Now this is what I call change. George Bush declared war on our enemies and liberals went nuts. But when “Hopenchange” declares war on our friends … now that’s something liberal Democrats beholding to unions can get their arms around.
The stimulus bill passed by the House last night contains a controversial provision that would mostly bar foreign steel and iron from the infrastructure projects laid out by the $819 billion economic package.
A Senate version, yet to be acted upon, goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.
Proponents of expanding the “Buy American” provisions enacted during the Great Depression, including steel and iron manufacturers and labor unions, argue that it is the only way to ensure that the stimulus creates jobs at home and not overseas.
Yes I am a free trader … but no matter how you read it this is just bad economics. And has already sparked talk of a trade war.
The Dems’ pork bill is bad in just about every possible way. One feature of the bill that hasn’t received a lot of attention (here, anyway) is the “buy America” provision. But the Europeans have noticed, and they say it may lead to a trade war. From England’s Telegraph …
John is right … but it takes Ed Morrisey to put it in it’s proper economic perspective.
We have done this before, and under worse circumstances, which is why this such sheer folly. The Smoot-Hawley tariff act turned a severe but recoverable recession and turned it into a generational depression. Instead of working cooperatively, the major trading nations had to respond to American penalties with more penalties, and the Buy American provisions of the New Deal entrenched those divisions, making recovery impossible. The rest of the world — Europe, Asia, Latin America — would likely shut out the US and trade amongst themselves, and we would lose decades of work in building American economic strength abroad.
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I can understand the Buy American provisions of the bill, they don't want all of this money going overseas. They are going to overpay for things, but this bill is just a big give away anyway so what the hell is the difference. They just want money moving through the economy.
My prediction is that we will see a boost followed by a massive crash. It is like eating transfats and Sugar at 9 and running out of energy at 11:00. What you really should have eaten were an apple and a piece of cheese and you'll go long and strong.
-Erik