Buy American? Well, at least don’t buy from China!

Economists sure have had a lot on their plate lately with the stimulus package, haven't they? The debate over whether tax cuts or government spending is more effective in generating growth revealed a divide between Neo-Keynesians and supply-siders (If you don't know the difference, don't panic. After all, this is a Congress blog, not an economics blog!)

But another econ-centric debate emerged, sparked by this gem from page 190 of the bill:


SEC. 1605. USE OF AMERICAN IRON, STEEL, AND MANUFACTURED
GOODS. (a) None of the funds appropriated or otherwise
made available by this Act may be used for a project for the construction,
alteration, maintenance, or repair of a public building or
public work unless all of the iron, steel, and manufactured goods
used in the project are produced in the United States.


In plain English, transportation and construction projects must use American-made iron and steel.

Iron_Bridge

This so-called "Buy American" requirement looks like the first shot in a global trade war. But Congress inserted some provisions that may make the requirement just an effective piece of populism. Analysis and some caveats after the jump.

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