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In his first week, President Obama has made a point of reaching out to the rest of the world and signaling a change toward a more open and cooperative approach. Why, then, has he been silent on the efforts by Congress to insert extensive “Buy American” provisions in the stimulus bill?
These provisions require that steel and perhaps other goods purchased with stimulus funds should be made in America. While that sounds logical when the goal is to create jobs, it isn’t. Other countries that are developing their own stimulus programs will emulate the United States and the legislation might save some US jobs in steel mills, but at the expense of jobs at Caterpillar or other firms that export a substantial share of the output. Moreover, the United States has committed in the World Trade Organization and in bilateral trade agreements to limit the extent to which it uses buy national provisions in government procurement.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.