Eight Ways a Divided Congress and White House Can Boost Manufacturing
The 113th Congress was historically unproductive and entirely forgettable. But when the legislature reconvenes in January, it’ll have a different look and feel, reflective of the Republican gains in November’s elections.
And while you might be girding for more of the same partisan gridlock, there are several areas where President Obama and the GOP can work together to support American manufacturing and increase job growth. We know these policies work, and we also know they have widespread support from voters.
Here’s what I’m watching for:
Tackle America’s infrastructure crisis. Few issues attract more support than infrastructure investment, because everyone agrees that businesses need an efficient transportation network to get their goods to market. But no one seems to want to pay for it. With gas prices low and several Democrats and Republicans boldly stepping forward to suggest new revenue streams, 2015 may be the magical year to get something done.
Federal infrastructure investment creates a significant bang for our buck; each dollar spent yields $3.54 in economic impact, and every $1 billion creates more than 21,000 jobs. There is some urgency to this issue: The latest short-term infrastructure “patch” expires in May. Congress shouldn’t wait until then to agree to a long-term solution.
Keep it Made in America. “No more outsourcing” was a common refrain in political advertising this year. Now let’s walk the walk. If we’re going to create more middle-income manufacturing jobs, Washington must build upon existing Buy America preferences (some of which were put in place by none other than Ronald Reagan) to ensure that public investments in our roads, bridges, rail, and other infrastructure are truly American-made.
Push tax reform that encourages manufacturing. There’s rumblings that 2015 might be the year Washington takes a run at this notoriously thorny issue. Corporate tax reform can create prosperity by creating and enhancing policies that encourage American manufacturing, like ensuring industry has the ability to quickly recover the significant costs of capital investments. But there are also plans that would eliminate such deductions and credits as a means of lowering taxes for other sectors of the business world that really don’t face global competition. If the tax code doesn’t recognize the critical role manufacturing plays in our economy and the unique global competition it faces, we’ll see another wave of factory jobs lost as a consequence of ill-founded public policy.
Deter and penalize China’s currency manipulation. Can you name another issue on which Paul Krugman and Art Laffer agree? The new GOP-controlled Congress should continue to press the Obama administration to pressure trade cheats like China and Japan to allow market forces to determine winners and losers, not market distortions like currency manipulation and government subsidies.
A majority of Congress has long supported decisive action to address currency manipulation, which artificially makes a manipulator’s exports cheaper and our own products more expensive. We’ve seen votes on this issue in 2005, 2010, and 2011. Let’s plan for a decisive one in 2015.
Open foreign markets, but enforce the rules. Trade policy has an enormous impact on the flow of goods and the global location of production and jobs. As Congress and the president consider pacts like the Trans-Pacific Partnership, the job losses and plant closures American manufacturing has suffered – often a direct result of Washington’s unwillingness to stop unfair trade practices – should be top of mind. It’s better to have a fair and reciprocal deal than a short-lived diplomatic victory that ultimately weakens America.
There needs to be a strong set of rules on issues such currency manipulation, competition with state-owned enterprises, and rules of origin. And they need to be strictly enforced. Trade is great. Fair play is even better.
Foster innovation. Our national competitiveness depends on the ability of manufacturers to innovate, adopt, and produce next-generation technologies and products. With this in mind, President Obama has set up a series of manufacturing institutes to leverage the resources of industry, academia, the government, and other stakeholders. Congress started to bolster these issues by authorizing $300 million for new innovation institutes in 2015. As the economy continues to recover, they should up that number for 2016.
Invest in workers. Wages are starting to rise. That’s good news for manufacturing, because it means more job seekers will look to industry for work. And rising incomes mean the rest of the nation will be buying more of what America makes. But there’s a lot Congress could do in the meantime to shake the rust off our system of technical training.
The Labor Department will be awarding $100 million in grants for industrial apprenticeships programs next year. Congress should at least triple that investment, as we lag far behind Germany and other competitors. Plus, business and labor like apprenticeships, which makes for a powerful tonic on Capitol Hill.
Increase our energy advantage. American oil and natural gas production are rising. We should harness it for domestic manufacturing. That means keeping a lot of it here, where homegrown resources can help to lower energy costs, particularly in high-cost regions like the Northeast.
Congress and the president can work together to invest in modernizing our energy transmission system, some of which is getting leaky and old. And while they’re at it, they should invest in industrial energy efficiency and spur the private sector toward a comparative advantage in renewable sources like wind and solar.
Am I dreaming? I’m not. Poll after poll shows broad, bipartisan support for pro-manufacturing policies, and there are plenty of politicians on both side of the aisle eager to see a revival of U.S. industry. Will 2015 be the year Washington gets it act together on at least some of these issues? I know one thing for sure: It’s our duty to ensure they do the right thing.
Scott Paul is president of Alliance for American Manufacturing.
