Over the past five decades, Americans have seen their wages shrivel and their community life be shredded by major corporations offshoring jobs from the United States to nations with lower wages like China, Mexico, and Vietnam. It is a hugely unpopular trend, regarded favorably by just 11 percent of voters in a 2017 poll.
Yet the unwillingness of successive Presidents—Democratic as well as Republican—to combat this torrent of job losses has led many Americans to question whose side the government is really on.
The refusal to enforce the Buy American Act had also continued under Presidents George W. Bush, Barack Obama, and Donald Trump. At present, nearly half of the production contracts of the federal government are open to competition from foreign bidders.
But now, President Joe Biden is signaling his intent to combat offshoring of jobs and revive U.S. manufacturing. In a recent executive action, Biden took a fundamental first step toward halting the exodus of jobs, by requiring U.S. firms with government contracts to perform their work in the United States. In effect, Biden is simply calling for restoring the enforcement of the Buy American Act forcefully implemented by President Franklin Delano Roosevelt in the 1930s, which requires federal agencies to procure domestic materials and products whenever possible.
The logic is impeccable: Why should U.S. citizens’ tax dollars be diverted to enriching the manufacturing base of other nations when Americans need jobs? The impulse behind this, recounts commentator Thom Hartmann, extends all the way back to Alexander Hamilton’s 1791 plan to encourage manufacturing in the United States.
But this reinstatement of the Buy American principle is so urgent because of the way the law has been hollowed out, starting under President Ronald Reagan. Reagan issued massive numbers of waivers permitting U.S. firms to produce outside the United States, completely defanging the law.
For example, President Bill Clinton, an ardent advocate of “free trade,” continued Reagan’s policy, and big federal contractors like IBM and Apple were permitted to relocate all of their computer production overseas to fulfill their deals with the government. Combined with Clinton’s North American Free Trade Agreement and the Normalization of Trade with China, Clinton’s pro-corporate policies contributed mightily to the drop in manufacturing from jobs plaguing the United States.
Essentially, the refusal to enforce the Buy American Act had also continued under Presidents George W. Bush, Barack Obama, and Donald Trump. At present, nearly half of the production contracts of the federal government are open to competition from foreign bidders.
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“In 2010, the most recent data available, the United States opened $837 billion in government contract competitions to foreign firms, more than twice the combined figure of the next five—the European Union, Japan, South Korea, Norway, and Canada,” according to a recent article in The Washington Post. “The United States that year allowed foreign companies to bid on about 48 percent of its $1.7 trillion government procurement market while the other five put out to bid just 16 percent of their combined $2.4 trillion market.”
Democratic senators like Wisconsin’s Tammy Baldwin and Ohio’s Sherrod Brown, both concerned with the future of the industrial Midwest, strongly praised Biden’s step. They contrasted Biden’s move with Donald Trump’s inaction on the issue. “It’s going to make a very significant difference, in my mind,” Baldwin said
Corporations, we can be certain, will loudly resist enforcing the law requiring U.S. production in order to get government contracts. An infuriated U.S. Chamber of Commerce defensively responded to Biden’s “Buy American” executive order. The Chamber declared, “Some have slammed the U.S. Chamber for opposing ‘Buy American’ provisions, calling our position ‘economic treason.’ Try economic patriotism. Such provisions would cost American jobs.”
The notion of reciprocal responsibility—you get our contracts if you produce here—has become an alien concept to the Chamber and most corporate CEOs and investors. After all, they have experienced a free hand in relocating production for decades in order to maximize short-term profits. Under this regime of unrestrained corporate power, the United States lost five million manufacturing jobs between 2000 and 2015.
Genuinely reviving U.S. manufacturing will require a far more comprehensive industrial policy that will impose some democratic constraints and a more vigorous government role in economic planning. Biden will need pressure from below to go further toward transforming the economy.
But as with the Buy American Act, the underlying principle of the need for an expanded government hand in steering the economy is the same: The U.S. economy should be an instrument for meeting our society’s collective needs, rather than serving as its master.