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Biden’s ‘Buy America’ Spin

Este artículo estará disponible en español en El Tiempo Latino.

President Joe Biden has repeatedly claimed that past presidents, including his predecessor, have “ignored” or “failed to uphold” laws requiring that federal government money be used to purchase only U.S. materials or products. Biden has expanded and emphasized such requirements, but we found no indication other presidents didn’t abide by the laws on the books during their tenures.

Presidents of both parties have embraced the “Buy America” political messaging. Biden can lay claim to implementing broader requirements on how federal money is spent, such as those in a major infrastructure law that included $550 billion in new spending. But he goes too far in suggesting prior administrations broke the rules.

“And, by the way, ‘Buy America’ has been the law of the land since the ‘30s, but it’s been ignored by most administrations,” Biden said on May 8 in Racine, Wisconsin. “Past administrations, including my predecessor, have failed to buy American.

“Not anymore,” he continued. “Here’s how it works. When the pre- — when the Congress sends something to the president to build something — whether it’s a road, a highway, a deck of an aircraft carrier; whatever it is — that president is — back from a law that was passed in the ‘30s — is supposed to hire American workers to build it and use American products.”

In Pittsburgh, in a speech at the United Steelworkers Headquarters, Biden said “very few presidents ever paid attention to” the provision in the 1930s law. “If a president is sent money from the Congress to do something for the public, he must use American products and must use American workers unless you couldn’t find them. Well, guess what? A lot of them didn’t find them, except me.”

The president continued, “We buy America. And past administrations, including my predecessor, failed to uphold that Buy America provision. Not anymore.”

He made similar comments in his State of the Union address in early March, and on April 24, when picking up the endorsement of North America’s Building Trades Unions. At the union event, Biden said former President “Donald Trump failed to uphold” Buy America.

Biden is right in describing the law dating back to 1933. That act, and several subsequent laws that are often conflated with it, have required federal government money to be spent on domestic, not foreign, products — with some exceptions and waivers allowed under certain conditions, such as cost and supply issues, or prevailing trade agreements. But experts told us past presidents, including Trump, didn’t ignore these laws.

Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics, told us Biden’s claim about past presidents was “a pretty egregious misstatement.”

Scott Lincicome, the vice president of general economics and trade at the libertarian Cato Institute, told us Biden’s claim “stretches the truth.”

“The Trump administration was quite active in trying to limit the application of Buy America waivers,” Lincicome said, “and thus make the rules more restrictive.”

When we asked the White House about Biden’s remarks, a spokesperson pointed to the president’s efforts to expand Buy America requirements, including a proposed rule to eliminate a broad, decades-old waiver for manufactured products used in highways. One expert told us getting rid of that waiver gives Biden’s claim legitimacy, while another disagreed.

Even if we give Biden credit for going beyond what his predecessors have done, his broad-brush comments leave the impression that presidents before him “ignored,” as he puts it, the buy-domestic provisions entirely.

“If previous administrations had somehow violated the Buy America provision in the 1930 law, as amended, you may be sure that some domestic firm would have sued,” Hufbauer told us. “I know of no such suits.”

We should note that economists generally are critical of these types of protectionist laws, because, they say, the restrictions increase costs, delay projects, and can lead to getting inferior or not as advanced products. And the more the U.S. pushes such laws, the more other countries implement their own buy-national rules. Both Lincicome and Hufbauer have written about such concerns.

“Economists don’t like these things,” Lincicome told us, saying it was “one of those rare areas” where the “vast majority of economists agree.”

In a 2020 article, Hufbauer and his Peterson Institute co-author Euijin Jung estimated the markup on domestic procurement due to restrictions on buying potentially cheaper imports. They then calculated that “the annual taxpayer cost for each US job arguably ‘saved’ by Made in America probably exceeds $250,000. We put ‘saved’ in quotation marks because buy national requirements essentially shuffle jobs from other sectors of the economy to the procurement sector.” They called such a policy of excluding imports “an economic loser.”

But “it’s good politics and that’s what keeps it going,” Hufbauer told us.

We’ll explain more about what these laws do and the actions of the Biden administration and past presidents.

Buy America/American History

In general, there are two types of these laws: those concerning materials the federal government buys itself, and those applicable to federal money granted to states and local governments for some infrastructure projects.

Biden cites the 1933 Buy American Act, the first of these types of statutes. The law concerns federal government procurement, requiring agencies “to apply a price preference for ‘domestic end products’ and use ‘domestic construction materials’ for covered contracts performed in the United States,” as the Congressional Research Service explained in a report updated in 2022.

There are several other laws that further the domestic-content requirements for federal purchasing, such as the Berry Amendment, which puts restrictions on Defense Department spending. “There are also a number of other domestic content restrictions that apply in specific contexts and, in many cases, are intended to address perceived gaps in the BAA,” CRS said.

Connecticut Department of Transportation crews reconstruct a southbound Interstate 95 bridge on Nov. 5, 2023, in Westport. The work is part of a project funded by the 2021 bipartisan infrastructure law. Photo by John Moore/Getty Images.

Confusingly, there are also Buy America — no “n” — laws and regulations that apply to federal money given to state and local governments for some infrastructure projects. The restrictions mainly concern “highways, public transportation, aviation, and intercity passenger rail, including Amtrak,” CRS explained in another report on this family of laws. The transportation industry restrictions were first part of the Surface Transportation Assistance Act of 1978.

“Unless a nationwide or project-specific waiver is granted, Buy America generally requires the use of U.S.-made iron and steel and the domestic production and assembly of certain other manufactured goods,” CRS said. “One of the main manufacturing industries this affects is rolling stock, which includes intercity passenger rail trains, public transportation rail cars and buses, and associated equipment.”

Though Biden only mentions the 1933 law, he’s talking about both Buy America and Buy American provisions.

There are exceptions under these laws for purchasing foreign goods, including when the domestic products are too expensive, in short supply in the U.S., or when adhering to the requirements would be against the “public interest,” as Cato’s Lincicome explained in a February 2023 commentary piece. Under a 1979 law, presidents can also grant waivers if the restrictions would discriminate against countries that are in trade agreements with the U.S.

Changes Under Trump, Biden

Some of the details of the Buy America/American requirements have changed over time. The 1933 government procurement law called for the use of only “unmanufactured” materials that had been “mined or produced” in the U.S. and only “manufactured” items that had been made in this country “substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States.” As Lincicome wrote, “substantially all” used to mean 50% of the value of the items were from U.S. materials. The Trump administration increased the threshold to 55% in a rule, finalized late in his administration, that reflected a 2019 executive order. That rule also said for items manufactured from iron and steel, the cost of foreign iron and steel must be under 5% of the total product cost.

So, contrary to Biden’s claims, Trump tightened the requirements related to the 1930s law.

Biden, however, upped the general domestic content threshold again, to 60%. Under the October 2022 final rule, the threshold is set to increase further to 65% this year and 75% in 2029, though the final rule says the cut-off can go back to 55% through the end of 2029 if “no domestic products can meet the new thresholds or the cost to acquire them would be unreasonable,” the Office of Management and Budget’s Made in America Office, which Biden also created, explains.

The new Made in America Office has a website that includes all Buy America/American waiver requests and whether they have been reviewed yet. In addition to providing some transparency about the waivers, the site says it aims “to maximize opportunities for U.S. producers to supply goods and services to the federal government.”

There are more than 1,100 waivers listed, the vast majority of them requested due to “nonavailability” of the product in the U.S. But that doesn’t help us fact-check how this compares with past administrations or whether presidents have skirted these laws. Experts told us there’s no database or repository that could measure how much one administration “bought American” compared with another.

A Government Accountability Office report on fiscal year 2017 found that while waivers and exceptions were used, the federal government didn’t buy a lot of foreign products. Using federal procurement data for that year, the GAO determined that “foreign end products accounted for less than 5 percent—about $7.8 billion—of federal obligations for products potentially subject to the Buy American Act,” noting that the amount could be higher due to errors in the data.

As Lincicome put it, the GAO “said, yeah these waivers happen but they’re not the exception that’s eating the rule.”

Trump used “Buy American, Hire American” as a campaign slogan in 2016, and a few months into his presidency, he signed an executive order with that name, saying “every agency shall scrupulously monitor, enforce, and comply with Buy American Laws, to the extent they apply, and minimize the use of waivers, consistent with applicable law.” In 2018, he signed a bipartisan water infrastructure law that extended for five years requirements that only U.S. iron and steel be used in projects funded by a state revolving fund.

The restrictions on funding for transit projects also tightened just before Trump took office, Alon Levy, a research fellow with the NYU Marron Institute of Urban Management’s transportation and land-use program, told us. Levy said, “The decision was not made by political appointees but by career civil servants who were anticipating a more protectionist direction in federal policy,” under the incoming Trump administration.

“This is not about upholding provisions, though,” they said. “Buy America has an escape clause, allowing federally-funded projects to import if there’s no American substitute, or if the American substitute is too expensive, at least 25% more expensive than the import. However, to exercise the escape clause, agencies need to apply for a waiver — it’s not automatic.

“Traditionally, federal waivers were granted as per the law, but during the Obama-Trump transition, FTA stopped processing the waiver requests,” Levy said, referring to the Federal Transit Administration. “This policy has been maintained under Biden.”

Levy, who is also a critic of the Buy America policies, said “federal agencies have already acted as if the law is more restrictive than it actually is,” dating back to that Obama-Trump transition. And restrictions have gotten tighter during Biden’s administration “because the supply chain crisis created a backlog” of waiver requests. (In a 2021 article, Levy said Buy America was “harmful” and should be repealed, detailing the impact on U.S. mass transit and what they said were “[t]oo few jobs” created at too high a cost.)

Under Biden, the Build America Buy America Act, which was part of the 2021 infrastructure law, expanded how Buy America pertains to federal infrastructure grants. The law says all infrastructure projects that are federally funded must use iron, steel, manufactured products and other construction materials that are made in the U.S., with waivers available for public interest, supply and cost issues. (See this explainer by the Bipartisan Policy Center for more.)

Typically, the Buy America laws covered transportation and water infrastructure, but the Build America Buy America provision goes beyond that to include any infrastructure construction. And in addition to covering “the usual iron/steel products,” Lincicome wrote, the act pertains to “nonferrous metals (e.g., copper), plastic‐ and polymer‐based products, glass, composite building materials, lumber, and drywall.”

Hufbauer noted that previous presidents “didn’t have huge projects like this” — except for the American Recovery and Reinvestment Act under former President Barack Obama. That 2009 stimulus act also included requirements that “all of the iron, steel, and manufactured goods” in public projects be domestic, with the usual exceptions. Hufbauer also said that previous presidents “weren’t tight on requiring states to follow Buy America rules when they spent the money.”

Biden “did change the way things are done,” he said, but Biden’s claim that others were “breaking the law … is a misstatement.”

Also under Biden, the 2022 Inflation Reduction Act, which includes funding for renewable energy projects, offers a bonus for projects that meet domestic content restrictions.

Lincicome told us “it’s fair to say” that the Biden administration has tried to reduce the exceptions to Buy America rules. “But Trump did the same type of stuff,” and it’s hard to determine the impact of Biden’s efforts thus far. “You can kind of tell how effective [it has been] by how much people are complaining,” he said, “and people are complaining,” referring to industry players and state transportation departments and others that have to deal with these rules.

When we asked the White House press office about the president’s comments about past administrations, White House spokesperson Robyn M. Patterson sent us a statement saying: “Since his first week in office, President Biden has worked tirelessly to build a future Made in America – including by signing Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers, and establishing the Made in America Office at the Office of Management and budget and launched a whole-of-government initiative to strengthen the use of taxpayers’ dollars to support American manufacturing.”

Patterson also referred to a proposed rule by the Biden administration to do away with a longtime waiver for federally funded highway projects that said manufactured products that don’t contain steel and iron are exempt from Buy America provisions. Examples of such manufactured products include traffic signals and controllers, and vehicle detection equipment. Patterson said “the previous administration continued a sweeping, Reagan-era Buy America waiver for manufacturing products in federal-aid highway projects and failed to carry out longstanding grants guidance which encouraged the purchase of domestic products.”

The proposed rule’s comment period ended on May 13.

The waiver has been in place since 1983, when the Federal Highway Administration cited “public interest” reasons for the exception, saying the products affected by the waiver made up only a small percentage of highway projects. “Due to the Manufactured Products General Waiver, manufactured products permanently incorporated into FHWA-funded projects do not need to be produced domestically, apart from predominantly iron or steel manufactured products and predominantly iron or steel components of manufactured products,” the proposed rule says.

A former House transportation committee staff member told us there has been an effort on Capitol Hill over the years to get rid of that waiver, but no one has done it. If this is what Biden means in talking about past administrations not upholding the law, the former staffer said, it’s a legitimate claim.

But Hufbauer said the proposed rule still doesn’t back up Biden. “Previous administrations were perfectly entitled to invoke the [FHWA] waiver,” he told us. “Nothing wrong with that. They did that to save taxpayer money and speed up projects.”

Biden can claim that his administration has taken several steps to increase the use of domestic products in federal and federally funded projects, but that doesn’t mean that past administrations have “ignored” or “failed to uphold” Buy America/American laws.

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