Will Obama Keep His "Buy America" Promise?

Back in August, presidential candidate Barack Obama made his commitment to the concept behind "Buy America" legislation very clear in a series of campaign statements and ads [1] lambasting John McCain for opposing such pragmatic laws. Obama even distributed campaign stickers and flyers [2] with a special emblem (at right) declaring his support. It was part of Obama's decidedly progressive and populist campaign platform on trade and economics that many of us (me included) loudly applauded - and it was smart politics and good policy.

As Businessweek reported in its cover story a few weeks back [3], taxpayers lose a major bang for their buck when our money is allowed to be spent on products and commodities made overseas. Thus, the least we can do is make sure that when taxpayer money is spent, that it gets spent to create jobs here at home. That's basic commonsense that domestic business and labor be able to agree on. It's an issue, in fact, that even many progressive Democrats and Republicans agree on (note that archconservative Republican Rep. Duncan Hunter [4] was a big supporter of "Buy America" laws).

Cut to today. Both the House and Senate, following the campaign promise of Obama, inserted the most basic "Buy America" provisions into their drafts of the economic stimulus package. As the nonpartisan watchdog group Public Citizen reports, these provisions, requiring that U.S. steel and iron be used for federal and state transportation infrastructure projects, "simply extends existing law (the 1982 Buy America Act)" and is therefore explicitly exempt from any corporate-written trade rules that seek to limit such policies.

These provisions are critical, especially because they include language making sure they don't inadvertently undermine taxpayers interests. For example, the president is allowed to waive the Buy America provisions if applying the preference would be "inconsistent with the public interest," if iron and steel are not produced in the United States "in sufficient and reasonably available quantities and of a satisfactory quality," or if inclusion of iron and steel produced in the United States will increase the cost of the overall project by more than 25 percent.

OK - so to review: Obama campaigned on the Buy America concept, Congress followed his lead and legislated them into the stimulus bill but made sure to give him enough flexibility to waive them if they ever endanger taxpayers. So has the Obama administration been cheering and applauding - thanking Congress for helping them fulfill a campaign promise? Um, not exactly.

Since the provisions passed, business front groups - representing multinational corporations yet fraudulently putting the terms "American" and "U.S." in their names - have launched a major lobbying offensive to gut them [5]. For example, the U.S. Chamber of Commerce and the Emergency Committee for American Trade in Washington are demanding Obama use his leverage to get Congress to eliminate the Buy America provisions.

The groups are getting help from individual companies like Caterpillar and General Electric (not surprisingly, two of the biggest job outsourcers) as well as the usual cast of Washington's corporate-funded think tanks and private equity firms like the Carlyle Group [6] who make the hysterical claim that ensuring American tax dollars are spent in America will somehow initiate a global "trade war." [7] They also throw out the canard that these provisions are somehow like the Smoot-Hawley tariffs that conservatives blame the Great Depression on - somehow omitting that the original Buy American laws were passed in 1933 (well after Smoot-Hawley) and one of the New Deal policies that got us out of the Depression. The screeching has gotten so loud, that for the first time since I can ever remember, the Washington Post [8] (whose editorial board has been one of the most strident voices for free trade fundamentalism in American politics) put a story on page A1 about trade/industrial policy.

But for all the claims of concern about the domestic economy and regular workers, the corporations lobbying against Buy America are acting to defend their own business models that rely on economic policies that effectively incentivize corporations to ship jobs overseas, where they can crush unions, destroy the environment, enslave workers - and therefore lower their bottom line. Buy America laws that reward domestic businesses for staying in this country are a mortal threat to the multinational corporate lobby.

Indeed, what this is about is making sure taxpayer money keeps flowing to corporations that have no loyalty to the United States. Whether its multinational banks getting bailout money or multinational manufacturers getting Export-Import Bank grants to ship jobs overseas [9], K Street has done a fantastic job of making sure that you and I - the average taxpayer - keeps having to subsidize our own pink slips. And now K Street is making its first campaign of 2009 a campaign to convince Obama to drop his campaign promises and use his power to ensure that our taxpayer money keeps funding our own economic demise - even if it means, as Businessweek suggested, severely weakening the positive effects of the stimulus package.

The Obama administration has responded with a very tepid reaction. Instead of Obama saying, "Damn straight, we're going to make sure stimulus money gets spent in America," the best we've gotten is Vice President Joe Biden [10] telling CNBC, "I don't view [the Buy America provisions] as some of the pure free traders view it, as a harbinger of protectionism." That's at least a start - but from Biden's boss, the president, we haven't even gotten that.

Here's Bloomberg News [11]:

President Barack Obama’s administration will examine a “buy American” requirement in economic stimulus legislation that has raised concern among U.S. trading partners, White House press secretary Robert Gibbs said.

The administration “will review that particular provision,” Gibbs said today at his regular briefing. The president’s advisers understand “all of the concerns that have been heard, not only in this room, but in newspapers produced both up north and down south.”

He refused to say whether the administration supported or opposed keeping that part of the legislation intact. Nor did he say what the president would do if the provision remains once the bill clears the House and the Senate.

Forgive me for being not encouraged by this pledge to "review" provisions that Obama campaigned on, but c'mon - this is, well, not encouraging.

Obama's first use of presidential power was a veto threat [12] to make sure taxpayer cash keeps flowing to multinational banks and financial houses. He's negotiating with Republicans [13] over adding new corporate tax cuts to the stimulus bill. Now, as a corporate lobbying campaign ramps up, he's signaling a willingness to "review" the most basic provisions making sure American taxpayer dollars benefit American taxpayers.

At what point will he draw the line? At what point will he answer that historic question that labor always asks: Which side are you on? At what point will he firmly and proudly say "no" to the demands of moneyed interests in Washington? Is it too much to ask him to stand up and publicly defend the most basic, minimal and commonsensical form of economic patriotism that would make sure the stimulus package gets the most bang for the buck?

Democrats just ran a 2006 [14] and 2008 [15] campaign promising to come to Washington to reform our trade and economic policies to make sure they start working for regular people. This fight over Buy America is the beginning of that battle - and if at the very beginning the head of the Democratic Party joins the economic Benedict Arnolds who have sold our country out, it could rip apart the party the same way Bill Clinton tore apart the party with his early push for NAFTA (anyone remember the '94 election?). More important, it could undermine the effectiveness of the stimulus and tell voters Democrats really were never serious about their most minimal economic pledges.

Let me conclude by saying I hold out hope that Obama will make the right decision and support Buy America provisions - and we should withhold our judgment until the president makes his judgment. But the fact that there's even a hesitation once again reiterates what I said in my newspaper column today [16]. Like FDR in the 1930s, we may today have president who says he agrees with us, but passing even the most minimal policies like Buy America will require us to make him do it.