The government’s ability to control the supply chains of private companies is limited, despite the administration’s pledge to aggressively enforce “Buy American” mandates.
President Joe Biden wants to require federal agencies to buy more American products to help rebuild America’s factory base. He’s about to find out how hard it will be to deliver on his goal.
Like former President Donald Trump, Biden has pledged to rely heavily on taxpayer-funded projects to revitalize the American manufacturing sector, especially for the trillions of dollars in spending promised under the “Build Back Better” agenda. But his moves to tighten up “Buy American” government mandates may not be much help in meeting his administration’s overall goal of creating 5 million more jobs in “manufacturing and innovation” by the end of 2024.
His problem comes from two key factors: The vast majority of government expenditures are already for products made in America.
In addition, U.S. factory employment stood at 12.2 million workers when Biden took office — and has not exceeded 17 million since early 2001 — so bolstering employment by 40 percent in manufacturing, let alone any sector, is aggressive.
Many economists, including those at the Peterson Institute for International Economics, argue Buy American policies don’t add jobs to the economy and actually limit growth. That’s because they redirect resources away from the private sector toward government spending. The Peterson Institute also estimated the annual cost to taxpayers for every job protected by Buy American provisions is over $250,000 because of the higher prices paid for goods.
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