As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Tuesday, February 03, 2009

Transforming The Domestic Economy

The rage over the "Buy American" provisions in the economic recovery package are symptomatic of the entire reason why we're surging toward economic disaster. Let's go over this again: provisions like this are CURRENT LAW for federal procurement. When the federal government purchases, they purchase American goods. Just like every other country does. China is building a huge railroad with their initial stimulus package made entirely out of Chinese products. Every country does this. It's not controversial in the least.

Yet, it's only controversial when America, who has been selling out their industrial and manufacturing base for so long that multinationals expect nothing less, tries to implement the exact same policy they and the rest of the world have been doing for decades. This is ridiculous.

Last week the House of Representatives version of the bill stirred alarm in the EU and Canada by demanding that all iron and steel bought to rebuild the country’s crumbling infrastructure has to be American made.

Anxious lobbying by the EU has fallen on deaf ears as explicitly protectionist language was added to the Senate bill leaving it open to legal challenge under the rules of the World Trade Organisation (bullshit, federal procurement has never been and will never be subject to these trade agreements -ed) [...]

Big multinational corporations, including Caterpillar and General Electric which depend on foreign manufacturing plants, have launched a rearguard attempt to remove the Buy American provisions from the bill. The Emergency Committee for American Trade, another lobby group, is sending out shrill alarms that the stimulus bill could trigger a trade war that would ultimately damage American interests.

“Protectionism is the crackcocaine of economics. It may provide a high. It’s addictive and it leads to economic death,” said Richard Fisher, president of the Dallas Federal.

The Smoot-Hawley Tariff Act was put into place by corporate execs who wanted their companies to profit from the Depression. This measure is being opposed by the ancestors of those corporate execs who want to profit again. Any parallel between the two is completely absurd. It's the inverse.

Which is why even the free-traders in the Obama Administration are zipping their lips about these provisions.

Free-traders on President Obama’s economic team are suppressing concerns over Buy American provisions in the stimulus, derided as protectionist by corporate lobbyists.

Treasury Secretary Timothy Geithner and Obama’s top economic adviser, Lawrence Summers, have raised no objections to tough provisions in the House stimulus bill intended to ensure that U.S. iron and steel are used in any infrastructure projects, such as the construction of highways and bridges, even if they add to the project’s cost.

Nor have they complained about a provision in the Senate bill that would go much further by calling for the use of U.S. iron, steel and other manufactured goods in infrastructure spending in the stimulus.

Some interests have also called for language to ensure that any spending on health technology in the stimulus goes to U.S. firms, and not those in India.

Support in both chambers means the iron and steel provisions, at a minimum, seem likely to be included in the bill sent to President Obama’s desk, despite an outcry from business groups and foreign governments that argue they could set off a new trade war.

Seriously, tough crap. The bottom line is that creating American manufacturing jobs multiplies the stimulus, and goes a long way to transforming what's so sick about this economy. We can leap from bubble to bubble forever, creating enormous pain and suffering in the down times, or we can build an economy that works, based on making things, and selling things that you make because people want to buy them, and because they can afford them because they have a job with a living wage. More from John Judis, who is absolutely correct that this would finally spur our huge global trade deficit that has been killing the economy for years.

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