Made in America and the State of the Union

If you want to win a bet next Tuesday, wager your friends that President Obama will say “Made in America” in the State of the Union address. It’s the closest you’ll ever get to a sure thing.

“Made in America” is a wildly popular notion across the political spectrum. The President has uttered the phrase dozens of times over the past year. So, it shouldn’t be shocking for him to say it on January 24. But, what’s behind the rhetoric? Is there any “there” there? That’s what I’ll be looking for on Tuesday evening.  

It’s fair to say that this administration has showered more attention on American manufacturing than it has seen for a long time, and that our sector of the economy has stabilized somewhat after years of serious decay. But, treading water simply isn’t good enough while China passes us, and our high unemployment rate threatens to sink us.

What the President has proposed so far on advanced
manufacturing
, insourcing, and skills is all positive, but it is also minor league compared to the efforts of our global competitors. The administration’s rescue of General Motors and Chrysler has been good for our economy and consumers (who now have better cars from which to choose), but it was more akin to emergency room care than to a long-term strategy to regrow manufacturing. That’s one of
the reasons why America’s share of global manufacturing has declined.  It’s also why Germany still has over 20 percent of its economy in manufacturing while in the U.S. the number is closer to 11 percent.

We know the American people want the White House and Congress to go “all in” for manufacturing. That means better tax, investment, education, and trade policies. There is plenty that the President could do on his own—right now—without having to wade through Congress. As the White House is fond of saying, “we can’t wait.” For instance, the White House could:

  • Keep our trade laws strong and strictly enforced. Refocus the trade agenda by giving American businesses new tools to counter China’s currency manipulation, industrial subsidies, intellectual property theft, and barriers to market access.
  • Condition new federal loan guarantees for construction of energy projects on the utilization of domestic supply chains. Approve additional applications for renewable and traditional energy projects,
    contingent on the use of American-made materials.
  • Expedite small business loans through the Small Business Administration and Treasury Department to help firms expand, retool, and hire.
  • Convene a multilateral meeting to address global imbalances and in particular Chinese mercantilism. If China doesn’t agree to participate, designate it a currency manipulator. (China ships more than one-quarter of its exports to the U.S. and finances less than 10 percent of our public debt, so we have more leverage than some might suggest.)
  • On the heels of the landmark agreement with automakers on fuel economy standards, secure an additional agreement from all foreign and domestic car companies to increase their levels of domestic content by at least 10 percent over the next three years.
  • Direct the Department of Defense to leverage existing procurement to contractors that commit to increasing their domestic content of our military equipment, technology, and supplies.
  • Promote energy conservation and security by promoting the retrofitting of public buildings with American-made materials and manufactured goods, and support private sector efforts to increase industrial energy efficiency.

There is also plenty that Congress can and should do, as well. Quite honestly, failing to pass any of these proven, popular policies will result in self-inflicted wounds for our economy.

  • Work with congressional leaders to adopt a large-scale, long-term infrastructure plan of at least $500 billion over six years. Leverage capital from private investors for large-scale transportation and energy projects by using creative investment measures, such as the establishment of a national infrastructure bank that delivers low-cost loans or loan guarantees.
  • Reshape the tax code in a revenue-neutral way to provide incentives for job creation and inward investment. Research and development tax credits should help firms that not only innovate in America, but also make their products here. We should lower tax rates for manufacturing activity in
    America and expand and renew incentives such as the 48(c) clean energy manufacturing tax credit and up-front expensing for plant and equipment purchases.
  • Shift some education investment to rebuilding our vocational and technical skills programs, which would address looming shortages of qualified workers needed in the manufacturing sector.

These policies aren’t partisan or ideological. Taken together, they will make a real difference. A strong manufacturing base is critical to many of our economic and strategic goals: rebuilding the middle class, lowering our budget deficit and the debt we owe to China, and ensuring
that we have the ability to innovate. China’s not waiting for us.

If the President really wants to see “Made in America” stamped on products shipped all over the world, he needs to be bold. We’ll be watching. And so will voters.

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