WASHINGTON (AP) — The Biden administration is taking a key step toward ensuring that federal dollars will support U.S. manufacturing — issuing requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction material.
New guidance issued Monday requires that the material purchased — whether it’s for a bridge, a highway, a water pipe or broadband internet — be produced in the U.S. These rules provide a way to waiver these requirements if the materials are too expensive or there aren’t enough producers in the United States. The goal is to issue fewer waivers as the U.S. manufactures capacity grows.
“There are going to be additional opportunities for good jobs in the manufacturing sector,” said Celeste Drake, director of Made in America at the White House Office of Management and Budget.
President Joe Biden hopes to create more jobs, ease supply chain strains and reduce the reliance on China and other nations with interests that diverge from America’s. With inflation at a 40-year high ahead of the 2022 midterm elections, he’s betting that more domestic production will ultimately reduce price pressures to blunt Republican attacks that his $1.9 trillion coronavirus relief package initially triggered higher prices.
“From Day One, every action I’ve taken to rebuild our economy has been guided by one principle: Made in America,” Biden said Thursday in Greensboro, North Carolina. “It takes a federal government that doesn’t just give lip service to buying American but actually takes action.”
Biden claimed that while the $700 billion spent annually by the government on procurement is meant to be prioritized U.S. suppliers, but that regulations from the 1930s were either diluted or used in ways that obscure foreign imports.
Even though $350B is being spent this year on construction, the Administration could not tell how much of U.S.-made construction material is used in existing infrastructure projects. These guidelines will allow government officials to determine how much money goes to U.S. workers or factories.
Tucked into the bipartisan infrastructure package that became law last November was a requirement that starting on May 14 “none of the funds” allocated to federal agencies for projects may be spent “unless all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States.” That’s according to Monday’s 17-page guidance.
The guidance includes three standards for these requirements to be waived: if the purchase “would be inconsistent with the public interest”; if the needed materials aren’t produced “in sufficient and reasonably available quantities or of a satisfactory quality”; or if U.S. materials increase a project’s cost by more than 25%.
American factories are currently just 170,000 away from the 12.8million factory jobs that were available in 2019. This is because manufacturing jobs started to fall before the epidemic. However, the U.S. still has 6.9 millions fewer manufacturing jobs in 2019 than at the 1979 peak. This loss is due to outsourcing and automation.
Getting more industrial jobs will likely mean adding more factories and assembly lines — as manufacturers are operating at a 78.7% capacity, which the Federal Reserve notes is above the historical average.
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