Yves here. We warned that Trump would be forgiven a great deal if he increased wages and reduced un- and underemployment. But as his economic plans begin to crystalize, many of his big priorities are near and dear to Republicans, namely, cutting taxes and getting rid of Obamacare (although Trump has also said he’d like to keep some Obamacare features….but the ones he’d like to preserve necessitate keeping the program largely intact). And one of Trump’s big job boosting ideas, infrastructure spending, is now looking more like pork to the rich. Rather than government-funded expenditures, Trump is advocating public-private partnerships that would get special tax incentives to lower not just the cost of borrowing but even the cost of equity investment. Aside from the fact that public-private partnerships are an exercise in looting, this program is unlikely to do much on the jobs front. First, the infrastructure spending won’t lead to an increase in fiscal spending, so it will not act as an economic stimulus. Second, to the extent it does create jobs, investment dollars will go to places where the projects pencil out as providing attractive user fees. That means they will be in places with moderate to high population density….and not in the smaller communities that are struggling from the loss of factory jobs.
So how does Trump plan to deliver on his campaign promise? He appears to be relying entirely on cutting the trade deficit and using immigration “reform” to reduce competition for low-wage jobs. (He may also believe that tax cuts aimed at the rich and deregulation will produce growth, but those were never very productive approaches, and the marginal return from going further down that path won’t be great).
The post below discusses how Trump will encounter resistance from Republicans on his plans to stop sending as much demand as we do overseas, which has the effect of exporting jobs. One would think that “Buying American” would be an uncontroversial idea. Think again.
By Leo W. Gerard, president of the United Steelworkers union. President Barack Obama appointed him to the President’s Advisory Committee on Trade Policy and Negotiations. Follow him on Twitter @USWBlogger. Originally published at Alternet
Virtually every time President-elect Donald Trump performs in cities across America on his thank-you tour, he mentions, to grand applause, his preference for Made in America. He describes his plan to create jobs with a federal infrastructure spending project (improvements to crumbling roads, bridges, waterlines and airports), and then says, “We will have two simple rules when it comes to this massive rebuilding effort: Buy American and hire American.”
That American-job-creating, buy-American thing is supported by 71 percent of the American public. But it is a smack in the face to GOP Speaker of the House Paul Ryan, who just made it clear in the Water Resources Development Act that he’s fine with creating slave-wage iron- and steel-making jobs in China with U.S. tax dollars, so long as a few fat-cat iron-and-steel importers make a profit on the deal.
So clearly, there’s a battle brewing between the President-elect and the Speaker of the House. This is the President-elect who has repeatedly promised the working-class men and women who elected him that he’d support Buy American provisions in federal law to create jobs for them. And it’s a GOP Speaker who wants to ship taxpayer-financed work overseas and let the working class wait a couple more decades to just possibly feel a tiny pinch of trickle-down from the largesse of filthy rich iron and steel importers. This, also, is a clash between a New York real estate titan who won the presidency and a Wisconsin lawmaker who lost the vice presidency.
By advocating night after night for American Made, President-elect Trump essentially warned Ryan not to strip the Buy-American provisions out of the Water Resources Development Act. But Ryan did it anyway early in December when he got the act from the Senate.
The act contained strong, permanent Buy America language when the Senate sent it over. These provisions are significant because they use tax dollars to create 33 percent more U.S. factory jobs, something that is, again, important to voters, 68 percent of whom told the Mellman Group & North Star Opinion Research in November in a national survey conducted for the Alliance for American Manufacturing that they were worried that the country had lost too many manufacturing jobs.
In addition—and President-elect Trump knows this from the response he gets at his rallies—Buy American policies are very popular. Seventy-four percent of voters say large infrastructure projects financed by taxpayer money should be constructed with American-made materials and American workers. And those who voted for President-elect Trump agree more strongly – 79 percent of them say American-made should be given preference over the lowest bidder.
This is a very big deal to iron and steel producers and workers in the United States. Far too many mills are closed or partially shuttered because of unfairly traded imports, and more than 16,000 steelworkers across this country have been laid off over the past year.
China is the main culprit, but there are others. China produces so much steel now that it has managed to inundate the world with more steel than anyone needs. It is dumping steel on the world market at such low prices that no one can compete. As a result, producers from places as far flung as Mexico, the U.S., Canada, India, the U.K. and Spain are shutting down and throwing workers out of their jobs.
China props up that excess steelmaking capacity with methods that are illegal under the terms of the agreements it entered into to gain access to the World Trade Organization and Permanent Normalized Trade Relations with the United States. If steel is sold domestically, a country can provide steel firms with subsidies like exemptions from utility payments and taxes, interest-free loans and free land. But those free market-warping subsidies violate international trade agreements when the steel is exported. That’s what China is doing. And it’s killing American steel companies and American jobs.
When Ryan eliminated the permanent Buy American provision in the Water Bill, essentially saying it’s fine to import illegally subsidized Chinese iron and steel for taxpayer-financed water projects, he was also saying it is fine to bankrupt American steel companies and destroy American jobs.
If the United States is reduced to buying steel from China to build its military tanks and armor, that’s okay with Ryan, as long as he maintains a great relationship with the lobbyists for the foreign steelmakers. They pushed him hard to drop the Buy American provision through Squire Patton Boggs, a Washington, D.C. lobby and law firm employing Ryan’s predecessor Speaker John Boehner and numerous former top GOP aides.
He got hit with a tweet storm after he chose Chinese jobs over American jobs, though. Buy American supporters and members of the Congressional Steel Caucus began pointing out on Twitter just how good #BuyAmerica is for American jobs and the economy and cited @realDonaldTrump, the President-elect’s Twitter handle on every Tweet, which means his account was alerted.
This came from Ohio Sen. Sherrod Brown:
“.@RealDonaldTrump: Tell @SpeakerRyan to put #BuyAmerica back in Water bill. American tax dollars for American jobs.”
And steelworkers wrote protests on Ryan’s Facebook page and hundreds called Ryan and his anti-American-made congressional crew.
Ryan responded. Sort of. He restored one-year Buy American language to the bill. Nothing like the permanent provisions achieved in other federal laws, but it does keep the jobs for 12 months and the issue alive until President-elect Trump can take on Ryan mano-a-mano on Buy American after the inauguration.
Ryan has made clear his anti-American preference, so this will be a royal rumble. But the Speaker should beware. The last time the President-elect stepped into the ring with a heavyweight, it was with the ring’s owner, World Wrestling Entertainment CEO Vince McMahon, a former professional wrestler. And McMahon left bald and defeated.