NEWS
Stimulus Bill
Jan 31, 2009
By Gustavs Plato
The United States and the world are facing the greatest economic crisis of the last 70 years. The U.S. Congress and the White House are working on legislation that would provide over $800 billion in new economic stimulus through a combination of spending and tax cuts.

The hope is that this will create millions of new jobs and also provide tax cuts to American citizens. The bill clearly targets key components of the President Barack Obama's long term investment agenda, which includes energy, health care, and infrastructure. LatCham is very supportive of these investments as we believe that in the current economy they can provide long term economic benefits.

LatCham is also generally supportive of such an fiscal stimulus agenda in the current economic environment. We have attained a crisis in confidence, which has resulted in the majority of world industries and individuals simultaneously halting their consumption/spending. This has resulted in dire consequences for world economies. Although typically one could look towards spending reduction and lowering tax rates as a way out of a economic downturn, the typical logic may need a judo approach, which this package has the potential to achieve.

Today, many economies are on the brink of collapse, or certainly could not survive on their own. So the stimulus package comes at the right time, especially, if it is enacted in concert with other national spending strategies. China already has a spending stimulus on the books and Europe and Japan are still looking to shore up the current shortfalls. We believe that it is the synchronous stimulus that will create enough momentum to stop the current downward spiral that has spread across the globe.

We are also asking the Congress and the White House to scrutinize this legislation carefully. The legislation should be free of earmarks and non-stimulus spending. It should be spent in those areas of the economy, and on projects, which will be the best enable consumer spending and work its way through the economy.

In addition, it is important to continue to support free trade and not limit spending to U.S. made goods only. The House version had such language with regards to the steel industry. The draft Senate version increases the restrictions to all manufactured goods.

SEC. 1604. 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.

(d) In this section, the terms ‘‘public building’’ and ‘‘public work’’ have the meanings given such terms in section 1 of the Buy American Act (41 U.S.C. 10c) and include airports, bridges, canals, dams, dikes, pipelines, railroads, multiline mass transit systems, roads, tunnels, harbors, and piers.


However, many U.S. manufactured products have raw materials sourced from around the globe. Caterpillar, Apple, you name it, they source internationally. In addition, the U.S. sells over $4 trillion dollars worth of goods overseas because markets are open to our businesses. What would happen to US industries, US economy, and US jobs, if this came to a rapid halt?

If we enable trade barriers and other nations do the same, the results would be catastrophic. Not only would our goods become more expensive, but many large U.S. global firms would lose their overseas business opportunities and the sales would fall. What good is an American made good if no one can afford to buy it or if their is no market to sell to?

The U.S. Chamber of Commerce, as well as foreign officials from U.S. allies in Europe, the Americas, and around the globe are very concerned about the legislation's provision for it's requirement of making manufactured goods in the United States.

Rightfully so. LatCham is supportive of free trade. Of course, we realize that there are situations, where provisions made need to be made to equalize the playing field. However, an across the board rejection of foreign made goods is not a step in the right direction. U.S. trading partners must, in a similar fashion, lower look at their own legislation and see if there are any barriers to trade that must be lowered.

We hope that this legislation helps to bring this discussion front and center, but that in the end, any protectionist barriers that are vestiges of an old world economic strategy are eliminated by all parties across the globe.

The Chamber’s letter is available at: www.uschamber.com/issues/letters/2009/090126_taxact.htm

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