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Buy America Stokes Stimulus Packages

January 27, 2010

Leading Republicans say that the administration’s $787 billion stimulus plan passed a year ago failed.  They claim that tax breaks for business would be more effective than government priming the economic pump in a new stimulus plan—passed by the House of Representatives in December—headed for the U.S. Senate.

A new pamphlet by the Alliance for American Manufacturing challenges the charge that the stimulus failed by detailing how “Buy America” laws—on the books for more than 70 years—strengthen government stimulus packages, saving or creating thousands of American jobs.

In eastern Pennsylvania, members of the Steelworkers at ArcelorMittal are busy producing 125,000 linear feet of rail for Southeastern Pennsylvania Transportation Authority. SEPTA’s contract is one of two public transportation rail projects, funded in part by $3.7 million from the stimulus that requires the use of domestically-produced rail. With U.S. steel plants running at 50 percent of capacity during the current recession, and only three rail-producing plants left in the U.S., that mandate is a lifeline in avoiding more layoffs.

In Oregon, United Streetcar is building the first modern streetcars to be manufactured in America in nearly 60 years. The project, supported in part by federal dollars outside of the Recovery Act, is thriving because of Federal Transit Administration “Buy America” language which requires that at least 60 percent of vehicles contain domestic content.

If the legislation under consideration now in the U.S. Senate passes, one of the beneficiaries could be members of Erie, Pa., Local 56 who perform electrical maintenance and large-scale projects in the 100 year-old locomotive manufacturing plant owned by GE Transportation.  The bill includes $800 million for modernizing Amtrak’s fleet.  The House jobs bill strengthens “buy American” language which could help GE to land work in the factory which cut 1,500 jobs last September.

Domestic content legislation enjoys broad popularity.  A poll commissioned by the manufacturing alliance found last year that 84 percent of Americans favored “Buy America” requirements in the Recovery Act. The same month as the poll, the Senate voted 31 to 65 against an amendment sponsored by Sen. John McCain (R-Ariz.) to strip Buy America language from the Recovery Act.

More than 500 local, state and municipal governments have passed “Buy America” measures. While some trading partners have criticized such provisions as excessive protectionism, the alliance holds that they help to maintain a more level playing field in North American and international trade.

If leaders fail to fully implement “Buy America” requirements, states the alliance, the U.S. would be weaker in negotiations with other countries that have domestic-sourcing policies to mutually open up procurement markets.

Read the AAM pamphlet: