Why the phrase ‘Buy American’ is misguided
In the seventh month of his presidency, Joe Biden ventured to the swing state of Pennsylvania to burnish his blue-collar credentials among blue-collar voters who have been deserting the Democratic Party. At a Mack Trucks assembly plant he announced an expansion of Buy American regulations, which pertain to about one-third of the $600 billion in goods and services the federal government was then purchasing annually.
Mack Trucks, owned by Sweden’s Volvo Group, used much European steel at the time because, the Cato Institute’s Scott Lincicome reported, the company was “unaware of an appropriate American-made substitute.” And probably still is.
In a 21-day period that included Biden’s visit, Mack’s Pennsylvania plant received nearly 900 tons of parts from 11 countries. This was less than four months after Biden had said, “Not a contract will go out that I control that will not go to a company that is an American company with American products all the way down the line.”
“Buy American,” like protectionism generally, can protect some blue-collar jobs — but at a steep price: A Peterson Institute for International Economics study concludes that it costs taxpayers $250,000 annually for each job saved in a protected industry.
In the usual braying-and-pouting choreography of the State of the Union evening, members of the president’s party leap ecstatically when he praises himself, and members of the other party respond sullenly, by not responding. This year, however, something unusual happened when President Biden vowed to “require all construction materials used in federal infrastructure projects to be made in America.” A bipartisan ovation greeted his promise.
This will mean more borrowing, not fewer projects. Federal spending is not constrained by a mere shortage of revenue. So, Biden was promising to increase the deficit.
Biden was tactically slippery when he said, “Buy American has been the law of the land since 1933.”
Yes, it first appeared on March 3, 1933, as the last gasp of Herbert Hoover’s bewildered presidency.
There have, however, been dozens of iterations of this policy.
The Washington Post’s David J. Lynch has detailed some of the ways Biden’s plans to increase domestic manufacturing collide with something obstinate: reality. Biden’s Transportation Department has denied a request by the nation’s ports to use federal infrastructure funds to purchase imported dock cranes, boat lifts and other equipment because, Lynch reports, “no domestic manufacturers exist for them.”
Buy American protection helps U.S. producers of rail cars. But a 2019 Congressional Research Service report (citing a study funded by Canada) found that eliminating Buy American requirements would result in 57,000 fewer U.S. manufacturing jobs but an increase of more than 300,000 jobs from economic dynamism enhanced by efficiency.
Progressives lament what they call America’s “market fundamentalism.”
Sensible people say: Would that this were real.
Populists will note that Buy American is popular.
It is that, and it also is proof that polarization can be ameliorated by the bipartisan appeal of a bad idea.
