "consumer" nation cannot survive for long…we must have a manufacturing base…nuts to Global Warming which is a farce and a power grab, nuts to saving a 3 inch long fish and shutting farmers out of their fields…everything is skewed in this society and our heads are spinning with the changes…and that is the plan…keep us off kilter while the Dems pass their socialistic programs…beware America, our freedoms are slipping away.

    15. mred canada says:

      I agree with buy American ~! This means the US no longer gets any of our oil (75% from the tar sands alone.)

      No more timber or minerals or natural gas or water.

      Way to go yanks . Leave the natural resources to those who own them . Oh ya I forgot? foriegn companies own Canada.

    16. Tim Az says:

      It was the steele workers union that asked Mao-Bama to impliment tarrifs on imported tires to pay the unions back for supporting him. That's why if anyone has noticed the price for tires is sky rocketing. If your kid can read thank a teacher. If your kid cannot read thank a union. How's that hope and change working out for you?

    17. Lynn B. DeSpain says:

      The best way to tell if you are buying American is to check the 'Bar Code' on the item. If the first two or three numbers are zeros, then it is made in America, otherwise it is not, even if it has an American Brand Name!

    18. Pingback: Heritage — Rep. David Dreier (R-CA) on Buy American | The Kansas Progress

    19. Jeanne Stotler, Wood says:

      We buy American made cars, we prefer GM cars and have for years, even so there are parts of these cars that are made in Mexico. I am a widow of an Union man, when Unions were organized it was to prevent companies from abusing workers, requiring long hours, low pay and no benifits, vac. sick lesave etc. Even when my husband retired we got good benifits and health ins. Now they big union bosses just want more and more and the benies are shrinking. I have been widowed for 33+ yrs and was suppose to get a % of his retirement, to this day I have not seen a cent, everytime I ask, it goes so far then no one will talk to me, Union says I am not the member etc.Years ago this would not have happened, and this is METRO in D.C.

    20. philip says:

      WHAT DO WE MANUFACTURE IN AMERICA WITH OUR GLOBLE MANUFACTURERING WE IMPORT NOT MUCH EXPORT

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