In addition, employment in US factories stood at 12.2 million workers when Biden took office – and has not exceeded 17 million since the start of 2001 – thus boosting employment by 40% in the manufacturing sector, let alone any sector, is aggressive.
Many economists, including those at the Peterson Institute for International Economics, argue that purchasing policies in the United States do not add jobs to the economy and in fact limit growth. This is because they redirect resources from the private sector to government spending. The Peterson Institute has also estimated that the annual cost to taxpayers for each job protected by the Buy American provisions is over $ 250,000 because of the higher prices paid for the goods.
Progressives, such as Sen. Tammy Baldwin (D-Wis.), Disagree and say it makes sense for government agencies to give preference to products made in the United States.
“I firmly believe that when we spend US tax dollars, we shouldn’t send it overseas to support foreign companies and foreign workers, companies that pay no US taxes,” Baldwin said. “We should invest in the American workforce and in products made in the United States.”
The severe shortage of personal protective equipment and other medical items in the early days of the pandemic year also highlighted the need to use the power of the federal wallet to encourage greater production of these products. in the United States, she said.
“I saw a Wisconsin police department bid against the same county sheriff’s department against the rural hospital down the road, all trying to get their hands on the necessary PPE and test the swabs and reagents, ”Baldwin said. “I have seen the chaos that exists when we don’t have strong policies or when we can manufacture what we need.”
One of the main purposes of an executive order signed by Biden on Jan. 25 was to crack down on the number of exemptions that federal agencies grant suppliers from the obligation to purchase American products, which he described as “loopholes” for businesses rather than a reduction in costs. measured.
“If an agency wants to issue a waiver to say, ‘We’re not going to buy an American product under 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.
He took a big step this week towards implementing this stricter approach by appointing Celeste Drake, a trade policy specialist who honed her skills while working for the trade union federation AFL-CIO, to a new post as he created: director of Made in America. The position will be part of the White House Office of Management and Budget.
Trade union groups welcomed this choice. AFL-CIO President Richard Trumka called her a “brilliant and critical thinker on trade and global issues” and the “perfect person” for the job. Drake, a veteran of many Congressional trade battles against the business sector, will be empowered to closely consider whether any proposed waivers need to be approved.
But there may not be a lot of slack in the system. The United States Chamber of Commerce and other business groups estimate that products made in the United States already accounted for nearly 97% of a $ 2.35 trillion value of government spending from 2015 to 2020.
In addition, less than 1% of the 85 million contracts signed during this period went to foreign companies, and almost all were Department of Defense contracts that went to US subsidiaries of UK or European companies, have the trade groups said in a statement. letter last year to Trump administration officials.
Congress first passed the Buy American Act of 1933 when the United States was in the depths of the Great Depression. Over the years, Congress has also imposed what it called the “Buy America” home purchase requirements on federal funding to state and local governments for transportation and water projects. These include projects funded by the Federal Highway Administration, Federal Railroad Administration, Federal Aviation Administration, Federal Transit Administration, and certain offices within the Environmental Protection Agency.
Shortly before stepping down, the Trump administration toughened the domestic content requirement for an item to be considered “made in the United States.” The threshold is now 55 percent for manufactured goods and 95 percent for iron and steel, up from 50 percent previously for all items.
To give American manufacturers even more advantage, Trump also increased the amount government agencies could pay for domestic products compared to products made abroad.
Theoretically, the Biden administration could roll back what the Trump administration did, but “I think they see that as a floor rather than a ceiling,” said Scott Paul, president of the Alliance for American Manufacturing. , a metalworkers union and a manufacturing group. coalition that is a strong supporter of the Buy American demands.
Tightening domestic content provisions would give high-grade American automobiles a big advantage, as Biden seeks to replace the government’s current fleet of around 645,000 cars and trucks with electric vehicles as part of its infrastructure package.
Most of the billions of dollars spent on roads, bridges and “soft” infrastructure like child care will need to be authorized by Congress. While Buy American has deep-rooted patriotic goals of supporting more jobs, the ability of lawmakers to control private business supply chains is limited.
The business community also argues that federal government purchases alone are not large enough to persuade manufacturers to relocate supply chains.
U.S. generics manufacturers, for example, say other incentives such as long-term price and volume contracts, construction subsidies, and tax credits or deductions would do more to encourage investors to invest billions of dollars in building new factories and new equipment.
Other experts such as Rosemary Coates, executive director of the Reshoring Institute, a manufacturing policy think tank, believe that Buy American policies can have a strong influence on the decisions of companies to move manufacturing to the United States, by especially in combination with private sector initiatives. She underscored Walmart’s promise to invest an additional $ 350 billion over the next 10 years “in items made, grown or assembled in the United States.”
The retail giant estimates that its program will support more than 750,000 new American jobs. It focuses on six priority categories: plastics, textiles, small electrical appliances, food processing, pharmaceutical and medical supplies and “goods not for resale”, which refer to items such as fixtures store, equipment, building materials and housekeeping supplies.
“This is a really important initiative. Walmart and the US government are both going to drive a lot more development in manufacturing I think in the future, ”Coates said.