"Buy American" clause in stimulus labeled 'dangerous' by Ca., EU

geochem1st

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BBC NEWS | Business | Buy American clause 'dangerous'

"The "Buy American" clause seeks to ensure that only US iron, steel and manufactured goods are used in construction work funded by the bill.
The EU ambassador in Washington said that if approved, the measure would set a "dangerous precedent". The $800bn (£567bn) rescue plan package is under discussion in the US Senate this week.

Meanwhile, President Barack Obama is expected to name Republican Senator Judd Gregg as commerce secretary. Mr Gregg would be the third Republican in Mr Obama's cabinet. The president's first choice for the post, New Mexico Governor Bill Richardson, withdrew following questions about his links to big business.

'Dangerous precedent'
The BBC's Jonathan Beale in Washington says Mr Obama will hope that Mr Gregg's nomination can help him secure approval for the stimulus package.
It is unlikely that the package, which has already been approved by the House of Representatives, will be able to pass the Senate without Republican support.

If we have a series of protectionist measures introduced, then the possibility of real global leadership is put at risk John Bruton, EU ambassador to Washington

Dire warnings about protectionism
The White House has said it is reviewing the "Buy American" part of the stimulus bill, although Vice President Joe Biden said last week that it was legitimate to have some portion of Buy American in the final measure.
Mr Obama's signals as a presidential candidate on the campaign trail last year that he could rip up the North America free trade agreement were seen as a political gesture to win round the sceptical white working class vote, says our Washington correspondent.

Perhaps that has become more important with the economic crisis, but it leaves one wondering where the Obama administration really stands on free trade, he adds. EU Ambassador John Bruton said that if passed, the measure could sap global public confidence.

"If we have a series of protectionist measures introduced, then the possibility of real global leadership is put at risk," he said.
"We regard this legislation as setting a very dangerous precedent at a time when the world is facing a global economic crisis."

'Retaliatory risk'
In a letter to Senate leaders, the Canadian ambassador in Washington, Michael Wilson, said that if "Buy American" was in the final legislation, it would set a negative precedent with global repercussions. "The United States will lose the moral authority to pressure others not to introduce protectionist policies," he wrote.

Canadian International Trade Minister Stockwell Day said Canada hoped to be exempted from any such measure, which he warned could lead to a global depression. "These protectionist measures, in a time of recession, only make things worse," he told broadcaster CBC. "It can only trigger retaliatory action and we don't want to go there."

There is also opposition from some senior US Republicans who say the measure could start trade wars. Mr Obama has urged the US Congress not to delay his stimulus plan over modest differences. He said on Monday that he was expecting a "difficult next few days" as the Senate debated the package.

He also warned that more US banks are likely to fail as the full extent of their losses in the economic crisis becomes clear. The Democrat leader in the Senate, Harry Reid, has said he hopes the stimulus can be approved by the end of the week."
:hmm:
 

kernelofwisdom

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We have this type of provision in some nuclear defense related contracts. Do you really want a "payless" bolt holding together your reactor. :)

Anyway, shouldn't be a problem. This is a stimulus, meaning money spent to generate commerce that we normally wouldn't spend. Shouldn't be in any foreign nation's budget or business plan. We're printing bogus money to do work projects hastily cobbled together. We will print 800 billion and owe 800 billion. We're not coming out a buck ahead, why should anyone else?
 

The_Sentry

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Hahahahaha....

"If your government does not support OUR BUSINESSES AS WELL, and give US MONEY, we're...we're going to write a nasty letter!"

:laugh2:

EDIT: Quite honestly, the economy's already in the tank. It's going to take years to rebuild. Best get it over with than go further into debt with foreign powers.
 

geochem1st

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We have this type of provision in some nuclear defense related contracts. Do you really want a "payless" bolt holding together your reactor. :)

Anyway, shouldn't be a problem. This is a stimulus, meaning money spent to generate commerce that we normally wouldn't spend. Shouldn't be in any foreign nation's budget or business plan. We're printing bogus money to do work projects hastily cobbled together. We will print 800 billion and owe 800 billion. We're not coming out a buck ahead, why should anyone else?

Well you have two concepts lumped together here, the first is an issue of perceived quality, and I agree that yes I want a US bolt holding together my nukes as opposed to a Chinese one.

The other concept you put forth I don't agree with totally. (Ideally) We will be putting people back to work improving the infrastructure, real work of value will be performed, cash- even if its deficit cash, will start circulating priming the pump again. Profits will be made by the companies getting the contracts. If inflation caused by the excess printing can be kept under control through the Central Banks use of interest rates then we can get things rolling again for real.

The other side of this that no one is talking about is that taxes will have to be raised to start paying for the two wars that we are in. This is the first time in history that we have been at war that taxes were LOWERED instead of raised.
 

drewbertca

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but this will hurt the canadian steel industry...oh well China is always buying.....
 

PraXis

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Just make America a tax haven and all the jobs will come back.
 

kernelofwisdom

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Well you have two concepts lumped together here, the first is an issue of perceived quality, and I agree that yes I want a US bolt holding together my nukes as opposed to a Chinese one.

The other concept you put forth I don't agree with totally. (Ideally) We will be putting people back to work improving the infrastructure, real work of value will be performed, cash- even if its deficit cash, will start circulating priming the pump again. Profits will be made by the companies getting the contracts. If inflation caused by the excess printing can be kept under control through the Central Banks use of interest rates then we can get things rolling again for real.

The other side of this that no one is talking about is that taxes will have to be raised to start paying for the two wars that we are in. This is the first time in history that we have been at war that taxes were LOWERED instead of raised.

On that second concept, well I was running my mouth, but not more hastily I'm afraid than our government is behaving. For heavy infrastructure, long-term planning and engineering is necessary before dirt gets moved. No one is saying that cash will be flowing maybe years from now on that rather than now. As you know, you don't just expand a port or build a new bridge or overhaul reactors on two months notice.

It strikes me that we cannot afford to raise taxes, if at the heart of things we want the average person to spend more. Raising taxes reduces the ability to do that. Infrastructure projects are a better use of money than most things I agree, but I'm worried about the double pronged drag of debt that has to be dealt with as we deficit spend and expanding government programs that will continue to be a future expense, as they are almost impossible to kill.

That means when "recovery" comes hang on to your hat cause taxes and fees will have to go up, big time, or else the money just gets funnier.

As to having two wars and lower taxes, that was crap. Let the soldiers sacrifice, but ask not the politicians to face the expense of what they command or the citizen to pay for what his representatives commit on his behalf. We should have been paying for those wars all along, given at that point there appeared to be limitless money for "bonuses" big houses and general spending all around.

I don't have the answers. The desire for people to have more than they can afford is perhaps being dampened and that's good. The raping of our financial system by parasites in fancy suits may be dampened and that's good. The rest who knows; I don't.
 

geochem1st

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Just make America a tax haven and all the jobs will come back.

just how will that compensate for the discrepancies we have in the pay rates, health coverage, and environmental costs built into the prices of our mfg goods vs. foreign competitors?
 

PraXis

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just how will that compensate for the discrepancies we have in the pay rates, health coverage, and environmental costs built into the prices of our mfg goods vs. foreign competitors?

I don't care. I care about jobs coming back to our soil. If we make America a tax haven, then foreign companies will start moving HQ here.

Over 400 (out of 500 interviewed) multi-national companies said they would move production, manufacturing, etc to America if we implemented the FairTax.

We have the second highest corporate tax rate in the world, and that's the main reason why companies jet out of here (well that and Sarbanes Oxley).
 

kernelofwisdom

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just how will that compensate for the discrepancies we have in the pay rates, health coverage, and environmental costs built into the prices of our mfg goods vs. foreign competitors?

It shan't. Manufacturing is going or gone in the areas it has left due to the cost of production. Labor rates are one piece of that. Other things are the sorts you mention.

Interestingly, we frequently do jobs governed by Davis-Bacon labor rates. This says, basically, that if you want to do this construction job, you have to pay your workers at least X dollars per hour, no less. Sometimes that X is shockingly high, I mean this is set by the government. You get a credit for benefits, but basically this levels the field for union companies that may have a higher labor rate than a non-union competitor. The government deems this fair.

Yet, whether our manufacturers are union or non-union, foreign competition can just ship goods right on in without any pretense of providing the basic things we claim are necessary for workers. It helps us get priced right out of the market.

I remain convinced that fair trade requires that we impose the same cost of foreign competition that we do on our native companies, and then let the rest fall to the market. However, my opinion means this: 0.

Or, perhaps we should reduce the cost of production so that we can compete again. Oops, can't do that, doesn't provide a living wage. Then how in the world are we going to have jobs for everybody - since we're letting them go without a fight? Ok, we'll stimulate everything for awhile and see what that does. I guess I feel that beneath the anal reaming that we took from Wall Street, there is more than just our bridges and roads crumbling.
 

dennistruckdriver

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kernelofwisdom

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I don't care. I care about jobs coming back to our soil. If we make America a tax haven, then foreign companies will start moving HQ here.

Over 400 (out of 500 interviewed) multi-national companies said they would move production, manufacturing, etc to America if we implemented the FairTax.

We have the second highest corporate tax rate in the world, and that's the main reason why companies jet out of here (well that and Sarbanes Oxley).

I think you have a point, but as to manufacturing, no change in the tax policy itself will make it worth making a shirt in NC v. Pakistan or China again. The cost of production difference is just too great. Perhaps in other industries that might differ. Yet, even in high-tech industries, companies I know are viewing the cost of production as the major driver. However, I have a limited perspective.

At the HQ level, I imagine your point is very credible. Certainly when we were HQ'ed in Switzerland, a lot of money and time was spent managing tax liability for operations in the US.

Taxes are a cost of business. Businesses want to keep costs low. It stands to reason that lower taxes would make the US more attractive for globally mobile companies.
 

geochem1st

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On that second concept, well I was running my mouth, but not more hastily I'm afraid than our government is behaving. ......
I don't have the answers. The desire for people to have more than they can afford is perhaps being dampened and that's good. The raping of our financial system by parasites in fancy suits may be dampened and that's good. The rest who knows; I don't.

I'm just thinking out loud as well. I am not trying to put you to task, and all of our opinions are really worth naught, but I respect what you have to say and I am trying to sort this all out myself. It appears that there will be pain for quite some time, and timing will be crucial. We will have to raise taxes but that has to be down the line for the reasons you outlined, I just hope that there will be enough of us around when there finally is light at the end of the tunnel.
 

kernelofwisdom

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I'm just thinking out loud as well. I am not trying to put you to task, and all of our opinions are really worth naught, but I respect what you have to say and I am trying to sort this all out myself. It appears that there will be pain for quite some time, and timing will be crucial. We will have to raise taxes but that has to be down the line for the reasons you outlined, I just hope that there will be enough of us around when there finally is light at the end of the tunnel.

Sorry, wasn't trying to come across as being wanked! I was honestly just saying I was running my mouth (and so probably not being obviously or even actually logical). :laugh2: And while I feel like I have no control, it appears at least this "bail out" or "stimulus" or whatever is getting some debate at all levels of society. The first one we were told had to go through at lightning speed or the world would end. Kind of like we needed to go into Iraq right now or they would blow us up. Both were crap alarms; I think this one is too. This level of spending deserves some thought.

As to the opinion being worth zero thing, I mean that in the context of the fair trade. I think most Americans don't share the viewpoint I have, even those who stand to lose their jobs at some point due to foreign competition priced under what we are allowed to do. Maybe I'm the wrong one on this one, probably so. I sure feel like I'm tilting at windmills on it.

I do get the sense that this won't be over quickly, but I guess everybody thinks that too. Yet, I still get mad when I read the crap people do, stuffing STD prevention in a stimulus package, or hosting a lavish blow out while being insolvent, or - let's get the little guy in here - buying a house that simply is not affordable or wise, all of these things the "bail out" crew believes should be healed by the public treasury.

The test is on for representative government; I just hope they don't sink the ship!
 

PraXis

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I love Boortz's take on this idiotic stimulus:

But this, according to Democrats, constitutes economic stimulus:

* $350 million to develop and maintain a "broadband inventory map" at the Department of Commerce (that's Jamie's favorite)
* $1.375 billion for "Rural Water and Waste Disposal"
* $1 billion for the 2010 Census
* $150 million for the Office of the Federal Detention Trustee
* $50 million in aid to combat Internet Crimes Against Children
* $1.4 billion for water projects for Indian tribes
* $10 million to inspect canals in urban areas
* $2.1 billion on energy efficiency in government buildings
* $600 million to buy high fuel economy vehicles for the federal government
* $240 million for "Alteration of Bridges"
* $55 million for Historic Preservation in Park System
* $150 million for facilities at the Smithsonian
* $100 million in Aging nutrition services
* $400 million for screening and prevention of STD's, including HIV
* $1.5 billion for "Homelessness Prevention Fund"

Keeping all of these pork barrel projects in mind .. and by the way, that doesn't even scratch the surface of what is actually in this bill .. Obama says that he would be willing to scale back some of his spending plans in order to win Republican support. He said that he would remove any proposals which were not directly aimed at job creation.

OK ... let's parse that a second. Job creation? Most of Obama's stimulus plan is "work" creation, not job creation. These temporary construction and infrastructure projects don't create jobs, they create work. When you're finished sprucing up those government offices at the Department of Agriculture that work disappears. Ditto for landscaping around the National Mall. Also - where Obama's spending plan does create jobs they're generally government jobs, not private sector jobs.

Just a few weeks ago I told you about a hearing with the chairman of the joint committee on taxation. He was there to testify on behalf of the economic stimulus package. And when he is asked how many jobs this plan is expected to create, the guy didn't have an answer. Amazing.

How do you modify the stimulus plan? Start with each of the projects above. Then move on to every project that focuses on government work instead of private sector jobs. How do you do that? Pretty easy, actually. You put more money into the hands of the private sector - businesses large to small - to create jobs. The way to do that is through tax cuts. Not phony welfare checks you call tax cuts, but actual tax cuts. Right now the corporate tax rate in the U.S. is the second highest in the industrialized world. Do you think that is how to work toward business and job growth? If you do, you're a Democrat.
 

kernelofwisdom

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Pwoznic,

It seems silly to me too. And in some of those particular cases you pointed out, offensive. I'm not a financial wizard, so I don't know how it all sorts out.

But in the end, common sense says fix the root problems. Seems to me they are:

1. people were spending too much money, and time is necessary (not a stimulus) for that to track back to a healthy amount;
2. non-service industries have or are fleeing the country (see above mentioned production costs and tax costs);
3. insane financial sector dealings are allowed that impact the general public enough, allegedly, that we should pay to save those who made those deals from suffering their consequences.

I have heard it said that you could eliminate the payroll tax for a year for the cost of this stimulus. Doing that means the people have the money, not the government, but I can tell you I'd be damn stimulated if I weren't paying payroll tax for a year. I'd expand my house, buy stuff, eat out, and do everything possible to stimulate baby!

If the money must be spent, because that's the way it will be, it'd be nice if they at least split the baby on this one - half to the people who produce the money and half to those who take it.

Anyway, the stimulus is seems to me does nothing for the long term problems. I hope the price tag is worth what it does in the short/medium term, because some stimulus is going to pass.

Get some reasonable rules in place, again (they used to exist), in the financial world (less government guaranteeing of things too). Spend money, if you do, on things that will sponsor the creation of industry and production in this country rather than one and done projects. Hold on til consumers are not so overloaded with debt that they can get to spending again, hopefully not insanely so again.
 

LoKi

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Homeless prevention fund is almost hilarious. Might as well spend the 1.5 BILLION on crack and cardboard boxes.
 

geochem1st

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Homeless prevention fund is almost hilarious. Might as well spend the 1.5 BILLION on crack and cardboard boxes.

Thats the old view of the 'homeless'. Today the homeless are families who have been foreclosed on because they have been laid off.... Huge difference. I know many families that are just one paycheck away from being homeless, working multiple part time jobs to make things meet, waiting to have their lives crash in because retail is going down the tubes.
 

LoKi

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Thats the old view of the 'homeless'. Today the homeless are families who have been foreclosed on because they have been laid off.... Huge difference. I know many families that are just one paycheck away from being homeless, working multiple part time jobs to make things meet, waiting to have their lives crash in because retail is going down the tubes.
I know, I completely agree, but the 1.5 billion will go into creating jobs for people that could otherwise be working somewhere else, and not a dime of it will go directly to anyone who is homeless or destitute, probably with large bonuses to the people who are supposed to 'manage' the money to solve the problem. Such is the system.
 

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