The Atlanta Journal-Constitution
President’s ‘Buy America’ plan running into hurdles
Bill requires U.S.made materials, though some are only made overseas.
The “Buy America” initiative that President Joe Biden says will promote domestic manufacturing and fuel a blue-collar renaissance is running into a problem: The U.S. no longer produces many of the items needed to modernize roads, bridges and ports.
The $1 trillion infrastructure legislation that the president signed in late 2021, however, insists that U.S. materials be used.
This awkward dynamic spilled into public view this month, when the U.S. Department of Transportation denied a request by the nation’s ports to use federal infrastructure funds to purchase imported dock cranes, trucks, boat lifts and similar equipment, after industry officials argued that no domestic manufacturers exist for them. In particular, while some smaller cargo-handling units are made in the U.S., all of the electric models that support the administration’s climate goals are made overseas, according to the American Association of Port Authorities.
The infrastructure legislation includes broader requirements for the use of American-made construction materials, including copper, drywall and fiber-optic cables, in federally funded projects. The administration this month issued new guidance for determining whether substances and manufactured products used on such projects qualify as “made-in-the-USA” and solicited public comments about numerous specifics.
With the approach of the spring construction season, Biden’s push to boost domestic production is clashing with the reality that some materials are not available from U.S. sources in the amount or time required, according to groups representing the agencies that manage projects and the industries that build them.
“They’re trying to spur industry,” said Jim McDonnell, director of engineering for the American Association of State Highway and Transportation Officials. “But it seems they’re trying to push out too much, too quickly.”
Among the looming headaches: State and local transportation officials fear they will be unable to obtain adequate supplies of the reflective glass beads used to make safety striping for highway pavement. And materials for high-speed rail systems are almost entirely made in Japan or Europe, according to the summary of meetings last year between top DOT officials and industry representatives.
Two senior administration officials, who spoke on the condition of anonymity, said officials intend to grant waivers of the Buy America rules in some cases and to continue a dialogue with industry groups aimed at resolving specific issues as they arise.
The most ambitious domestic preference effort ever mounted, Biden’s program is part of a broader administration campaign he highlighted in the State of the Union address.
What the president billed as “a blue-collar blueprint to rebuild America and make a real difference in your lives at home” is aimed at working-class voters who have abandoned the Democratic Party as their economic fortunes have been upended by globalization.
Government preferences for domestic goods enjoy wide support from politicians in both parties, despite evidence that such measures often mean added costs and project delays. The administration’s determination to increase domestic production now is colliding with the industrial legacy of decades of trade liberalization, which facilitated the relocation of factories to lower-cost locales.
The consequences of more than three decades of offshoring can be seen in U.S. government statistics. Outside of the computer industry, inflation-adjusted manufacturing output has essentially flatlined since 2007, according to the Bureau of Economic Analysis.
U.S. companies bought $1.2 trillion more in manufactured goods than they sold to foreign customers last year, according to an analysis by economist Rob Scott, a research associate at the Economic Policy Institute.
By itself, boosting government purchases of domestic items is unlikely to reshape the $25 trillion U.S. economy, Scott said.
“To be honest, the effects are going to be at best marginal,” he said. “Government — you think it’s big. But it’s really a small percentage of the overall total. The question is: How do you move the dial on private sector purchases?”
The administration’s economic policies, including the Buy America push, are spurring domestic investment.
In August, Corning announced plans to build a new facility in Gilbert, Ariz., to manufacture optical cable, designed to capitalize on the administration’s plans to spend $45 billion of infrastructure cash on broadband internet networks. Corning said it expects to employ about 250 workers at the new site, which is scheduled to open next year.
Some supporters of the domestic content push, seeing this as evidence that the policies are working, have little patience for industry warnings of looming cost increases and project delays.
“A lot of the complaints about this from state and local officials and contractors — they act way too much like helpless children,” said Scott Paul, president of the Alliance for American Manufacturing, a nonprofit organization backed by the steel industry and steelworkers’ union.
Still, Buy America requirements often have delayed transportation projects, according to a 2019 Congressional Research Service report.
In 2011, transit officials in New York purchased a water mist fire suppression system from Finland for two stations on Manhattan’s Second Avenue Subway, believing that it was permitted as a part of the overall system. A U.S. company challenged that interpretation in 2013, sparking an investigation that began the next year and resulted in a 2015 federal ruling that transit officials had erred.
The fire suppression system — not the subway station — was the “end product” that under federal regulations had to be made in the U.S. Four years after the original fire suppression contract, New York subway officials had to start over.
Though many economists disparage Buy America laws as inefficient, their overall economic impact is “small” and generally swamped by global forces, CRS concluded.
Government efforts to favor domestic producers typically save a limited number of jobs in protected industries, although they do nothing to increase the economy’s total number of jobs. But each position costs taxpayers more than $250,000 to preserve, according to a 2020 study by economists Gary Hufbauer and Euijin Jung of the Peterson Institute for International Economics.
“It’s economic nonsense, though it may be politically wonderful,” Hufbauer said.
The Biden administration believes such arguments ignore the lessons of the pandemic, when a dependence on global supply chains repeatedly left Americans short of goods ranging from toilet paper to medicines.
Promoting greater domestic production will make supply chains for critical goods such as personal protective equipment, semiconductors and clean energy products less vulnerable to interruption, officials said. And contrary to industry warnings of higher costs, they insist that the development of new domestic supply links will bring costs down through additional competition.