What Happened To The Buy American Provisons Of The Stimulus Bill?

By Big Tent Democrat, Section Economy
Posted on Mon Feb 16, 2009 at 02:22:52 PM EST
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Booman argues that President Obama's language opposing the stricter Buy American provisions in the stimulus bill does not matter because Obama did not actually do anything to weaken these provisions. Now, as folks should know by now, I am a free trader, so Buy American provisions are not something I favor generally (I also think existing Buy American provisions provide sufficient advantages for domestic vendors.) But I am curious if Booman is correct that in fact Obama did not act or lobby for weakening the Buy American provisions in the stimulus bill. My understanding, based on this Reuters fact sheet, is that he did indeed weaken the Buy American provisions in the stimulus bill:

TRADE PACT COMMITMENT CLAUSE

* The bill stipulates that the Buy American provision be "applied in a manner consistent with United States obligations under international agreements."

* That is further explained in separate report language on the bill to clarify that it requires the United States to comply with obligations under the World Trade Organization's government procurement agreement and under the North American Free Trade Agreement and other U.S. free trade accords.

* The report language says products from least-developed countries would be treated in the same manner as countries with which the United States has formal trade commitments.

* The trade compliance language gives members of the WTO's government pact such as the European Union, Japan, Canada, South Korea and Taiwan comfort they could provide material for a public works project funded by the stimulus bill.

. . . WAIVER AUTHORITY

* The act allows the Buy American mandate to be waived if the federal agency overseeing a particular project deems it would be "inconsistent with the public interest."

* It can also be waived if iron, steel and the relevant manufactured goods "are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality" or if it would increase the overall cost of a project by more than 25 percent.

* The waivers can apply to a "category of cases" so if a particular product is not made in the United States, contractors would not have to apply over and over again for permission to use it.

(Emphasis supplied.) The 25% steel subsidy is a provision that was put in place in the 1980s by President Reagan. I believe it was allowed to lapse at some point and now returns. But I might be wrong on this. It might never have lapsed. I'll doublecheck that point. But I do know that the original Buy American provision provided absolute requirement that domestic steel and iron be used. so even this 25% subsidy is a weakening of the original provision.

As for the rest of the provisions, this is all existing law as I understand it. In short, the attempted imposition of stricter Buy American provisions seems to have fallen by the wayside, at President Obama's behest.

Booman relies on an LATimes story on the issue:

"Buy American" rules remain in the stimulus bill that the president is scheduled to sign Tuesday, but labor advocates were alarmed by Obama's willingness to insert himself in the debate as a champion of business concerns. They said his stance was far different than during the presidential election, when Obama was trying to win union votes and called for rebuilding America with union-made materials.

While it is true the Buy American language remains (it was mostly already on the books anyway), the language about complying with trade agreements pretty much strips it of any new teeth. I am not sure how anyone can plausibly argue that Obama did not weaken the Buy American provisions in the stimulus bill. He clearly did.

Now that's all right with me. If and when the President goes back on promises I care about, I will and have been screaming loudly. I find it interesting that folks claiming to feel strongly about "fair trade" issues have stood mute on this one. I suspect they will be disappointed on trade agreements generally with President Obama (I have always said that I believed Obama would agree with me on trade and I see no evidence to think I am wrong.) I wonder if they will continue to be muted on that issue.

I think they will. I think they are playing for one particular issue - EFCA, the Employer Free Choice Act. I think labor will give Obama lots of room on everything else but I think they will absolutely pummel President Obama if he does not fight for passage of EFCA.

We will find out pretty soon.

Speaking for me only

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What Happened To The Buy American Provisons Of The Stimulus Bill? | 20 comments (20 topical)

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You know, BTD, I am also pro-trade. (5.00 / 1) (#5)
by masslib on Mon Feb 16, 2009 at 02:55:39 PM EST

Indeed, I often say 100 years from now Bill Clinton will be praised for his foresight on trade issues. I say this because the 200 million person Indian middle class is directly related to expansive trade policies, and so forth. I think the problem accepting expanding trade alliances has been two-fold. One, unions wrongheadedly, fought Bill Clinton on NAFTA rather than supporting him on health care. Had health care been affordable, including his later initiatives such as allowing 55 and olders into Medicare, then labor in this country would be more competitive with labor outside. Two, labor advocates are so focused on protecting manufacturing jobs, they have completely missed the boat on unionizing the service sector, where all the job growth has been for several years.

However, in this case, I have to agree with Krugman, a little protectionism wouldn't hurt. If our objective is to stimulate the American economy by spending federal dollars on infrastructure, then why wouldn't we buy American steel? I agree with you, Obama clearly weakened the Buy American provisions, and even as someone who supports trade, I can say that's too bad.

Also, EFCA, in my opinion, is more important in some regards because it goes right to my point about unionizing the service sector. But will Obama seek to weaken that bill as well?

Obama keeps reaffirming his support for EFCA (none / 0) (#6)
by magster on Mon Feb 16, 2009 at 03:00:35 PM EST

He might be waiting for Franken's vote, because it will difficult to break a filibuster.

We shall see...


I think (none / 0) (#7)
by Big Tent Democrat on Mon Feb 16, 2009 at 03:05:14 PM EST

Obama is going to do all he can to deliver on EFCA and will get a wide berth on everything else.


I think the Congress is already set on passing it, (none / 0) (#9)
by masslib on Mon Feb 16, 2009 at 03:06:04 PM EST

again the question is, will it have teeth?


I do not know the specifics of the issue (none / 0) (#10)
by Big Tent Democrat on Mon Feb 16, 2009 at 03:07:42 PM EST

But I think the issue is getting 60 in the senate. Sound familiar?


Yeah but read up on support for the bill. (5.00 / 1) (#11)
by masslib on Mon Feb 16, 2009 at 03:11:19 PM EST

It's supported by conservative and liberal Dems alike, and even some Repubs(or so I have heard). Further, is this 60 seat thing going to be used as an excuse for weakening every Democratic initiative? I do not remember that being the case with George Bush. Would Repubs filibuster on this? I doubt it. But if the Democrats are interested in passing legislation that will be effective, then why not call the bluff of those who say they would filibuster?


Are you kidding? (none / 0) (#12)
by gyrfalcon on Mon Feb 16, 2009 at 03:37:18 PM EST

Of COURSE they'd invoke the filibuster on EFCA! Handicapping and breaking unions is one of their absolute top priorities.

They're also having no trouble at all selling the notion that the EFCA is un-American because it abolishes the secret ballot. The pro-labor position on this one is hard to explain because you have to go deep into the weeds of procedure to explain what management does to poison those "secret ballot" elections."


Then let's see them do it, and see how the public (5.00 / 2) (#13)
by masslib on Mon Feb 16, 2009 at 03:40:35 PM EST

responds. My guess is very unfavorably.


Well (5.00 / 3) (#14)
by Big Tent Democrat on Mon Feb 16, 2009 at 03:41:50 PM EST

the love for unions you ascribe to the American People is not something I have seen much of frankly.


: People tend to think (5.00 / 2) (#15)
by andgarden on Mon Feb 16, 2009 at 03:51:42 PM EST

that unions are greedy/corrupt and getting away with something not available to the average person. Unions lost the image battle long ago.

: Indeed (none / 0) (#16)
by gyrfalcon on Mon Feb 16, 2009 at 03:53:36 PM EST

Especially with the Republicans and the corporate groups screaming "Secret ballot! Secret ballot!" every five minutes. There are few things more sacred to Americans' image of themselves and the country than the "secret ballot." (which for some reason, here in Vermont is called always called "Australian ballot")

: Well, we'll see. (none / 0) (#17)
by masslib on Mon Feb 16, 2009 at 03:53:38 PM EST

The bill already passed in the House. It did not receive cloture in the Senate, however, Arlen Specter already voted aye on cloture, so if we seat Franken, Specter alone would be enough for a cloture vote. Even if we don't, I suspect, with small pressure Snowe and/or Collins would vote for cloture.
This notion that we first need to get to 60 votes before bringing something to the floor will mean plenty of weak policies going forward. Sometimes you have to call their bluff. Do you remember what happened when Newt Gingrich closed the federal government? It didn't work out so well for the Republicans.

: Also, I am not referring to a (none / 0) (#18)
by masslib on Mon Feb 16, 2009 at 03:55:54 PM EST

"love of unions", I am referring to doing nothing. The public, even when they do not agree with a policy, usually reward action, one way or the other. Not filibusters.

Reaffirming? Hmm, I read two things he has (none / 0) (#8)
by masslib on Mon Feb 16, 2009 at 03:05:23 PM EST

said: One, there are no jobs to unionize right now. Two, there may be a middle way between business interests and unions(I paraphrase). Biden also said the bill may have to be watered down. So I want to see what the final bill looks like. There is no doubt something will be passed. It's supported by even the conservative wing of the Dem Party and some Republicans. The question is will it have teeth.


: I know this thread is stale (none / 0) (#19)
by magster on Mon Feb 16, 2009 at 04:55:16 PM EST

but I didn't read your reply until now.
I searched the blogs I read to find what I read and where I read it. It was in a Kos diary FWIW.
Like I said before, we shall see....

WHY AN ECONOMIC POLICY (none / 0) (#1)
by robert diogenes on Mon Feb 16, 2009 at 02:31:14 PM EST

WHY A New ECONOMIC POLICY II

THE FACTS BEHIND THE NEWS

Elizabeth Warren head of the oversight panel setup by Congress To monitor the Federal Bailout says, "THE GOV'T STILL DOES NOT SEEM TO HAVE A COHERENT STRATEGY FOR EASING THE FINANCIAL CRISIS. "Instead the gov't seemed to go from one tactic to the next without clarifying how each step fits into the overall plan.

A reason for Ms. Warren's observation is the US does not have an economic strategy. Professor Michael Porter distinguished Harvard School Professor is a strong advocate of the need to develop an Economic Strategy.

Professor Porter notes the American political system as it has evolved with piecemeal reactions to current events. I believe Professor Porter would like to see an ORGANIZED APPROACH TO POLICIES THAT PROMOTE LONG TERM GROWTH AND COMPETITIVENESS.

Is what has driven our success starting to erode?
.
Prof Porter believes" a series of policy failures have offset and even nullified "US " strengths just as other nations are becoming more competitive". Let's have a look at some of the economic areas.

"An inadequate rate of reinvestment in science and technology is hampering our feeder system for entrepreneurship. Research and development as a share of the GDP has declined, while it has risen in other countries". This is well recognized but policy makers have failed to act.
Our belief in competition is waning. "A creeping relaxation of antitrust enforcement has allowed mergers to dominate markets". "We are seeing more interference in competition with protectionism and favoritism."
US colleges and universities do not have a serious plan, such as GI Bill or National Science Foundation programs, to improve access to them. The US now ranks 12th in educational attainment for 25 to 34year olds. For 30 yrs we have not improved ourselves in this area. This is an "ominous trend in an economy that must have the skills to justify our high wages."
At a time when job insecurity and turnover are high the US gov't has not taken responsibility to provide a transition safety net for US working people. The job training system is ineffective and receives less funding each year. Pension security is declining. Social security is not being adjusted and strengthened. Access to affordable health insurance is a major worry to most people. The gov't could equalize the tax deductibility of individuals purchasing insurance to assist those not covered by their employers, but has failed to do so.
The US is energy inefficient. Public policies fail to promote energy conservation.
"Trade and foreign investment are fundamental to the success of the US economy but the US has lost its focus and credibility in shaping the international trading system." "With no strategy the US has failed to work with other advanced countries to assist poorer countries to feel confident about opening markets and internal reform." "Our foreign aid is still tied to the purchase of US goods rather than the actual needs of countries."
"The federal gov't has failed to recognize and support the decentralization and regional specialization that drives our economy.
Lack of regulatory oversight combined with lack of a strategic plan has resulted in a hodge-podge of policies that have driven up the costs of doing business. TO SUM UP WE HAVE HAD POOR ECONOMIC MANAGEMENT.
Is good strategic economic plan possible considering our political system?

It requires political parties and private leaders to come together and chart a long term plan. Prof Porter recommends a bipartisan joint planning group to coordinate priorities,

Does the new Stimulus Bill help solve these problems.

huh? (none / 0) (#2)
by andgarden on Mon Feb 16, 2009 at 02:40:30 PM EST

: Forget it. He's rolling. (5.00 / 2) (#3)
by sarcastic unnamed one on Mon Feb 16, 2009 at 02:41:55 PM EST

I found that the 25% subsidy for domestic (none / 0) (#4)
by Big Tent Democrat on Mon Feb 16, 2009 at 02:44:53 PM EST

steel and iron is already law for many federal agencies, including the Federal Highway Authority.

Link.

actually BTD, there's something (none / 0) (#20)
by cpinva on Tue Feb 17, 2009 at 12:56:28 AM EST

to be said for the "Buy American" provisions, free trade notwithstanding. i say this as someone who strongly supported clinton on NAFTA.

certain core industries, steel very definitely among them (regardless of what you think of the management of those companies) are too important to overall national security, to be allowed to completely wither away, regardless of the fiscal savings that might be had, by acquiring these commodities elsewhere.

in part, that's one of the primary reasons behind the original "Buy American" provisions, and not necessarily a bad one. we've already witnessed the problems resulting from our dependence on foreign oil, multiply that by every core manufacturing industry, and you can see the adverse impact it could potentially have.