This afternoon, the U.S. Senate will be voting on an amendment to H.R. 2112, the Agriculture-Commerce-etc. appropriations bill for FY 2012. The amendment, #789, is being offered by Senator Merkley (D-OR). Below is a legislative alert sent by Americans for Tax Reform opposing the measure.
Senator Merkley’s amendment would require that all steel, iron, and manufactured products used on freight transportation projects be made in the U.S.
The motivation behind “Buy American” may make political sense, but it makes horrible economic sense. Such protectionist measures raise costs for consumers and businesses. Not only do “Buy American” provisions restrict growth, they inevitably cost more jobs than they purport to create.
At the behest of President Obama, Democrats in Congress have already attempted to use this same protectionist provision. “Buy American” mandates in the 2009 $787 billion spending package have clearly not helped create the jobs that legislators have promised. Unemployment hovers above nine percent, yet populist sentiments urge you to make the same mistake twice. According to the New York Times, employers across the country were forced to lay off workers as a direct result of “Buy American” requirements in the bill. One factory in Pennsylvania let go of 600 employees because some of its products include goods produced overseas.
Additionally, “Buy American” mandates raise barriers to trade and endanger American businesses to retaliation from trading partners. If the federal government is serious about spurring the creation of new jobs, Congress should focus on lowering taxes and spending, while encouraging the administration to pursue new free trade agreements.
Free trade reduces prices for consumers, promotes innovation, and naturally creates jobs in the private sector. Protectionism appeals to a populist agenda and the will of big labor, without yielding the intended results, as history has shown. As American companies struggle to hire new workers, it is a terrible idea to introduce mandates that will raise employers’ costs further.