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WASHINGTON – Indiana’s economy stands to get an extra jolt from the stimulus package because of a provision in the legislation that favors U.S. iron, steel and manufacturing.
Steel plants dot northern Indiana, and the state is a major source of manufactured goods.
The Obama administration estimates that the projects paid for through the stimulus package would add 79,000 jobs in Indiana over two years. But if those projects have to use U.S.-made products, a Gary-area congressman said, even more Hoosiers would be put to work.
Indiana’s unemployment rate, 8.1 percent in December, has nearly doubled in a year.
The “Buy American” requirement is sparking protests from some corporations and U.S. trading partners, but it is not likely to be stripped from the legislation before the bill is sent to President Obama.
The House-passed version requires that U.S.-made iron and steel be used in any public works project paid for out of the package. The Senate bill includes a broader mandate: Any project funded under the stimulus package would have to use U.S.-made goods exclusively.
“We produce more steel in our state than any other state in the country,” said Rep. Pete Visclosky, D-1st, who represents the Gary area and is the author of the “Buy American” section of the House bill.
“These are taxpayer dollars,” he said of the nearly $900 billion stimulus package. “We ought to be buying through this stimulus package goods produced by those same taxpayers.”
About 100 companies and associations sent a letter to Senate leaders this week warning that the “Buy American” provisions “will backfire on the United States” because other countries would retaliate with trade restrictions that would “put at risk huge amounts of American exports.”
Obama said Tuesday that the U.S. has to be careful not to include any provisions in the stimulus plan that could “trigger a trade war.”
“I think it would be a mistake ... at a time when worldwide trade is declining, for us to start sending a message that somehow we’re just looking after ourselves and not concerned with world trade,” Obama said in a televised interview.
Visclosky said he “categorically denies” that it’s trade protectionism to require the use of U.S.-made goods in legislation designed to get the domestic economy moving.
“The U.S. imports more goods and services than any other country, and for anybody else to give us a lecture on free trade is ridiculous,” he said.
Although Rep. Mark Souder, R-3rd, voted against the stimulus package, he said he supports “Buy American” requirements.
“In my district, I believe we gain from ‘Buy American,’ ” he said.
Souder said he recognizes the potential for an international backlash, which would hurt local businesses that export, including the defense industry.
But, he said, “If ever there’s a time to do ‘Buy American,’ it’s in a short-term stimulus.”
Visclosky, chairman of the congressional steel caucus, conducted an unofficial hearing on the “Buy American” requirements Wednesday.
“The American people are with us and with you on this issue,” Dan DiMicco, chief executive of Nucor Corp., said at the hearing. Nucor has several plants in Indiana.
DiMicco said a study done by the Peterson Institute for International Economics – which concluded the “Buy American” provision would create as few as 1,000 new jobs and possibly cost the U.S. at least 6,500 jobs if trading partners retaliate – is “garbage.”
The Progressive Policy Institute, a research arm of an organization of pro-trade, moderate Democrats, said that if foreign businesses are barred from U.S. contracts, they will probably exclude American firms from their own stimulus programs.
Worldwide, governments have launched $2.3 trillion in spending programs designed to perk up their economies.
Under “Buy American,” the Progressive Policy Institute said, American companies could “find their modest extra domestic business canceled out by many lost contracts abroad.”
Sen. Evan Bayh, D-Ind., is an honorary chairman of the institute’s parent organization.
He voted against an unsuccessful amendment to remove the “Buy American” requirement Wednesday.
Sen. Richard Lugar, R-Ind., voted to remove the mandate and believes that exporting creates more job-growth opportunity than limiting our possibilities.
