Opinion: Why aren’t federal agencies helping better with reconstruction? – GV wire
Surveys consistently show that US consumers want to buy American-made products. Americans in particular do not want to shop in China and know that buying “Made in USA” can support good jobs and economic growth domestically.
Unfortunately, the federal government‘s programs often offer incentives for foreign production. This is because the United States stands alone among the world’s major developed nations as it lacks a coordinated strategy to expand domestic production. In fact, the stated goals of many key federal agencies are actually an obstacle to the development of new supply chains in the United States
The US lack of concern about domestic production
This lack of concern for domestic production is illustrated by the National Economic Council (NEC), the main White House body responsible for coordinating economic policy. Despite frequent presidential rhetoric – such as President Joe Biden‘s “Build Back Better” agenda and former President Donald Trump’s pledges to “buy Americans” and hire Americans, the NEC still lacks a mandate to rebuild supply chains at home.
A look at various federal agencies reveals few goals for increasing important productions again. For example, the Department of Energy’s Loan Program Office (DOE) provides billions in loans for power generation projects across the country. However, the DOE does not specify where the resulting power grid infrastructure should be built.
Likewise, the Department of Commerce’s Economic Development Administration (EDA) focuses on “innovation, new technologies, intellectual property – and data”. This shows a blatant lack of interest in the production side of digital technologies. The EDA only aims to strengthen intellectual property protection and drive innovation. However, R&D funded by the agency is often made abroad.
There is also the recent CHIPS for America Act, which aims to encourage domestic research and development for semiconductors. Unfortunately, the legislation does not sufficiently require chip manufacturers to set up new production facilities in the USA. And that continues America’s longstanding pattern of inventing breakthrough technologies – like solar panels and computer chips – and then manufacturing them overseas.
More money needs to be spent on American-made products
The federal government spends around $ 600 billion annually on procurement. Spending this taxpayer money specifically on US-made products rather than imports could give domestic businesses a huge boost. But all too often, federal agencies simply buy the cheapest goods regardless of where they’re made.
Most industrialized nations take a different approach. They use public procurement to support their own factories. And they try carefully to sell their wares in the US, but avoid buying American-made products in return. India, for example, is maintaining a tariff of 125 percent on imports of cars and trucks – a policy with which it has built the fourth largest auto market in the world. Almost every car on India’s roads is made in India. In contrast, the US only levies 2.5 percent tariffs on car imports. This enables multinational corporations to build new auto plants in low-wage countries like Mexico and then sell cars very profitably to US consumers.
When politicians talk about “boosting exports” they are essentially missing the bigger picture. To rebuild domestic production, Washington must finally give priority to the American home market – and help domestic manufacturers sell more products to US consumers.
Rebuilding US industry needs leadership from Washington
An analysis by the Coalition for a Prosperous America (CPA) found that the U.S. domestic market for manufactured goods was $ 6.8 trillion in 2020. By comparison, exports in 2020 were only $ 1.2 trillion. Exports simply pale compared to what US manufacturers could benefit from recapturing more of their home market.
Since 2002, American factories have lost 7.7 percent of their home market. Retrieving that piece of the pie could increase US manufacturing sales by about $ 500 billion and create millions of new jobs.
Unfortunately, US manufacturers are losing more and more ground at home. Since 2002, American factories have lost 7.7 percent of their home market. Retrieving that piece of the pie could increase U.S. manufacturing sales by about $ 500 billion and create millions of new jobs.
A concerted, whole-government strategy is needed to remedy this. That means Washington is doubling its domestic sourcing and insisting that federal agencies source goods from U.S. suppliers whenever possible.
To ensure that federal agencies work together to rebuild US industry, it takes the leadership of the White House. It is time to establish a national production policy that will be overseen and coordinated by the executive. In particular, the White House National Economic Council should make industrial strategy a central part of its mission.
Other nations are already using electric vehicles and other breakthrough technologies. US manufacturers deserve the same position in their home market as they compete in these emerging industries. However, unless Washington steps in, American manufacturers will continue to lose ground in the one market that matters – their home base.
About the writer
Michael Stumo is the CEO of the Coalition for a Prosperous America. He wrote this for InsideSources.com.