General Economics

Why ‘Buy America’ isn’t good for Americans

Doug Sachtleben - December 06th, 2016

Published in Conservative Review  12/6/16

By David McIntosh

Americans love competition. When it’s time to buy a product or service we want choices that induce competition.

And when the buyer is the federal government — using our tax dollars — we definitely want the most bang for the buck. Like our president-elect showed in his business when he famously had Trump neckties manufactured overseas, the goal is to deliver the best product at the cheapest price. That’s what taxpayers want; do the job right … do it efficiently … and don’t waste money paying more because some federal bureaucrat wants to steer our dollars to a favored business or to pay off a favor. That’s called cronyism.Cronyism takes on a whole host of forms in Washington. This week it may be tucked in a five billion bill called the Water Resources Development Act (WRDA), as Democrats are pushing hard for “Buy America” provisions in the bill.

For as patriotic as “Buy America” sounds, the truth is this: slapping “Buy America” mandates on federally-funded projects drives up costs, reduces competitiveness, and gives the federal government a green light to pick winners and losers among American businesses.

The U.S. Department of Transportation has estimated that forcing American companies to use only domestically-produced products for infrastructure jobs “will increase the cost of the overall project by more than 25 percent.” That means taxpayers are forced to pay at least another $250 million for every billion dollars of a federally-funded project.

The mandates also give a competitive advantage to some American companies over other American companies. Those that buy their raw materials internationally are likely to be shut out of the process. “Buy America” provisions are a classic example of protectionism and cronyism that protects and benefits certain firms and their employees, while shutting out others.

American businesses are also hurt when other countries retaliate against U.S. protectionism. Some of our largest trading partners have mounted efforts in the past to slow the flow of U.S. products into their countries, and have threatened to raise tariffs on products made by American companies to respond to our government’s “Buy America” protectionism. Again, while one sector of U.S. business is unfairly helped by such mandates, many others suddenly face new obstacles to their markets.

Competition and choice has been the true American way, and the federal government needs to stay out of the business of picking winners and punishing taxpayers. The WRDA legislation is costly enough without adding “Buy America” provisions.

The United States can compete with anyone. Tax reform and deregulation will make sure of that; not cronyism.

Club for Growth Backs House Leadership’s Warning Against Tariffs

Doug Sachtleben - December 05th, 2016

“Tax cuts and deregulation will make the American economy great again, but tariffs and trade wars will make it tank again.”

 Washington, DC – Club for Growth president David McIntosh released the following statement in response to published reports that “House Majority Leader Kevin McCarthy refused to back President-elect Donald Trump’s push for a 35-percent tariff on companies that move operations abroad…”:

“Tax cuts and deregulation will make the American economy great again, but tariffs and trade wars will make it tank again,” said Club for Growth president David McIntosh. “The president-elect is spot on when he calls for cutting taxes and federal regulations, but 35-percent tariffs would be devastating to consumers and businesses. The Majority Leader is right to caution against protectionism and to urge a robust debate on free markets and trade.”

Club on Trump’s Carrier Deal

Doug Sachtleben - December 02nd, 2016

Club President David McIntosh discussed President-elect Trump’s Indiana Carrier deal during an appearance on Fox Business Network’s “Making Money w Charles Payne” on 12-1-16

Economic Growth Crippled by Lack of Startups

Madeline Rainwater - October 24th, 2016

In a piece from the Wall Street Journal, author Jeffrey Sparshott reveals just how much the economy has relied on new startups to propel economic growth, and how it has been hampered by a decades-long increase in regulation. In fact, the pace of economic expansion has been the weakest since at least WWII, according to the article. If there is any serious recovery effort to be made to help the economy, repealing regulation and making it easier for startups to exist is the perfect place to start!

Full article here

In The News… 5.25.16

Stacy French - May 25th, 2016
  • Mike Crane and Drew Ferguson to compete in a runoff on July 26, AJC
  • Obama’s Education Department is attempting to mandate “equalized spending” at the state and local level, even though the education law passed last year specifically forbids it, Washington Examiner
  • Why Obama’s “mandate prosperity” is a fallacy, Real Clear Markets