Matt Slocum/AP Photo
Biden at a metal fabricating facility in Dunmore, Pennsylvania, last week
President Trump took a whack at Joe Biden’s new economic plan, with its strong Buy American provisions. “He plagiarized it from me,” said Trump, in a sly reference to a controversy long ago when Biden borrowed some rhetoric from British leader Neil Kinnock.
In fact, Trump’s Buy American program is all talk and no action. The president has issued no fewer than four generalized executive orders intended to promote purchases of products made in America using government procurement. But no increased domestic procurement resulted. All of the follow up has been blocked by his own Office of Management and Budget and other cabinet departments in bed with multinational corporations.
In his first week in office, Trump signed an impressive sounding memo requiring the pipelines for his expanded gas and oil energy program to use steel and other materials made in the USA. There was zero follow up to implement the memo.
Even his order, in the midst of the pandemic, to rebuild domestic supply chains for urgently needed drugs and other medical equipment, came to nothing. “There has been no increase in domestic procurement since Trump took office,” says Scott Paul, president of the Association for American Manufacturing.
Here as elsewhere, Trump is all about symbolism, not about delivering. Under Trump, direct government contracts to foreign suppliers are actually up 30 percent.
A word about “Buy American.” This concept refers to several different pieces of legislation, which in practice are riddled with exceptions.
In theory and in law, if the federal government underwrites the cost of a local transit project, the steel for a bridge or the rail cars for a subway modernization, the project should be made in America. But there are several ways around this requirement.
The rebuilding of the Verrazzano Bridge straddling New York Harbor, for instance, was built with Chinese steel. There was plenty of American steel available. How did the Port Authority, sponsor of the project, evade Buy American provisions?
The authority argued that the bridge is mostly financed by tolls, ignoring the fact that its tax-exempt bonds are a federal subsidy. A government serious about Buy American would have insisted on American steel. Ours didn’t.
In addition, other construction materials, such as concrete and electronic components, are not even covered by Buy American requirements. (Technically, Buy America refers to a broad range of domestic government procurement and Buy American refers to defense procurement.)
The Washington Metropolitan Area Transit Authority gets a mix of federal, state, and local funding. It is building new railcars made offshore, even though domestic suppliers exist. Since money is fungible, WMATA argues that it is buying the cars with its non-federal funds. What’s needed, as Biden understands, are requirements that public agencies that get federal funds must buy American.
The original Buy American Act dates to 1933. Over the years, it has been riddled with exemptions, waivers, and weak enforcement. Buy America provisions have been inserted in laws authorizing federally subsidized infrastructure and defense spending but these are also more loophole than law.
The obsession with hyper-globalization has further weakened Buy American. In its trade deals under the World Trade Organization and in other trade agreements, administrations of both parties have voluntarily given up their right under U.S. law to give preference to U.S.-based companies in government procurement. According to a Government Accountability Office report requested by Sen. Tammy Baldwin, the U.S. opened up as much domestic government procurement to foreign supplies as the next five largest WTO member countries combined.
In part, there is also a chicken and egg problem. So much of U.S. industry has been hollowed out that when a local transit authority or defense weapons system is looking for a domestic supplier, either the supplier doesn’t exist, or it is a final assembly producer reliant on Chinese or Korean “partner” who is providing most of the value added.
This is what makes Biden’s plan so impressive. Not only does it close several loopholes. It specifically allocates $400 billion to domestic procurement, and another $300 billion to American industrial policy, so that there are domestic producers to rendezvous with government procurement contracts. And there is not a word of the usual bipartisan blather about the genius of free trade.
The plan is also admirably detailed, when it comes to closing specific loopholes in existing Buy America law and practice. For instance, current law allows products that are 51 percent domestic to be labeled Made in America. Current policy allows products created with government subsidized R&D to be invented and designed here but then manufactured offshore. Says Biden’s plan:
If companies benefit from taxpayer-funded research that leads to new products and profits, those products should be made in the U.S. or the company should reimburse the government for its support. The days of taxpayer benefits going to companies that seek to outsource jobs or avoid paying their fair share of taxes are over.
This is a revolutionary challenge, not just to Trump—but to decades of bipartisan trade policy that sold out American industry. If put into practice, Biden’s plan just might make American manufacturing great again.
