Let's Talk About Buy America
It's that time of year again. House Democrats convened a press conference last week introducing legislation to expand the "Buy America" requirements for infrastructure investments. In short, the lawmakers want to boost the American raw materials and manufactured components that are required to go into major road, bridge, and transit projects.
The legislation has no Republican support and is unlikely to go anywhere, but it's worth looking at the summary of the proposal to see where Democrats think the current system falls short. In addition, the Transportation Department's overview of the law gives us a textbook example of balancing competing needs--protecting the country's dwindling manufacturing capacity without making it impossible for the private sector to invest in big projects. Legislate, but do no harm.
The Transportation Secretary now has the authority to waive Buy America provisions for almost any reason--if it's against the public interest, the raw materials aren't available, or the materials are simply too expensive. Democrats want to make it harder for him to do so, and they want the Federal Highway Administration to review whether old waivers are still warranted.
The Democratic Buy America proposal also would gradually increase the requisite American-made percentage of transit-related components from its current 60 percent level to 100 percent. And why not? The original numbers in current law are simply a product of legislative haggling.
This is not a new debate in Washington, but it's worth exploring the origin of the law. What is the purpose of Buy America? Is it necessary? How does it affect private-sector investments in infrastructure? How does it affect employment in the transportation industry? In its current form, is it doing what it was intended to do? Would it be more or less effective with the changes suggested by House Democrats?

March 19, 2013 12:37 PM
Buying American is So American
By Ed Wytkind
President, Transportation Trades Department, AFL-CIO
What’s so complicated about spending American taxpayer dollars to put Americans to work? That’s the motivation behind our endorsement of policies that condition America’s investment in new streetcars, buses and rail cars on making those products here in America.
Seriously, is there a poll that says we should spend the hard-earned tax dollars of Americans to create a pipeline of transportation manufacturing jobs offshore? Of course there isn’t. But there are plenty of politicians and foreign lobbyists who do a nice job bottling up legislation to beef up our Buy America policies.
We are at a crucial moment in time. We know from the report card issued today by the American Society of Civil Engineers that our nation’s transportation system gets a grade of D+. That means – even if we have to drag many politicians kicking and screaming – that we need to shovel hundreds of billions of dollars into our transit and rail systems, airports and air traffic control, roads and bridges, and our ports and navigation channels.
How ...
What’s so complicated about spending American taxpayer dollars to put Americans to work? That’s the motivation behind our endorsement of policies that condition America’s investment in new streetcars, buses and rail cars on making those products here in America.
Seriously, is there a poll that says we should spend the hard-earned tax dollars of Americans to create a pipeline of transportation manufacturing jobs offshore? Of course there isn’t. But there are plenty of politicians and foreign lobbyists who do a nice job bottling up legislation to beef up our Buy America policies.
We are at a crucial moment in time. We know from the report card issued today by the American Society of Civil Engineers that our nation’s transportation system gets a grade of D+. That means – even if we have to drag many politicians kicking and screaming – that we need to shovel hundreds of billions of dollars into our transit and rail systems, airports and air traffic control, roads and bridges, and our ports and navigation channels.
How does all this connect back to Buy America policies? Well, we have reached a “duh” moment. As we invest billions to fix and upgrade our transportation system we will also be replacing rail cars and buses, some of which were built when getting a man on the moon was still a dream. We either buy replacement equipment made by Americans employed in middle-class jobs, or we don’t. The choice is that simple.
That’s why we’ve endorsed the Invest in American Jobs bill, introduced earlier this month by Rep. Nick Rahall (D-W.Va.). Its goal is pretty simple: to make this the generation that offers the most modern transportation system in the world using the most modern equipment manufactured here in America. China’s long-term plan to compete in the global economy doesn’t contemplate putting Americans to work – it contemplates dominating markets and putting the Chinese people to work. We might want to stop using their playbook.
The Buy America requirements currently in place are fraught with loopholes and low thresholds for the percentage of materials manufactured in the U.S. used in federally funded transportation projects. Yes, you’ll be shocked to learn that our Buy America laws have loopholes through which lawyers drive routinely on behalf of their clients. The Rahall bill tries to shut the door on those loopholes.
For instance, under current standards, manufacturers of buses and rail cars funded by federal dollars can get the Buy America stamp of approval with as little as 36 percent of the vehicle’s cost coming from components manufactured in the U.S. While under current Buy America rules, the actual requirement for American-made components in rolling stock is 60 percent of the vehicle’s total cost, each of those “American-made” components can comprise up to 40 percent of its cost in foreign-made parts and materials. Am I claiming that foreign interests game our Buy America rules? You bet, and the Rahall bill would end this charade.
The next time you are around an elected official tell him or her that reforming our transportation Buy America rules is so American.
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March 15, 2013 1:55 PM
Spending US tax dollars here makes cents
By Rob McCulloch
Senior Policy and Legislative Advocate, BlueGreen Alliance
On July 1, 2009 United Streetcar — an American company based in Oregon — unveiled the first streetcar to be manufactured in America in almost 60 years. The streetcar, intended for Portland’s transit fleet, was built locally with materials supplied by businesses reaching coast to coast. Portland's transit investment secured federal funding in part because they complied with Buy America statutes, provisions of federal infrastructure legislation first implemented by the Reagan administration to support American industries and return taxpayer dollars rightfully to the U.S. economy.
The nation’s economy benefits substantially from Buy America statutes, which have simultaneously saved and created manufacturing jobs as part of our nation’s ongoing economic recovery. A 2009 analysis conducted by the University of Massachusetts-Amherst estimated Buy America requirements in Recovery Act-funded projects increase the number of jobs created in the U.S. by as much as 33 percent compared to overseas procurement.
By supporting domestic production of...
On July 1, 2009 United Streetcar — an American company based in Oregon — unveiled the first streetcar to be manufactured in America in almost 60 years. The streetcar, intended for Portland’s transit fleet, was built locally with materials supplied by businesses reaching coast to coast. Portland's transit investment secured federal funding in part because they complied with Buy America statutes, provisions of federal infrastructure legislation first implemented by the Reagan administration to support American industries and return taxpayer dollars rightfully to the U.S. economy.
The nation’s economy benefits substantially from Buy America statutes, which have simultaneously saved and created manufacturing jobs as part of our nation’s ongoing economic recovery. A 2009 analysis conducted by the University of Massachusetts-Amherst estimated Buy America requirements in Recovery Act-funded projects increase the number of jobs created in the U.S. by as much as 33 percent compared to overseas procurement.
By supporting domestic production of steel, iron, and other manufactured goods, Buy America decreases the negative environmental impacts of long-distance transport and under-regulated manufacturing in foreign countries. For example, in a 2009 assessment of environmental regulations in the U.S. and Chinese steel industries, the Alliance for American Manufacturing found that the amount of carbon dioxide emissions per ton of steel produced are nearly double in China compared to the U.S. Buy America then also serves to ensure companies here making strides in sustainable production are not at a competitive disadvantage.
Creating U.S. jobs and ensuring quality, responsibly-produced materials are used in federally-funded projects can only serve to strengthen the nation’s economy. This principle is at the forefront of recently introduced legislation, Rep. Nick Rahall’s (WV) Invest in American Jobs Act, which would strengthen existing Buy America requirements for highway, bridge, public transit, rail, water, and aviation infrastructure investments. The national market for steel and manufactured products across these sectors is deep, and in many cases manufacturers state current levels of domestic content could be surpassed without issue.
The U.S. thrives because of its open economy, and the goal of Buy America is not to force unwilling market players to use domestic products. However, when it comes to American taxpayer dollars, it only makes sense to keep that money here at home supporting American businesses and workers, strengthening our own economy rather than adding to our trade deficit.
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