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David Dreier (R-CA) is Right on “Buy American”

I’ve been say­ing this since, oh well, Jan­u­ary, but it’s good to see a mem­ber of Con­gress start echo­ing my thoughts.

From the Her­itage Foundation’s Foundry Blog:

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 jump-starting our trade agenda, open­ing new mar­kets for Amer­i­can pro­duc­ers and paving the way for export-led job cre­ation. That would be true eco­nomic stimulus.


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