One of President Joe Biden’s earlier executive orders instructs the government to buy American more. Federal agencies should buy more American products to help American manufacturing.
Now, Biden's about to find out his directive might be too little, too late to do anything.
Many Presidents Already Went With “Buy American”
The first movement to make the government Buy American Act happened in 1933 during the Great Depression. Since then, many presidents, including former President Donald Trump already went the Buy American route.
Before he left the White House, Trump bolstered the Buy American policy by increasing domestic content requirements for “American-made” items.
Before the threshold stood at 50% for manufactured items and iron and steel. Trump made it 55 percent for manufactured goods and 95 percent for iron and steel.
Earlier January, Biden offered the latest version of directing taxpayer-funded projects to provide a boost to American manufacturing. This time, he wants a more domestic role in his “Build Back Better” program.
However, his Buy American initiative won’t help much in meeting the overall goal of creating 5 million new jobs by 2024.
Buy American Can’t Add Jobs
There are two reasons. The first is that the majority of government purchases already deal with products made in the USA. The second deals with employment.
US factory jobs at the start of 2021 numbered 12.2 million. At its zenith, employment in the sector never exceeded 17 million since 2001. Therefore, pushing for 5 million jobs by 2024 is a bit too much to handle.
Economists from the Peterson Institute for International Economics say that asking the government to buy local doesn't really add jobs.
In fact, pursuing this policy can limit growth instead. This is because they funnel resources away from the private sector into government spending.
In particular, the Peterson Institute estimated that the annual cost to taxpayers for every Buy American job costs over $250,000 due to higher prices
Progressives like Wisconsin Senator Tammy Baldwin (D) disagree with the Peterson Institute. He said it makes sense that government agencies prefer American-made goods.
“I strongly believe when we are expending U.S. taxpayer dollars, we should not be sending those overseas to support foreign companies and foreign workers, companies that don't pay any U.S. taxes,” Baldwin said. “We should be investing in the American workforce and American-made products,” she added.
For example, the acute shortage of personal protective equipment during the initial outbreak last year showed how Buy American can work.
Instead of getting locals to supply the critical items during the initial weeks of the pandemic, the US had to import. “I saw one Wisconsin police department bidding against the same county’s sheriff's department bidding against the rural hospital down the road, all trying to get a hold of necessary PPE and testing swabs and reagents,” Baldwin said. “I saw the chaos that exists when we don't have strong policies or that we can manufacture what we need.”
Crackdown on Exemptions
In his executive order, Biden emphasized the need to crack down on exemptions that allow federal agencies to buy non-American goods.
He described them as “corporate loopholes” rather than a cost-saving measure. “If an agency wants to issue a waiver to say, ‘We’re not going to buy an American product as part of this project; we’re going to buy a foreign product,’ they have to come to the White House and explain it to us,” Biden said.
To address that gaping hole, Biden appointed Celeste Drake, a trade policy specialist who worked for the AFL-CIO labor federation. Drake will sport a new title:
Made in America director, which is part of the White House’s Office of Management and Budget. Drake will closely scrutinize whether applications for waivers and recommend their approval or rejection.
Government Already Buys American
How much more should the government buy? According to the US Chamber of Commerce, local goods already account for 97% of the $2.35 trillion spendings by the government between 2015 to 2020.
In addition, foreign firms won less than 1% of around 85 million contracts signed by the government during the same period. In particular, almost all of that was Defense department contracts that US affiliates of British or European companies managed to win.
Watch Fox News’ Martha MacCallum weighing in on what Biden's promises are really doing to America:
Is Buy American important to you? What do you think of Biden’s Buy American policies? Are they just a paper tiger, or will they help boost American businesses? Let us know what you think by sharing your comments below.