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U.S. Corporations Against Buying American

Published 01/28/09 Dustin Ensinger and Alexia Cameron - Print Article
E-mail - editor@economyincisis.org

Two of America’s largest and most successful companies are facilitating in the demise of America's manufacturing base. General Electric Co. and Caterpillar Inc. are imploring President Barack Obama and Congressional Democrats to drop a “buy American” provision included in the $850 billion stimulus package, according to Bloomberg News.

Backed by both the U.S. Chamber of Commerce and the Emergency Committee for American Trade, GE and Caterpillar are claiming that forcing companies that participate in the stimulus plan to buy American-made products could spark a trade war.   

What they fail to realize, however, is that America is already in a trade war - and losing badly.

   

“Free trade” has only served to allow the nation’s trade deficit to explode to uncontrollable levels, killed jobs, armed economic rivals with the means to buy up American assets and businesses and allowed our shores to be invaded with toxic products from Third World nations. 

 

The U.S. Chamber of Commerce, the Emergency Committee for American Trade in Washington and other businesses wrote a letter to House Speaker Nancy Pelosi in opposition of the “buy American provision. The group claims that a “buy American” clause would undermine American economic leadership by violating a pledge the U.S. and other governments made made in November, which vowed not to enact any new trade barriers for the next year..   

Thankfully lawmakers do not seem to be listening.  On Thursday, the House Appropriations Committee added a clause to the package that will not allow any stimulus funds to be used “unless all of the iron and steel used in the project are produced in the United States.”  

In addition, lawmakers are also considering allowing certain purchases to come from countries that have signed the World Trade Organization’s government procurement agreement.  They say the provision would effectively ban the purchase of products from both China and India while still being in compliance with WTO rules.   

The procurement agreement was signed by 27 developed nations on January 1, 1996 and one of the provisions states that the agreement was implemented to duly take into account the development, financial and trade needs of developing countries to promote the development of domestic industries in rural or backward areas. The provision states that “each Party shall facilitate increased imports from developing countries at low stages of economic development.

The “buy American” clause should facilitate the growth of the American economy which does not mean importing products from other countries. While the provision may ban the purchase of products from China and India, other countries such as France and the United Kingdom are not prohibited from purchasing products from developing nations, marking them up and filtering them off to us as part of the “buy American” clause. In which case the purpose of such a clause would be completely null.

Aside from publicly crying “trade war,” the real reason GE and Caterpillar do not support the “buy American” provision is the fact that both are multinational corporations that exploit the cheap labor markets of the Third World.  Half of all of GE’s sales come from outside the U.S. while Caterpillar generates 60 percent of its revenue in other nations. 

"I don't want to see these stimulus dollars being spent buying electronic equipment made in China," Sen. Sherrod Brown (D-OH) said.   

Indeed, any stimulus plan without a “buy American” provision is defeating the purpose of a “stimulus plan” as well as being an exercise in futility.   

“If American tax dollars are going to be invested, it seems only rational that American products would be favored,” said Terrence Straub, vice president for government relations at U.S. Steel. “The whole intention is to stimulate the creation of American jobs.”  

 

Our “free trade” policies have turned our corporations against us. They are merely concerned with reaping their own profits, at the expense of American citizens. The U.S. is in dire straits and industries need to band together to propel this nation forward. We cannot allow our stimulus money to be siphoned into foreign economies, when our economy is reeling.

What is worse is that the U.S. Chamber of Commerce, the world's largest not-for-profit business federation, is defending these corporations, aiding and abetting this race to the bottom. The Chamber of Commerce was established to represent the unified interests of U.S. businesses. However, the organization uses its highly influential lobbyists to sway votes in Congress, pushing its agenda of unfettered “free trade.”

Front Page Photo by: johnpwatts – Google Images some rights reserved

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Article Comments From Readers

gspencer says "Buy American" on 01/30/09
What if the US government prints up a bunch of new paper money and other similar paper securities to pay people to re-build and expand the US infrastructure (Pork Barrel Projects) in order to reduce unemployment, and it is all then spent on illegal aliens, imported earth-moving machinery, imported materials (Steel, equipment, Pipe & Wire), outsourced engineering, outsourced CAD drafting, immigrant labor, etc., and the US workers are still unemployed? Any Economic Stimulus Spending also needs to prohibit any imported products (even if we no longer manufacture those products) from being purchased with these funds, and also prohibit all outsourcing of the Labor Required.

The federal government bailout money has so far gone to pay for the golden parachutes, new jet airplanes and bonuses to these same highly paid incompetent executives who caused these criminal problems. These incompetent, arrogant, stupid, and selfish executives took so much money from the financial markets that they caused the systems to fail. The lowly paid US citizens is paying his hard earned taxes to them to continue their bad business policies that caused this crisis? Should taxpayer money pay off the bank loans that occurred when these financial geniuses borrowed money to pay stock dividends, in order to artificially drive up the stock prices, which personally enriched themselves through their stock option plans? How can we get rid of these financial geniuses that caused these problems without costing the taxpayer any more of his/her hard-earned tax money?

How can we ever re-start our industries (re-industrialize) to generate a positive balance of trade that will restore our economy? Most of the people who knew how to operate the US basic industry and factories were fired 30 years ago and are now long dead. There are no books that completely tell how to do most of the things that we knew how to do years ago when we created the industries that won WWII and gave us our bountiful way of life. We need science-oriented citizens to create products and services that we can exchange for foreign currency and foreign gold. According to the National Science Foundation and the National Society of Professional Engineers, only about 5% of the current college students in the USA are getting a degree in science, medicine, mathematics or engineering are US citizens. In the Asia the majority of the college students are majoring in science or engineering. I am worried about the future of my college age children, and all of the other children in the USA.

Only a positive balance of trade will restore the value of the dollar, and we must accomplish this by any means possible, or accept third world poverty on a large scale basis. Riots and insurrection are predictable, ala the French Revolution, when the people find their situations economically hopeless.

guest says "The stimulus & imperialism" on 01/29/09
Have we forgotten about U.S. imperialism and the global economy when we discuss trade deficits and the stimulus package?

guest says "US CORPORATION" on 01/29/09
THIS US CHAMBER OF COMMERCE IS A TRAITOR TO THE AMERICAN PEOPLE AND NEED TO BE CLOSED DOWN OR AT LEAST THE PEOPLE IN CHARGE SHOULD BE TRIED FOR TREASON,HOW DISGUSTING THESE A--HOLES ARE,THEY CLAIM THERE HELPING THE AMERICAN WORKERS, AND THEY ARE-RIGHT OUT OF A JOB, SCREW YOU AND DONT TELL ME ANY MORE OF YOUR CRAP

guest says "No h1b or l1" on 01/29/09
“The stimulus package should also have a provision to only help American and legal residents

And not those under the temporary working visas like h1b and l1.”

biguru says "The Big Fix" on 01/28/09
Somehow, my comment got in to the wrong post. Please delete the other one.

The Big Fix

There is an article on the subject by David Leonhart in New York Times that has a lot of good information. Some excerpts and comments are:

Growth is the only way for a government to pay off its debts in a relatively quick and painless fashion, allowing tax revenues to increase without tax rates having to rise...The rapid economic growth of the 1950s and ’60s — more than 4 percent a year, compared with 2.5 percent in this decade — quickly whittled that debt away.

Growth would not come from just importing products and services. If one wishes to grow at 4 percent, then one must produce (not import) and sell high value real products, not just raise the price of stuff.

Yet there are real concerns that the United States’ economy won’t grow enough to pay off its debts easily and ensure rising living standards, as happened in the postwar decades. The fraternity of growth experts in the economics profession predicts that the economy, on its current path, will grow more slowly in the next couple of decades than over the past couple. They are concerned in part because two of the economy’s most powerful recent engines have been exposed as a mirage: the explosion in consumer debt and spending, which lifted short-term growth at the expense of future growth, and the great Wall Street boom, which depended partly on activities that had very little real value.

Even short term growth was due to our massive imports. Our economy can grow because not everything has been invented. Growth is not finite as long as the Milky Way Galaxy is still out there.

Richard Freeman, a Harvard economist, argues that our bubble economy had something in common with the old Soviet economy. The Soviet Union’s growth was artificially raised by massive industrial output that ended up having little use. Ours was artificially raised by mortgage-backed securities, collateralized debt obligations and even the occasional Ponzi scheme.

At least the Soviets produced stuff, we just import them. The Soviets produced low quality stuff and could not market them overseas. We can not export much either.

So for the first time in more than 70 years, the epicenter of the American economy can be placed outside of California or New York or the industrial Midwest. It can be placed in Washington.

So, Washington is going to build your Wash-machine. Good Luck.

In the early 1980s, an economist named Mancur Olson developed a theory that could fairly be called the academic version of Rahm’s Doctrine...His seminal work, “The Rise and Decline of Nations,” helped explain how stable, affluent societies tend to get in trouble.

In Olson’s telling, successful countries give rise to interest groups that accumulate more and more influence over time. Eventually, the groups become powerful enough to win government favors, in the form of new laws or friendly regulators. These favors allow the groups to benefit at the expense of everyone else; not only do they end up with a larger piece of the economy’s pie, but they do so in a way that keeps the pie from growing as much as it otherwise would. Trade barriers and tariffs are the classic example.

The conclusion in the last sentence is wrong. These interest groups such as General Electric and Caterpillar make sure the free trade remains paramount and import continues unabated at the expense of the very soceity that are their customers. One would think that these large corporations will sitdown with the federal government and say, we want you to limit our import to less than what we export and here is how to do it. Let us select specific items that all producers agree so that no one can take advantage of the other. That way, if Company A can not import a specific product but must produce at home, Company B will not be allowed to import either. This is the only way. Everything else is a mirage.

Why it is so difficult to understand?

guest says "Buy American" on 01/28/09
Every one that is reading this ( also ask your friends) to email and post to your congress representative to Buy American. Without that forget any recovery.

You have a choice, do nothing and watch the great depression which can only change after 3 years when everybody realizes that is what is needed, or take this step now and prevent further slide in economy.

This single act can save lives. The explanation is self evident.