Are “Buy American” provisions in the federal stimulus package a good idea?

By PBN Staff
Posted 5/4/09

The federal government last month issued rules to implement the so-called Buy American provision in the $787 billion economic stimulus package that President Barack Obama signed in February.

The rules “instruct certain state and local governments to purchase goods and materials from a group of countries that excludes Canada,” according to Bloomberg News.

Trade representatives from other nations and some multinational companies have cried foul, saying the provision goes against the U.S.’s free trade obligations. But supporters say it is only right that a huge outlay of taxpayer money meant to prop up the American economy goes directly to U.S. firms.

What is your view?

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The Buy America Act, further refined by the Berry Amendment was created not as a mechanism to support American businesses. The objective of the Act was to maintain a "warm industrial base" in the event of another World War. The leaders at the time envisioned a global economy, but also recognized the pitfalls of materiel procurement should a 'friendly' country turn into an 'unfriendly' one. I feel it is important to look at the concept under this light, rather than in one that simply suggests America's businesses need help. Moreover, we can point ot example after example of how European governments were cut-off from their chain of supply when givernments changed hands.

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