Is the House Democrats’ New “Buy America” Jobs Bill Just a Political Ploy?

With no movement on a highway bill from House T&I Chairman John Mica until after Congress reconvenes in January, Ranking Member Nick Rahall held a press conference today to introduce the “Invest in American Jobs Act of 2011” [PDF]. The act would strengthen the “Buy America” requirements already in place on transit, rail, highway, bridge, and aviation programs.

This streetcar was made in Oregon, but will transit suffer under a Democratic mandate to buy all components stateside? Photo: ##http://seattletransitblog.com/2009/05/12/united-streetcar-10t-3/##Seattle Transit Blog##

Among the bill’s stipulations:

  • 100 percent of components and subcomponents of transit rolling stock must be made in the US by fiscal year 2016 (currently a 60 percent requirement, to be raised incrementally)
  • Amtrak would lose its exemption from Buy America on projects under $1 million
  • Any exemptions to Buy America sought will be subject to a period of public comment and must be reported to the Secretary of Transportation

It also seeks to eliminate loopholes for segmented or subcontracted projects like the east span of the San Francisco-Oakland Bay Bridge. Rahall specifically cited the bridge, the largest public works project in California’s history, as having been built using 43,000 tons of Chinese steel—“Made in China, but paid for by American taxpayers.”

The bill is the latest in a growing list of job-creation proposals and counter-proposals to come from either the President or Congress. And like those prior proposals, this one is unlikely to go very far.

Think of it as the Democrats’ answer to “drilling-for-infrastructure” (maybe “regulation-for-protectionism”?). While representatives from the AFL-CIO, United Steel Workers, and United Streetcar threw their support behind the bill at the announcement, a Republican House pushing to de-regulate everything will be unlikely to get behind a Democratic proposal to create additional regulatory burdens – and costs – for industry.

Indeed, it’s easy to read the bill as a mere political maneuver. Rather than letting the Republicans claim credit for introducing a transportation bill they’re overtly touting as a jobs-creator — and then letting them blame Democrats for refusing to pass it — the Democrats are trying to get out in front with their own unpassable jobs-and-transportation bill.

The Democrats introducing the bill remained optimistic, however. “The Republicans are now admitting that investing in infrastructure will be the major jobs bill of this Congress,” Rep. Peter DeFazio (D-OR) said. “The question is: where are they going to put the jobs?… They’ll answer it when they see this bill.”

Democrats also indicated that anxiety over the spending in the reauthorization will be assuaged if they can guarantee the money will be spent in the United States, creating American jobs. “When we’re talking about doing a transportation bill, the American people have to be convinced that we’re actually going to spend this money here in America, to put Americans to work,” said Rep. Daniel Lipinski (D-IL). “They cannot believe that we have spent these taxpayer dollars overseas.”

Buy America provisions, however, are no boon to the transit sector, which has to pay more for each component it buys. Since transit funding doesn’t increase with these mandates, the result is usually just less transit.

Chandra Brown, President of United Streetcar, was very enthusiastic: “As a businesswoman,” she said, “we need this bill.” Her company has built the first American-made streetcar in almost 60 years, and over 200 of her vendors are making new products as a result. But while the budding domestic transit vehicle industry is certainly excited about this bill, it has yet to be seen how much support it would garner from transit agencies themselves. Only one transit agency in the US—BART in San Francisco—has adopted a Buy America policy, and they did that three days ago. United Streetcar has two clients: Portland, OR, and Tuscon, AZ.

Following the announcement, Rahall was asked whether Committee Chair John Mica had been consulted on this bill, and whether it would ultimately be included in a larger transportation reauthorization effort. Rahall answered that he did not know; that moving ahead as a stand-alone bill is a possibility, but that Mica had been spoken to about Buy America’s inclusion in the reauthorization. His reaction, according to Rahall, was “not negative.”

  • Anonymous

    Shall we slap a “Buy America” requirement on all private cars, too?  Or how about electronics, or even clothing? Yes, imported cars have a tariff, but you’re still free to buy them if they make sense for your budget and needs.

    I am not a huge fan of free trade as currently practiced and I’m all for buying American, but this just seems one more way the playing field would be tilted a bit more in favor of automobiles and against transit. Public transit is a lifeline for the economically underprivileged and faces constant threats to its funding; this would just layer on one more burden, and it seems unfair that transit and public works should be uniquely targeted in this regard.

  • David

    OTOH maybe the strategy should be to push for higher Fed subsidy as costs “rise”.   The unspecified question is whether construction from US made components in a plant operated by a non US prime contractor would count.   As a side note, one of the methods Daimler used to loot Chrysler was to have many parts easily available within the US supplied from captive European sources.   

  • Bolwerk

    This is an awful idea.  Americans simply lack the competencies to build modern rail rolling stock because we haven’t had a meaningful industry for it in decades…thanks to shortsighted politicians like the so-called Democrats. I hope United Streetcar is successful, but right now its market segment is probably so tiny as to be insignificant.

    This might create some incidental jobs for Americans who will need to fix even more broken down equipment, but it’s a lose for efficient transit. If we are going to have a meaningful homegrown transit industry, we need to actually build the market for local transit back up.

  • Daphna

    EricPanzer and Bolwerk have said it already and I agree.  This will harm transit.  Transit needs funding; it does not need greater restrictions on where it can buy it’s materials and parts.  This will only make it even more difficult to build and maintain transit because it will cost more to do so; transit funding is already way too low.  I want transit to be free to build in the most cost effective way possible.

    EricPanzer also makes the good point that the government has not strapped a “buy American” restriction on other industries, or other methods of transportation.  It is very unfair to single out transit to be hampered in this way.

  • Eric McClure

    Bet the “drill, baby, drill” crowd would love a 100% “Buy American” restriction on crude oil by 2016, too.

  • Charles_Siegel

    I would back this law, if we also had a law saying that we could only sell gasoline made from petroleum drilled in America.  That would cut our gas consumption drastically.

  • Shorter Chandra Brown: we have no experience building modern rolling stock, we are using American transit agencies as a free debugging service, and none of our vendors knows what it’s doing. There’s no way we could sell a vehicle to an agency that had any kind of choice.

  • Playing devil’s advocate here, @05aff3c0a7c94529dc138ce87543764a:disqus :

    The argument you make is pretty much the argument developing countries use when they’re trying to get new industries off the ground. If the U.S. ever wants to have a transit manufacturing industry again (which is an open question), wouldn’t we need to, at least temporarily, give preferential treatment to our homegrown industry so it has a chance to develop and someday compete with the bigger European and Asian firms?

  • Bolwerk

    @tanyasnyder:disqus : how does this do that by the stretch of the dumbest devil advocate’s imagination?  It just means that instead of importing foreign equipment and learning about it, and creating a need for it, we’d be shielding ourselves from the evil NIH black magic forrin’ choochoos.

    Anyway, I think it’s questionable to say we could ever catch up to other countries on this one – not as long as the general trend in American manufacturing is towards outsourcing.  For whatever reasons, good as Americans (still, somehow) are at R&D, they rarely win at cost-effectiveness, quality, or, in the end, price. That can be fixed, maybe, but fixing it requires more than creating a homegrown rail industry.

  • Nicolo Machiavelli

    Allow me to exercise the “dumbest devil advocate’s imagination”.  First, there are some pretty adequate producers in the US, mostly European, Canadian and Asian, (Alstom, Bombardier, Kawasaki) that hire American workers.  Of course many, even most, of their value added components are made elsewhere.  Those components are not all that complex however and among the many factors that determine our competitiveness in these matters the value of the dollar cannot be over emphasized. 

    The great systems in Europe and Asia, like the great green solar technologies are really part of a political economy that values industrial production, uses industrial policy to advance home industries and a huge tax on oil to level out the transportation market.  The Germans make great streetcars because they make a lot of other great things, because they tax the hell out of oil, value urban space and have the Greeks, Portugese and Italians keeping down the value of the Euro to keep their exports competitive.

    I suggest that a better approach would be the one taken during the despised Hoover Administration when all American streetcar producers combined to come up with a common design that they all subsequently competed to produce.  The interchangeability of the parts created a base of skills and engineering throughout the US streetcar operations, then largely privately held, meant to compete head to head with the auto industry.  You can read about it if you wish at http://en.wikipedia.org/wiki/PCC_streetcar.  That might be an approach that would work for the Obama administration to pump the production of rolling stock.

    In place of a national strategy we have instead a state strategy whereby producers assemble rolling stock in certain states, like NY, that use state money to force them to do so.  That is why we have Bombardier in Plattsburgh, Alstom in Hornell, SuperSteel in Schenectady and Kawasaki in Yonkers.  The idea was to us the NY demand for these products to provide the productive capacity for these producers to compete in the rest of the country.  I suggest that is why the US Streetcar joint is up in Oregon as well.

    There is nothing technically beyond our engineers and workers in building streetcars.  That will send Alon off the wall because he knows that the French have really great stuff they are willing to sell us right now and with the value of the Euro we could probably get a pretty good deal.  But, when China or India makes an Airline purchasing choice between Airbus and Boeing they often demand as part of the contract that the winning producer agree to do some of the production work in those countries. 

    This is a weak attempt at industrial policy by other means, something the US does not do well, or at all really.  Maybe a Presidential Conference Committee like that in the 30s would be a way to approach building an actual industrial policy, it worked then.  Many of those streetcars are still running in the US and abroad.

  • Anonymous

    The Chrysler 300 is made outside the United States in Canada.  The new Chevy Caprice for-sale-to-Police-Agencies-only is made outside the United States in Australia.  There is only one truly US-owned “made in the USA” transit bus firm, Gillig.

    Will automobiles and buses sold to public agencies also be placed under this restriction?

  • The cynic is me thinks this wouldn’t be a political problem if Lockheed-Martin or Northrup Grumman made rolling stock. (I wish they did because then Congress would fund this stuff.)

    US transit agencies buying rolling stock from foreign companies using US labor doesn’t bother me at all. Any guess on where a GM sourced street car would be built? Canada or Mexico most likely.

  • Mad Park

    100 % US made?  Will this also apply to US airlines and bus companies?  Or ONLY to rail transit?

  • Larry Littlefield

    Was there a “buy America” provision for Cash for Clunkers?  No.  Drivers had the right to get the cheapest, best car they could.

    The auto companies don’t have to pay for the ADA folks to get around either.  Get old, get sick, can’t drive?  Then it’s the transit sector’s problem.

  • I’m a Democrat, and I have to say that this seems shortsighted, unless it’s backed up with tons of money for American rail research and development.  And American HSR test tracks.

    It’s never bothered me in the least that my trains were built by Siemens, Kawasaki, Hyundai or Breda.  They make good trains, and plenty of train builders have done what Honda and Toyota did with cars and moved manufacturing to the U.S. anyways.

  • Kenny Easwaran

    Which would create more jobs in the US?  Buying trains built in the US, or being able to afford 10% more trains, which will mean 10% more construction and driving jobs?

  • Anonymous

    Actually Kenny, the premium for buying trains made in the USA “enough” can be as high as 50%:
    http://pedestrianobservations.wordpress.com/2011/07/02/premium-cost-substandard-quality-locomotive/

  • Anonymous

    One issue is “Buy America” while the other, for regional and intercity rail, are the FRA buff-strength regulations (which have ironically left many with the only choice of either a foreign-built car driven in mixed traffic with large trucks, or a domestic trip on an foreign-built, and sometimes even foreign-registered, airliner.)

    A couple of more links for those interested in the topic:
    http://marketurbanism.com/2010/09/18/a-comment-on-rolling-stock-protectionism/

    http://marketurbanism.com/2010/09/17/buy-american-drives-up-cost-of-transit

    http://pedestrianobservations.wordpress.com/2011/06/21/bad-us-rail-practices-and-what-it-means-for-fra-regulations/

  • fj

    re:  Niccolo Machiavelli ” . . . American streetcar producers combined . . . ”

    General Atomics Urban Maglev is on the critical path to doing this unfortunately, currently designing around massive vehicles probably 25 tons and more using low-cost permanent magnet levitation working under the misguided common wisdom that large vehicles move lots of people better.

    A big improvement in effective efficiency, agility, practicality, cost, personal space, etc. can be achieved by designing around lots of small modular single-person vehicles that can stream on-and-off these systems.

    Systems provide hands-free automation, speed and safety; off-system, vehicles provide complete “last-mile” distributed on-demand mobility.

    http://atg.ga.com/EM/transportation/urban-maglev/index.php

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