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Caterpillar at center of opposition to “Buy American” language in stimulus bill

Democrats passed the federal stimulus bill yesterday without a single Republican vote. Caterpillar, meanwhile, is trying to talk Congress out of protectionist language designed to prevent U.S. infrastructure dollars from flowing overseas. From today’s Washington Post:

“There is no company that is going to benefit more from the stimulus package than Caterpillar, but I am telling you that by embracing Buy American you are undermining our ability to export U.S. produced products overseas,” said Bill Lane, government affairs director for Caterpillar in Washington. More than half of Caterpillar’s sales — including big-ticket items like construction cranes and land movers — are sold overseas.

“Any student of history will tell you that one of the most significant mistakes of the 1930s is when the U.S. embraced protectionism,” Lane said. “It had a cascading effect that ground world trade almost to a halt, and turned a one-year recession into the Great Depression.”

Just an example from my own experience. I drive a 2006 Honda Element that was built in Ohio by American workers. This car has no nationality, nor do most of the other products bought and sold on this planet. People understandably want trade to produce all winners and no losers, but they might as well try to mint one-sided coins. OK, rant over, back to the headlines.

The New York Times has an informative assessment of how fast the stimulus package, in its current form, can start doing some good. The tax breaks and direct cash aid for extended unemployment and food stamps programs will start helping right away. The aid to states facing crushing deficits will prevent massive layoffs. But what about the infrastructure provisions?

The greatest prospect of delay in spending is on infrastructure. The bill provides $30 billion for highway construction and tens of billions more for other transportation projects, water projects, park renovation, military construction, local housing projects and more.

A Congressional Budget Office analysis found that only 64 percent of the bill’s spending would be completed within 19 months, and spending on construction projects was among the slowest.

If the economic recovery is slow, that timing could work out perfectly, giving the economy a jolt just when faster-acting components are wearing off. But if there is a quicker-than-expected rebound, many of those projects could start just in time to compete with renewed private spending.

Political junkies should keep an eye on what comes next in the Senate. House Republicans who voted against the package obviously expect it to fail badly enough that they can bash Democrats with it in the 2010 elections. The Senate doesn’t have enough Democrats to block a filibuster by Senate Republicans, but the Senate is where the grown-ups live in the U.S. Congress, so they will presumably put the nation’s welfare first (while putting the nation on welfare, essentially) while covering their own hides from responsibility for making the recession worse.

We don’t even want to think about what the markets will do if the stimulus package fails.

I sympathize with the sentiment that reckless debt-chasing got us into this mess and seems unlikely to get us out of it. The critics are all saying “you can’t borrow your way to prosperity,” which sounds sexy but is plainly false. Everybody who took out a mortgage and retired rent-free or bought a car on a loan to get to work and back borrowed his way to prosperity. Any loan you can afford to pay off is not a problem.

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Tom Mangan posted at 9:00 am January 29th, 2009 |

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