Top Republican: Scrap 'buy American' stimulus clause

[celeb_2006]

Top Republican: Scrap 'buy American' stimulus clause - Yahoo! News

WASHINGTON (AFP) – The US Senate should strip a "Buy American" clause from President Barack Obama's economic stimulus plan, the chamber's top Republican said Monday amid anger at the restriction from US allies.
"I don't think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy," said Senator Mitch McConnell.
Asked whether he would support trying to strip the measure from what is now roughly an 888-billion-dollar economic stimulus package, the Republican minority leader told reporters: "I think it's a bad idea to put it in a bill like this, which is supposed to be about jump starting the economy, yes."
The House of Representatives last week voted to require that public works projects funded by its 819-billion-dollar stimulus bill to use only US iron and steel. The Senate version extends that restriction to all manufactured goods.
McConnell's comments came as Canada Trade Minister Stockwell Day warned that US protectionism "can only trigger retaliatory action" as he urged Obama to fight the provision.
The Republican leader also urged Obama to lean on his Democratic allies in the US Congress to accept or at least accommodate Republican ideas for how best to pull the US economy out of a paralyzing recession.
"I hope he can get through to them that the way to build this package is, indeed, to do it on a bipartisan basis, which doesn't mean just talking to us, but including ideas that we think would work," said McConnell.
That would include plans for government-backed, four percent fixed mortgages to qualified homebuyers, and cutting the bottom two income tax bracket rates from 15 percent to 10 percent and from 10 percent to five percent, he said.
McConnell also denounced the amount of social safety net spending in the stimulus plan and indicated Republicans would like to see fewer zeros on the overall price tag.
"We've been throwing figures around like it was paper money," he said. "We all agree that we need to do something, but I don't think we should just completely act like the amount is irrelevant."
While Senate procedures give the minority Republicans powers to slow or stall legislation, McConnell made clear his party's goal is not to stymie passage of a bill that might revive the US economy.
"Nobody that I know of is trying to keep a package from passing. You know, we're not trying to prevent a package from passing. We're trying to reform it -- reformulate it -- put it in a different place," he said.

[Grimmlok]

Well gee, fancy that. 'Patriotic' Republicans, so quick to jump on anybody else for not lurvin 'Mmurica not wanting people to buy american.. LOL

Fascist hypocrites.

[cmmdee]

"We all agree that we need to do something, but I don't think we should just completely act like the amount is irrelevant."

I do agree with this. However, when you're opposing what is being presented and against it, for the love of the stars, please offer up a different plan instead of just saying Nooo to everything.

[Grimmlok]

but they don't have anything.. they want to continue the disastrous nonsense that got the US where it is now. They LIKE that.

[witchcurlgirl]

It should totally be scrapped.

It's damaging to trade, this is a global market, the US cannot afford a trade war. The response from Davos this week made it clear that this would be a disaster.

[Fluffy]

^Not necessarily. Out of work Americans don't have money to buy items from overseas. The goal of the stimulus is to get Americans and the American economy working again. Without those two working, cheap imports from China or any other country to the US don't mean jack because they're not going to sell.

February 1, 2009, 4:47 pm Protectionism and stimulus (wonkish)

Should we be upset about the buy-American provisions in the stimulus bill? Is there an economic case for such provisions? The answer is yes and yes. And I do think it’s important to be honest about the second yes.

The economic case against protectionism is that it distorts incentives: each country produces goods in which it has a comparative disadvantage, and consumes too little of imported goods. And under normal conditions that’s the end of the story.

But these are not normal conditions. We’re in the midst of a global slump, with governments everywhere having trouble coming up with an effective response.

And one part of the problem facing the world is that there are major policy externalities. My fiscal stimulus helps your economy, by increasing your exports — but you don’t share in my addition to government debt. As I explained a while back, this means that the bang per buck on stimulus for any one country is less than it is for the world as a whole.

And this in turn means that if macro policy isn’t coordinated internationally — and it isn’t — we’ll tend to end up with too little fiscal stimulus, everywhere.

Now ask, how would this change if each country adopted protectionist measures that “contained” the effects of fiscal expansion within its domestic economy? Then everyone would adopt a more expansionary policy — and the world would get closer to full employment than it would have otherwise. Yes, trade would be more distorted, which is a cost; but the distortion caused by a severely underemployed world economy would be reduced. And as the late James Tobin liked to say, it takes a lot of Harberger triangles to fill an Okun gap.

Let’s be clear: this isn’t an argument for beggaring thy neighbor, it’s an argument that protectionism can make the world as a whole better off. It’s a second-best argument — coordinated policy is the first-best answer. But it needs to be taken seriously.

What’s the counter-argument? Don’t say that any theory which has good things to say about protectionism must be wrong: that’s theology, not economics.

The right argument, I think, is in terms of political economy. Everything I’ve just said applies only when the world is stuck in a liquidity trap; that’s where we are now, but it won’t be the normal situation. And if we go all protectionist, that will shatter the hard-won achievements of 70 years of trade negotiations — and it might take decades to put Humpty-Dumpty back together again.

But there is a short-run case for protectionism — and that case will increase in force if we don’t have an effective economic recovery program.

Protectionism and stimulus (wonkish) - Paul Krugman Blog - NYTimes.com

[greysfang]

I'm pretty sure the "buy American" stipulation is targeting big business and not individuals, and quite frankly, I don't see any problem with requiring companies receiving bailout money to spend a specific percentage at home.

[witchcurlgirl]

EU attacks 'Buy American' clause



The EU has increased its pressure on the US to reconsider the "Buy American" clause in the $800bn (£567bn) economic recovery package now before Congress.

The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill.

A European Commission spokesman said it was the "worst possible signal" the Obama administration could send out.

The EU will launch a complaint with the World Trade Organisation (WTO) if the clause remains, the spokesman said.

The EU and Canadian ambassadors to Washington have already warned that the clause could promote protectionism and trigger retaliatory moves.

The rescue plan has already been approved by the US House of Representatives and is under discussion in the Senate this week.

Mixed trade signals
"There isn't a great deal of scope for doing much more but if America went ahead and did this we would have to take it up with the World Trade Organisation," the European Commission trade spokesman, Peter Power, told the BBC's Chris Mason in Brussels.

British Conservative Members of the European Parliament warned of the dangers of "a new economic iron curtain" being drawn across Europe.

The clause "sends a terrible protectionist signal to the rest of the world, and particularly the EU", said Syed Kamall, the Conservative international trade spokesman in the European Parliament.


The White House has said it is reviewing the Buy American part of the stimulus bill, although Vice-President Joe Biden said last week that it was legitimate to have some portion of it in the final measure.

Barack Obama's signals as a presidential candidate on the campaign trail last year that he could rip up the North American Free Trade Agreement were seen as a political gesture to win round the sceptical white working class vote, says the BBC's Jonathan Beale, in Washington.

Perhaps that has become more important with the economic crisis, but it leaves one wondering where the Obama administration really stands on free trade, our correspondent adds.

'Retaliatory risk'
EU Ambassador to Washington John Bruton said that, if passed, the measure could erode global leadership on free trade.

"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis."

Canada's ambassador to Washington warned Senate leaders that if Buy American was in the final legislation, it would set a negative precedent with global repercussions.

"The United States will lose the moral authority to pressure others not to introduce protectionist policies," Michael Wilson wrote in a letter to the senators.

Canada was hoping to be exempted from any Buy American measures, said International Trade Minister Stockwell Day.

"These protectionist measures, in a time of recession, only make things worse," he told broadcaster CBC.

"It can only trigger retaliatory action and we don't want to go there."

There is also opposition from some senior US Republicans who say the measure could start trade wars.

Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences.

The Democratic leader in the Senate, Harry Reid, has said he hopes the stimulus can be approved by the end of the week.

It is unlikely that the package will be able to pass the Senate without Republican support.

Meanwhile, Mr Obama is expected to name Republican Senator Judd Gregg as commerce secretary.

Mr Obama will hope that Mr Gregg's nomination can help secure approval for the stimulus package, our Washington correspondent says.

Mr Gregg would be the third Republican in Mr Obama's cabinet.
The president's first choice for the post, New Mexico Governor Bill Richardson, withdrew following questions about his links to big business.

BBC NEWS | Business | EU attacks 'Buy American' clause

[Grimmlok]

Yeah no offense but the US is already ridiculously protectionist and doesn't abide by trade treaties it signs anyway, look at the North American lumber dispute. They don't have any 'moral authority'

[Fluffy]

Japan and South Korea are far more "protectionist" than the US.