The Buy American Clause
Xin Lu, over at Wisebread, does a good job explaning why the “Buy American” clause in the stimulus bill is such a poor idea:
So the logic is that if the stimulus spent as much as possible on American products then it would narrow the trade deficit and keep more jobs in America. However, considering that the public works portion of the stimulus bill is only about $73 billion, I doubt it would make a dent in the trade deficit. Instead, it is fueling a lot of anger in many trade partners for little gain.
The only people who think this is a good idea are the labor unions, who are working overtime to exact their pound of flesh in exchange for helping the Democrats get elected. The CEO of Caterpillar, which as an American manufacturing firm is one of the potential benficiaries of this clause, came out against the Buy American provision in an Op-Ed piece published in the Chicago Tribune:
Caterpillar would like to sell U.S.-made products for infrastructure projects at home and abroad. But if the U.S. sends the message that regardless of value, countries should only buy locally produced products, Cat’s exports, as well as the U.S. jobs they support, will be hurt. In some of our Illinois factories, as much as 70 percent of what we make is sold overseas.