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Save American Manufacturing

Wed, 08/11/2010 - 7:46am
American Iron and Steel Institute

Save American Manufacturing


August 11, 2010
Politico (Opinion)
By: Robert Borosage

These days, Republicans can’t suppress the gloat. The “Party of No,” leading in most polls, is said to be on the verge of taking the House and possibly the Senate in November.

The irrepressible Rep. Paul Ryan (R-Wis.) calls the midterms a “dress rehearsal” for 2012, posing a fundamental choice for voters: “Are we going to be an opportunity society with a safety net or a cradle-to-grave society with a welfare state?”

Put aside that Republicans scorn safety nets as incipient socialism; they even balked at extending unemployment insurance. Ryan’s choice — opportunity over welfare — has been a GOP standard since Ronald Reagan proved its popularity.

But will that old refrain play today? Democrats are trying a different tune: “Making It in America .”

When they return in September, the Democratic majority plans to push a legislative agenda that takes the first steps toward reviving U.S. manufacturing. Specific elements are still being determined but are likely to include new tax incentives for creating jobs, subsidies and tax credits for investment in renewable energy and a tougher stance on trade — probably featuring a challenge to Chinese currency manipulation.

Politically, the power of this message was foreshadowed in the Pennsylvania special election for Rep. John Murtha’s seat. Mark Critz, the Democratic candidate, won an upset in a conservative, white, ethnic district, with a campaign attacking the free-trade policies of his businessman opponent.

Democratic leaders were also electrified by a Mark Mellman poll for the Alliance for American Manufacturing, which showed that large majorities believe manufacturing is the most important industry for our economy and national security and support action to revive it.

Two-thirds of Democrats, Republicans and independents reject the view that “high-tech and services” industries can replace manufacturing in a strong U.S. economy.

When Mellman put a message calling for action to secure our manufacturing base against a conservative line disparaging Big Government and the auto bailouts and invoking the free market, the former won by almost two to one — 60 percent to 32 percent.

More than 75 percent of Americans support a “national manufacturing strategy to make sure that economic, tax, labor and trade policies work together to help support manufacturing in the U.S. ”

Not surprisingly, the Democrats’ lead initiative now is the National Manufacturing Strategy Act, introduced by Rep. Daniel Lipinski (D-Ill.). It calls for quadrennial review of U.S. manufacturing policy — including assessing strategic industries, reviewing tax and trade subsidies and requiring agencies to coordinate strategies.

Here, good politics is also good policy. A bold initiative for reviving U.S. manufacturing is overdue. Since 2000, we’ve lost nearly one-third of all manufacturing jobs — more than 5 million. We’ve racked up $6 trillion in global current account losses, borrowing as much as $2 billion a day to cover our trade deficits. Rising deficits now sap the faltering recovery.

This isn’t just globalization. This is a matter of ideology and policy. In the past three decades of conservative dominance, Americans embraced what George Soros calls “market fundamentalism.”

Government was scorned; markets, exalted. It translated into cutting taxes and spending, deregulating, freeing up trade, weakening unions and worker protections, celebrating CEOs, keeping the dollar strong — and letting it rip.

We know the results. Manufacturing went into long-term decline. Wages stagnated. The United States became the world’s largest debtor. Families took on greater debt to make ends meet. Financial speculation thrived, contributing to Gilded Age inequality. As Federal Reserve Chairman Ben Bernanke has argued, the global imbalances contributed directly to the financial collapse.

Now, Americans are worried about jobs and deficits, furious at big-bank bailouts and sensibly suspicious of a government that seems more responsive to lobbyists than to citizens. But Ryan’s choice offers no way out. Most Americans agree with President Barack Obama when he argues we can’t go back to that old economy.

It’s easy to dismiss the Democrats’ new message as a deathbed conversion. But if seriously pursued, it would represent a fundamental break with conservative policies.

Manufacturing is central to a strong economy and a broad middle class. And rebuilding a manufacturing sector with good jobs requires new policies in a global economy.

Obama’s “new foundation” for the economy offers first steps: public investment in 21st-century infrastructure, in education and training, in research and development. Yet these, slighted in years of conservative control, are necessary but not sufficient.

To ensure products are “made in America ” requires hardheaded steps to balance trade and challenging the mercantilist countries, starting with China .

This administration is allergic to the term “industrial policy,” dismissed as “picking winners and losers.” But the president — and Mother Nature — have already picked a winner, capturing a lead role in the green industrial revolution, beginning with what Obama calls “jump-starting a new American clean energy industry.”

Competition is already fierce, with Germany , Spain , China and others subsidizing strategic industries.

Meeting the competition is likely to require U.S. renewable energy standards that ensure a growing market for alternative energy, aggressive use of government procurement to help domestic producers, tax credits and other subsidies to help start-ups, expanded investment in science and technology and, finally, setting a price on carbon emissions.

A national investment bank could mobilize the public and private investment in new energy and infrastructure projects.

This forward-looking manufacturing strategy is vital to rebuilding a broad middle class — as other nations have demonstrated. Germany , for example, maintains a large manufacturing trade surplus that is now fueling its recovery, even as its workers receive higher pay and better benefits and work far fewer hours than Americans.

Against the backdrop of mass unemployment, a faltering recovery, deficit hysteria and bailout fury, this agenda may be too little and too late for many Democrats.

But it addresses a challenge that America cannot duck. A U.S. manufacturing strategy represents a dramatic conceptual break with the market triumphalism of the past decades.

By abandoning the Republicans’ “opportunity vs. welfare” refrain, Democrats’ “Making It in America ” may trump conservative scorn for government — and offer the party a lifeline this fall.

Robert L. Borosage is president of the Institute for America’s Future and co-director of its sister organization, the Campaign for America ’s Future.

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