General Question

fireside's avatar

Do you think it is a good thing that President Obama removed the "Buy American" clause from the economic stimulus package?

Asked by fireside (12273 points ) February 4th, 2009

From things I’ve heard and read, the EU was pressuring Obama to remove the clause before it incited a trade war.

What does the collective think about this?
Good or Bad?
Why?

Here’s a few links:
http://news.bbc.co.uk/2/hi/business/7866308.stm
http://www.cbc.ca/canada/story/2009/02/02/day-trade.html
http://business.theage.com.au/business/obama-opposes-buy-american-clause-20090204-7xye.html
http://www.timesonline.co.uk/tol/news/world/europe/article5655115.ece

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18 Answers

dynamicduo's avatar

As a Canadian, yes. It would have had serious impacts on both of our economies.

marinelife's avatar

I can see why he might have to make this political compromise. We are opposed to protectionism by other countries. It would be great if people and businesses on their own would make that effort whenever possible.

Mtl_zack's avatar

I am Canadian.

This clause might seem very good for America, but it just plain sucks for other countries. America is part of an international community, where everything is interconnected. if one falls, everything falls.

As Pierre Elliot Trudeau famously said, “Canada is like a mouse next to a sleeping elephant, always in fear that it might roll over”.

steelmarket's avatar

We are way too far down the road toward global trade to look back now. Not without serious repercussions, anyway.

And, if you look into what the Federal Trade Commission states that a company/product must do to say “Made in the USA”, it is pretty restrictive.

cdwccrn's avatar

I think removing the clause was a wise choice.

syz's avatar

Protectionism does not work. We would have been cutting our own throats to leave it intact.

fireside's avatar

Thanks for the answers everyone.
I agree that we are living in a global world and experiencing a global crisis. This is no time for nationalistic protectionism because our economy is nothing without the rest of the world.

i think it was probably just something that was put in at the request of Joe Biden, or because they knew that it would help the bill get further in Congress.

tabbycat's avatar

Absolutely. To get our economy and the world economy going, we need to stimulate trade, not restrict it. Protectionism is a very bad idea.

dalepetrie's avatar

I tend to disagree here. Essentially, we are putting forth an economic stimulus meant to stimulate the US economy. We expect that if we stimulate the US economy to its maximum extent, in a global economy, everyone will eventually benefit, but the role of internal stimulus by the US or any nation is to stimulate their OWN economy, not the global economy…one is direct and one is indirect. Essentially, I feel Obama is buying in to the lie of the free traders who say this will cause a trade war.

Think about that for a second. You’re telling me that other countries who already import the vast majority of the good we have available to buy in America are going to stop taking our money in exchange for goods, because in an effort to stimulate our OWN economy, we stated that we wanted to use American goods and American workers to build American roads and American schools? ARE YOU FUCKING KIDDING ME? It’s a complete sham, a lie dreamed up by the free traders, a scare tactic, which has unfortunately worked, and it’s a HUGE FUCKING MISTAKE.

Why? Because not only does is MASSIVELY dilute the impact of the stimulus directly on our own economy, but it pisses off all the millions of American laborers who got off their asses and gave money and lip service and time, and went door to door, and made phone calls and had house parties and everything else so Obama could get elected, and you mark my words, this is like spitting in their faces. Come the mid term elections, these people are going to say, fuck him…he couldn’t even a buy American clause in the stimulus package.

You can call it protectionism if you want, but think about it, not that long ago, America was a manufacturing economy and by NOT standing up for the rights of American workers, and NOT insisting on some level of American made products in our government spending, we’ve decimated labor, these people are hurting and Obama told them he was their friend. As much as I love Obama, I think he’s being a fucking pussy and not spending any of his political capital…he could be ramming a package TWICE this size down the throats of the obstructionist Republicans at this point and most of America would go for it, and though I like trying to strike and keep a bi-partisan tone, damn it, this is just too important.

My message to Obama, as they say in Texas, dance with the ones that brung ya. Spend the money on public works projects that have been underfunded since Reagan took office, spend it in the US, revitalize our economy, our workforce, our prosperity, and the world will follow, and if the other countries of the world think they have a hair’s chance of survivial without selling their goods to America, let them try and see how it works out for them. It’s a far better short term AND long term strategy, and after we’ve fixed this mess, THEN we can start worrying about what trade regulations are and are not important in day to day commerce, but this stimulus is a US Economic stimulus, period.

fireside's avatar

I still disagree. The future dollars we are borrowing are coming directly out of the global economy. In truth, I am far less worried about what the EU or Canada are shouting in the papers than what China may be whispering in the back rooms.

It was our short-sightedness that started this domino effect around the world and sticking to our guns about the buy american clause would be the antithesis of rebuilding our image around the world.

ramming it home with his political capital? isn’t that exactly what we just got rid of?

There are still plenty of dollars going towards American companies and if they can achieve a profitable business model by purchasing some goods outside of the US, then what is wrong with that? a profitable business model means that they can row their businesses and increase employment.

That’s more important now as we face a restructuring of our growth industries and look for new ways to maintain our footing on the world stage.

I agree he needs to draw a line between consideration and conciliation, but I don’t think this was the issue to do that on. There will be plenty more coming up soon.

dalepetrie's avatar

I think the biggest risk is the midterm elections, I just think organized labor is going to see this as a 180 from what he promised them in the campaign. I really don’t think there’s a realistic risk that China would stop selling to us because they couldn’t get some of the “extra” money from the bailout. This is over and above regular spending and we should be able to spend it in the way that best benefits us. I would NOT extend that to trade in the future, just in relation to this particular pile of money. And I do think there is a big difference between Obama expending “some” of his political capital to do the right thing…the thing he promised to organized labor, and GW basically making every single decision in a my way or the highway manner, without regard to political capital (which is akin to goodwill), but more with regard to “I’ve got zero goodwill left, but I’ve got all the cards, so they can suck it, because I can’t get any LESS popular.” With Obama it would be basically drawing a line in the sand and saying, OK, I’m willing to work with you to a great extent, I’m willing to listen to what you have to say, I’m willing to incorporate some of your ideas in any finished product, but this one thing is too important to buy into the same rhetoric we’ve been living with about how the free market can solve all the world’s problems, because it can’t, and this ONE time, we are trying to stimulate the American economy, and we NEED to spend this money in AMERICA, and I’m sorry if you don’t like it, I will still listen to you in the future, but I’m not bending on this one. That’s a small expenditure of goodwill, which will pay off in the long run both in how the stimulus succeeds and in how his base is willing to give blood sweat and tears for him in the future.

If you think I’m wrong, that’s fine. I’d just encourage you to ask someone in a labor union what THEY think if you can even find someone who still works for a labor union these days.

fireside's avatar

No, I definitely respect your opinion, dale.
You pay far more attention to the political scene than I do.

But I wonder if now isn’t the best time to put the mid-term election possibilities over the rebuilding of our international image.

This article indicates to me that now might not be the best time to irritate our international investors: US Treasury in plans for record debt sale

Traders are particularly concerned about the appetite for Treasuries among foreign investors, who hold more than half the outstanding $5,500bn in Treasury debt.

dalepetrie's avatar

The mid terms themselves are secondary, it’s the momentum that is important. The pendulum always swings in politics…and if Obama remains popular, he could swing it so that the rest of my lifetime would pass before it starts to swing back to the level of conservatism we saw over the last 30 years. Or he could end up doing what Clinton did…hanging on to the Presidency but slowly losing support, paving the way for another Bush in 8 years. If that happens, this is all for naught. But I just really don’t think that other countries will cut off their noses to spite their faces. If there is value to be had in this debt sale for Foreign investors, they’ll buy, if not, they’ll take a pass. Arguable there would be more potential value if our economy were expected to get the full impact of the stimulus via a buy American provision. I do think we can rebuild our international image in the ways that matter, in fact, I think to some degree, less wheeling and dealing with the outside nations might be a better prescription at this point anyway, because after all, much of the foreign resentment is because we tend to throw our weight around so freely. I think most of our image problems globally have a lot less to do with our foreign spending than they do with the way we consider the rest of the world in decisionmaking. Yes, it would be disappointing to foreign entities not to be able to cash in on a pool of nearly a trillion American dollars, but I just don’t see them saying, OK, if we can’t tap into that, they we aren’t going to take your other hundreds of billions of dollars anymore…they may bluff, but that’s all it would be.

But my overall point isn’t so much that we need to worry about future elections as it is that we need to make sure that this stimulus has the maximum impact it can. We need to do EVERYTHING we can to stimulate the economy right now…unemployment is 7.8%, higher than it’s been since 1974. We can’t afford to be scared into the same thinking that got us here in the first place (which is screw American labor, we can get it cheaper elsewhere…globalization is the way of the world). My problem with it is we are allowing ourselves to be scared by a consequence which is unlikely at best into doing the same counter productive things we’ve done in the past. And this COULD be the ultimate cause for the stimulus to fail, or at least to not succeed nearly as well as it could have. BUT, do you think Obama’s political enemies are going to say, “well, Obama did all HE could…he even came over to our side on the trade war argument, and ultimately WE were wrong and should have just trusted him,” or do you think they are going to say the only successes that the stimulus even had were perhaps BECAUSE of this concession? This is a potential weak link in the stimulus package as I see it, it’s a link that his political enemies have forced upon the plan, and it could doom the package, but when the blame game starts, no one’s gonna point to that link.

It’s just an opinion, I could be wrong, but this just doesn’t feel right…it feels like he’s listening to the wrong people…at a time when he should be listening to the people who got him elected, it just feels like he’s listening to the people who would rather see him fail. Call it more an intuition than anything, I just don’t like it, but I could be wrong.

gooch's avatar

No I think he is a moron. NAFTA is killing our economy not to mention China. We are already suffering from a trade imbalance.

lataylor's avatar

Who cares? It is already a terrible law with or without the protectionism part. And, it is not necessary. Obama has adopted the Politics of Fear that the Democrats criticized Bush for using regarding the real threat of terrorism. The 3 million jobs lost last year equals 2.2% of US jobs, not even half the percentage lost the first year of the Great Depression (total unemployment was 25% after three years, more than triple our unemployment today).

mattbrowne's avatar

Yes, a very good thing. New protectionism is not the solution. In Germany every buyer of a new car receives €2500 cash if his or her 9-year-old cars gets scrapped. The buyer doesn’t have to buy a German brand. It could be Japanese or Korean or American or French or Italian. It doesn’t matter. The program is a huge success. There are already more than 600,000 applications. Car dealers get swamped by new requests.

proXXi's avatar

Jesus Christ! What country’s President is he??

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