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.