Bye, America

President Joe Biden speaks on the banks of the Ohio River to highlight his economic plan on rebuilding infrastructure and creating good paying jobs. (Photo by Peter Zay/Anadolu Agency/Getty Images.)

Dear Capitolisters,

Most discussion of President Joe Biden’s State of the Union Address has probed the issues on which Republicans and Democrats disagreed—often vocally (sigh). Today, however, we’re going to look at one issue that elicited not only bipartisan agreement but an actual standing ovation: “Buy American.” A few Capitolisms have touched on this policy, which generally restricts federal funds to goods and services made domestically, but we’ve never really gotten into its many, many weeds. And since those weeds are unfortunately growing—and getting mad applause from our political class—it’s time we examined them.

What Is ‘Buy American’?

We talk about “Buy American” as a single U.S. law, but, as my Cato colleague Colin Grabow recently documented, there are actually several different “localization” restrictions tied to federal government spending. The most notable ones are as follows:

  • The Buy American Act of 1933 requires federal agencies to give a procurement preference to items that have been “manufactured in the United States substantially all from articles, materials, or supplies mined, produced or manufactured” domestically. Because the law didn’t define “substantially all,” presidents have monkeyed around with the definition. It used to be 50 percent, but then Trump increased it to 55 percent, and now Biden has pushed it to 60 percent, promising to increase it again to 65 percent in 2024 and 75 percent in 2029.
  • The Berry Amendment of 1941 requires Defense Department purchases to be 100 percent domestic in origin if falling into one of five categories: textiles, clothing, footwear, food, and hand or measuring tools (including flatware and dinnerware). A subsequent restriction for “specialty metals” was added in 1973.
  • The Kissell Amendment of 2009 (in the American Recovery and Reinvestment Act) requires the Department of Homeland Security to purchase American-made textiles, clothing, and footwear.
  • The Military Cargo Preference Act of 1904 and related maritime statutes (including, of course, the Jones Act) require the U.S. military to use U.S. vessels for transporting cargo and personnel and to use certain other goods (e.g., anchor chain) that are American-made.
  • The Buy America Act of 1978 and related statutes apply to federally funded transportation projects—highways, public transportation, aviation, intercity passenger rail (including Amtrak), water infrastructure, etc.—even when carried out by states or localities. Content thresholds vary by product but, importantly, iron, steel, and related manufactured products are subject to a requirement that they be wholly (100 percent) made in the United States.
  • Finally, the new Build America, Buy America Act (BABA) was buried in the thousand-page, trillion-dollar Infrastructure Investment and Jobs Act (IIJA) of 2021, and it expands traditional U.S. localization requirements in two ways: 1) It covers most public works projects (dams, buildings, electrical transmission facilities, etc.), not just transportation and water‐related stuff; and 2) it covers the usual iron/steel products, plus nonferrous metals (e.g., copper), plastic‐ and polymer‐based products, glass, composite building materials, lumber, and drywall. This law was what President Biden was discussing in the SOTU.

Finally, there are dozens of lesser-known Buy American restrictions that apply to specific goods or services, ranging from the obvious (defense-related goods) to the absurd (furniture in the White House, school lunches, etc.). State-law equivalents to Buy America, sometimes requiring in-state (not just in-country) purchases, can often restrict procurement even further.

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