Corporate Lobbyists Move to Crush "Buy American" Provisions In the Stimulus Bill

by: David Sirota

Mon Jan 26, 2009 at 14:54

A few weeks ago, I noted Businessweek's cover story which asked a simple question: "How much of Obama's mammoth fiscal stimulus will leak' abroad, creating jobs in China, Germany, or Mexico rather than the U.S?" In the age of corporate written trade policies that incentivize outsourcing, this is a key question, as U.S. tax dollars could end up simply heading offshore unless Congress takes action.

The good news is that Congress is taking action, attaching legislation by Rep. Peter Visclosky (D-IN) mandating that stimulus money spent on iron and steel be spent in the United States. The bad news is that Bloomberg News now notes that a corporate lobbying campaign is ramping up to strip those provisions out:

David Sirota :: Corporate Lobbyists Move to Crush "Buy American" Provisions In the Stimulus Bill
General Electric Co. and Caterpillar Inc. are among U.S. exporters that oppose "Buy American" provisions in the $825 billion stimulus legislation...

The fight presents a dilemma for President Barack Obama, who must balance demands from unions and Democrats to protect American jobs against the threat that the Buy American measure would spark protectionist measures by other countries that might deepen a global recession.

The U.S. Chamber of Commerce, the Emergency Committee for American Trade in Washington and other business groups warned of that possibility in a letter today to congressional leaders such as House Speaker Nancy Pelosi.

The story notes that both GE and Caterpillar generates roughly half of its sales from outside the United States, so their opposition to "Buy American" provisions isn't surprising. And though the names of the U.S. Chamber of Commerce and Emergency Committee for American Trade In Washington include references to the U.S./America, their membership is comprised of corporations whose profit margins have greatly benefited from free trade and procurement policies that encourage them to troll the world for the worst labor, environmental and human rights conditions.

But a spokesman for U.S. Steel has it right. "If American tax dollars are going to be invested, it seems only rational that American products would be favored...The whole intention is to stimulate the creation of American jobs." That's a truism, even if U.S. Steel will benefit from it.

It's not clear whether "Buy American" provisions will survive the U.S. Senate - the house of Congress that traditionally rubber-stamps Corporate America's wishes. And it's not yet clear where the Obama administration is on the issue, especially considering Obama economic aide Larry Summers' recent letter stating - rather perplexingly - that "the incoming Obama Administration has no intention of using any funds to implement an industrial policy" - as if having any industrial policy would be horrific.

That will have to be balanced against Obama's desire to show a real boost in domestic macroeconomic data after the stimulus. Indeed, stripping out Buy American provisions in the short term - and slow-walking fair trade reforms in the long-term - will limit the effectiveness of the stimulus package in boosting those macroeconomic data.  

Tags: (All Tags)
Print Friendly View Send As Email

Excellent post, David. (4.00 / 6)
As Catapillar slashes jobs in America, he lobbies to prevent jobs in America:

Caterpillar had by far the worst news of the group. The world's largest heavy equipment maker announced Monday it was slashing up to 5,000 jobs on top of several earlier actions. The latest cuts of support and management employees will be made globally by the end of March. An additional 2,500 workers already have accepted buyout offers, and ties have been severed with about 8,000 contract workers worldwide. In addition, about 4,000 full-time factory workers already have been let go.

We need Buy America provisions.  It's our government money.  

Maybe we can get the Democrat-hating media on this... (4.00 / 1)'s possible that they might report on this angst, especailly if we can get some Palinesque Republicans on board...

We should push for this and call our congressmen and senators to insist on it... Get our lobbying efforts up as well and get this in the news!

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

They better not send it overseas... (4.00 / 3)
Michigan Unemployment Rate
(Seasonally Adjusted)

December 2008 10.6%
Change Over Month  +1.0
Change Over Year +3.2

Michigan Payroll Jobs
(Seasonally Adjusted)

December 2008 4,055,000
Change Over Month -59,000
Change Over Year -173,000

I thought CA jumped ahead of us (0.00 / 0)
apparently not  :(

[ Parent ]
Buy American Steel = protectionism? (4.00 / 1)
Pete Visclosky is my Congressman. I hadn't heard of his contribution to the stimulus bill, and looking at his recent press release, I wonder if it extends beyond American steel, especially since BP, which is in the beginning stages of $3.8 Billion worth of refinery improvements, is in this district. I would like to see the exact text of his addition to the legislation. The release refers only to steel made in America.

Text of his press release:

January 21, 2009

Visclosky Adds American Steel First Principles to American Recovery and Reinvestment Act

Amendment Ensures American Steel is Part of Economic Stimulus

Washington, D.C.  -  Congressman Pete Visclosky, Chairman of the Congressional Steel Caucus, today amended the American Recovery and Reinvestment Act to include American Steel First provisions during a House Appropriations Committee markup of the legislation.  Visclosky's amendment, which passed by a vote of 55 to zero with one Member voting present, makes projects funded by the bill use only American-made steel.

"My American Steel First Amendment sends a clear message to American steel makers:  We support you, and want you to be a part of our economic recovery," said Visclosky.  "Our steel mills are operating under capacity, ready to make the steel we need to rebuild America.  Buying all our steel from domestic producers will send steelworkers back into the mills, adding to the benefits of the infrastructure projects."

Visclosky's amendment applies the principles of his American Steel First Act, which he introduced last week, to the American Recovery and Reinvestment Act so that all steel bought with monies appropriated by the bill be made in America.  Under Visclosky's leadership, the Steel Caucus had previously sent a bipartisan letter to House Leadership urging the inclusion of American Steel First provisions in the economic revitalization legislation, but they were omitted.  This amendment rectifies their exclusion.

American steel mills are running at 44 percent of their capacity, but could quickly ramp up production to meet the demands of the economic stimulus package.  For example, ArcelorMittal's Burns Harbor plant recently laid off 490 workers and has 900 more on a shortened workweek.

"I firmly believe that my amendment will give the economic stimulus package the broad, lasting impact on our workers and our economy that it needs to," said Visclosky.  "If we are going to expend such a massive sum of money, it must be spent on American products and workers.  This bill coming out of the Appropriations Committee will do just that for our steel and steelworkers."


ArcelorMittal, mentioned specifically here, is foreign-owned, so I guess that those companies protesting this part of the legislation bought the steel used in their products from outside the country? What is wrong with asking these companies to spend stimulus money here? They may pay more, but the jobs will stay here.

same legislation introduced 4/2008 (4.00 / 1)
110th Congress, H.R. 5935, creatively named the American Steel First Act of 2008, had 34 co-sponsors and died unceremoniously in committee.

[ Parent ]
Committees - where good legislation goes off to die (0.00 / 0)
I am so sick of these little purchased committee chairs burying very good bills in committee by refusing to even bring them up for a committee vote.

The entire Congressional Process stinks to high heaven in this regard where the House and Senate leaders and then committee chairs plain have way too much power to kill bills.

They need to change the rules to democratize Congress more and thus stop killing really great legislation by committee.  

The Economic Populist

[ Parent ]
attach to U.S. citizens, American workers! (4.00 / 2)
They need to attach the stimulus to hiring U.S. citizens, perm residents, to Americans for U.S. jobs.  

Believe me, the offshore outsourcing, body shops will be lining up to get U.S. taxpayer money to offshore outsource is we do not have Americans preferred for all jobs, including advanced R&D STEM.  We have underemployed, massive age discrimination, under utilized American STEM as well as I.T. in this country and they should be first up.  Also STEM people already have the education, years of experience which could easily adapt to power engineering, materials science, chemical engineering, oceanography and etc. "green job" skill sets.

This is a no brainer to take someone with a BS/MS/PhD and "retrain" them in advanced power engineering, R&D because they already have a background in R&D.  

I linked over to your critical post on Economic Populist and also link to some very serious Congressional testimony on how to align U.S. corporate behavior to the U.S. national interest..

right now most of these MNCs act like vultures on the global stage instead of benefiting the host country upon where they are incorporated (or the Caymans for that matter!).  

The Economic Populist

a suggestion (4.00 / 2)
if you are a corporation who doesn't want to buy American, go get your multi billion dollar stimulus from the Cayman Islands. And we will find out how "corporate friendly" they are really! Good Luck with that, Har har har!

[ Parent ]
I'm so sick of corporate worker explotation (4.00 / 3)
Here's a story you will love Dave.

My company has a factory in China that makes automotive parts that are then shipped to Mexico and America.  This plant is leased by my company from a Chinese 'authority', the state or local government or whatever.  When the plant first opened a few years ago, a co-worker that spent a few months at the plant to help with the start-up, observed some workers protesting outside of the plant.  This occurred for a few days.  After 3 or 4 days, a bus came and took away all the workers who were never seen from again.  The workers were the people who built my companies plant, they were never fully paid.  They had hoped to pressure our company to pay or make the government pay.  Well, convieniently we just lease the building so apparently our hands are clean.  Except that we agreed to build our parts there.  I'm hoping to get into the wind energy business.  I just can't stand automotive anymore.  Hopefully your articles and your work on the hill will help push for change for the better.  

good stuff (4.00 / 4)
Tim Ryan:

(Washington, D.C.)  Congressman Tim Ryan (OH-17) released the following response to those groups and companies opposing a Buy American provision in the Economic Stimulus bill which would require iron and steel used for infrastructure projects to be domestically manufactured.

"It's truly disturbing to see such opposition to the Buy American provision from large multinational companies and their lobbyists. These same companies stand to reap millions of dollars in tax breaks and government spending from the stimulus bill, yet they apparently don't believe that American iron and steel workers should receive similar benefits from the bill," said Congressman Tim Ryan. "The whole point of the American Recovery and Reinvestment Act is to get Americans working again. That these companies would oppose buying American iron and steel shows just how far removed they are from the country that gave them their start. I don't care how many flags they wave in their commercials, or how many racing teams they sponsor; if they want to see America and American manufacturing succeed, then they should support Buy American."

On twitter: @BobBrigham

Hopefully, he'll be our next senator for OH! n/t (4.00 / 1)

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
How is it protectionist? (4.00 / 3)
The DoD restricts procurements to US manufactured goods all the time. The bill won't say Caterpillar MUST use US steel in all of its tractors, its saying that any sold to projects taking stimulus money much use US steel.

Domestic subsidies are out of fashion with the Doha crowd no doubt, but this doesn't rise anywhere near the common understanding of protectionism.  

Difference (0.00 / 0)
Technically, there is no real difference between having an import tax and having a local subsidy.

[ Parent ]
No brainer (4.00 / 3)
I'm no protectionist and not particularly populist, but the concept that the stimulus should be directed to our own country is a no brainer.  Like, duh man.

In today's world it can be difficult to tell what qualifies as American.  Does a Toyota built in Kentucky count?  What about parts?  But still, the direction should be there to stimulate the U.S. economy, not someone else's.  I'm sure other countries are doing the same.

Seems pretty obvious (0.00 / 0)
In normal circumstances, I'm no fan of Buy American restrictions, partly because I believe the best contractor should win, partly because I think that America can't sustain it's current share of the global economy indefinitely.

But at present Buy American provisions make sense. We're talking about a huge economy with greater labour costs than in the bits of the world where the abolition of slavery was a technicality. We're talking about a time where corporate panic is so great that illusory cost savings will be prioritised over quality and workers' rights.

The world as a whole needs a strong American economy, because it needs something to sell to and because if America really suffers then the protectionist measures it feels driven towards will hurt the world economy much worse than this. You want to try to prevent unnecessary unemployment, and you want to keep producing high-quality goods (because training programmes in third-world factories probably aren't a priority nowadays).

Whether Buy American is a good idea for the world or America long term is a complicated question. But right now, it's a very sensible plaster, because otherwise you aren't giving your subsidy to Chile or Germany, you're giving it to multinational corporations with a nominal Chilean or German identity that won't put that money to good use anywhere.

Forgotten Countries - a foreign policy-focused blog


Open Left Campaigns



Advanced Search

Powered by: SoapBlox