'Buy American' Causes Discord in Washington

While American troops work to stabilize troubled parts of the world and supporters at home wear the red, white and blue, U.S. lawmakers are trying to make sure the federal government buys more goods with the "Made in the USA" label.

"American jobs are heading overseas at an alarming rate," Sen. Russ Feingold, D-Wis., said in a statement. "Folks in Wisconsin and across the nation should be able to depend on their government to support American workers by buying American-made products."

But many industries say stronger Buy American (search) laws will disenfranchise American businesses and cost U.S. taxpayers more money in the end.

In 1933, Congress passed the Buy American Act, which required federal agencies to purchase products with "substantially all" American content. But the government could get around it if the cost was unreasonable, American-made products were unavailable, or the secretary of defense determined that it was not in the public interest.

Labor groups launched campaigns to encourage consumers to buy goods made in America. With the advent of the Internet, hordes of Web sites sprouted up to educate consumers on how they can be sure they're purchasing American goods and supporting the U.S. economy.

But through the years, more relaxations and allowances of the act have been made on Defense purchases and some lawmakers want to put a stop to it.

"Congress no longer can stand by idly while all of our jobs head overseas," Rep. Donald Manzullo, R-Ill., chairman of the House Small Business Committee (search), recently wrote in a USA Today editorial. "We certainly should not contribute to the exodus."

Although some critics say supporting the measure contributed to protectionism and puts a damper on free trade laws, the campaign's cheerleaders say American companies are fully capable of providing the government with the best products at affordable rates.

Feingold got an amendment tacked on to the fiscal 2004 Energy and Water appropriations bills that requires the Energy and Interior departments to report how much taxpayer money is spent on goods made outside the United States.

Everyone Except Defense

The Defense Department is the only agency that currently has to report such spending. The Senate approved that measure and also adopted a Feingold amendment mandating the reporting requirement to the Labor, Health and Human Services and Education departments.

Rep. Duncan Hunter, chairman of the House Armed Services Committee, is another Buy American proponent.

His legislation, included in the House version of the fiscal 2004 defense authorization bill that passed the Armed Services Committee, would require major defense acquisitions to use only U.S.-made machine tools. It would also direct the Defense Department to procure weapons and equipment containing at least 65 percent U.S. content, an increase over the current 50 percent mandate.

Other lawmakers have included other Buy American provisions in various appropriations bills.

Over the summer, Hunter said in a newspaper interview that a Swiss company refused to provide vital parts for the Pentagon's Joint Direct Attack Munition during the Iraq war. Switzerland also blocked delivery of grenades to the British military in Iraq because it opposed the war, Hunter said.

"The Swiss experience -- where British combat forces found their grenade supply cut off because Switzerland disagreed with our Iraqi policy and Americans were denied critical components for our most important weapons, the JDAM -- should raise a red flag with security-minded Americans," Hunter told The Washington Times.

For the Opposition: Donald Rumsfeld

The Bush administration's strongest opponent of the current Buy American provisions is Defense Secretary Donald Rumsfeld, who warned Hunter in a July 8 letter that he would tell President Bush to veto the bill if the language wasn't watered down. Rumsfeld said the legislation would harm trans-Atlantic defense trade relationships, among other things.

Buy American critics say taxpayers will suffer if measures like these are enforced.

These bills have "far-reaching negative consequences for IT producers and the U.S. government customer," said Harris Miller, president of the Information Technology Association of America. "Our military deserves to have the highest quality tools to fight wars and terrorism, and they deserve to have them in short order."

The Aerospace Industry Association (search) said buying major weapons hardware or electronics exclusively from domestic sources "would cause a wave of foreign trade retaliation," force companies to stop doing business with the U.S. government and could cause companies to go bankrupt.

According to a National Taxpayers Union (search) study released last month, U.S. tax dollars and readiness could be put at risk.

"If truth in labeling requirements applies to congressional proposals, 'Buy American' would be called 'Bankrupt America' instead," NTU Government Affairs Director Paul Gessing said in a statement. "Far from being a patriotic gesture to boost our military capabilities, these provisions could harm our citizens and our soldiers at a critical point in U.S. fiscal and foreign policy."

So why aren't more lawmakers publicly coming out against the provision?

"Even though the senators tell us privately they're against 'Buy American,' they won't talk to the media and be against it … it's political suicide," Miller said at a recent ITAA luncheon in New York.