February 6, 2013    Volume 20, No. 2

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For A Pro-Domestic Manufacturing Policy Agenda In Congress, This Might Be The Year

By Richard A. McCormack

The U.S. Senate might be more open this year to legislation aimed at improving U.S. manufacturing and reducing the U.S. trade deficit. A number of new senators and those reelected to the chamber ran campaigns that focused on bringing manufacturing back to the United States.

One of the chamber's new members, Chris Murphy (D-Conn.), says supporting American manufacturing in his campaign had "political potency," and helped him win against former CEO of World Wrestling Entertainment Inc., Republican Linda McMahon. During the campaign, Murphy described her as having made millions of dollars by offshoring work to China and Pakistan. "It dovetailed with the similar conversation that was happening in the presidential election," says Murphy.

Murphy, the youngest member of the Senate at age 39, says he intends to be a leader on issues related to "Buy American" acquisition laws, currency manipulation, tax policies that promote investment in plants and equipment in the United States, and government investment in infrastructure that improves industrial competitiveness. "I have already reached out to other senators like Debbie Stabenow [D-Mich.] to join the pro-manufacturing efforts underway here in the Senate," he says. "If we get together as a party and movement to push this new strategy there will be a lot more people than just me in the Senate and the House ready to follow."

Murphy says the Republican Party could come around, too, on issues that favor domestic manufacturing. "There is an examination happening in the Republican Party as to why they hemorrhaged votes and seats in 2012," says Murphy. "They would be smart to realize that one of the reasons they lost votes is they continue to be on the wrong end of the outsourcing debate. They are coming around on immigration because they recognize that they can't win elections unless they change their tune on immigration. I think the same thing is true when it comes to manufacturing and outsourcing. If the Republicans continue to be identified as the supporters of outsourcing, they cannot win national elections. They certainly can't win presidential elections in places like Ohio and Pennsylvania. And so I think that our hopes -- to the extent that we have any hope of moving this agenda through the House -- is that the Republican consultant class, who tend to dictate what the Republicans stand for in the House, will realize that they have to get on the other side of this debate, and fast."

Other senators ran successful campaigns on similar pro U.S. manufacturing issues, notes Scott Paul, President of the Alliance for American Manufacturing. Among them were Democrats Tammy Baldwin of Wisconsin, Joe Donnelly of Indiana, Bob Casey of Pennsylvania, Sherrod Brown of Ohio and Kirsten Gillibrand of New York. Other Senate allies include Democratic Sens. Amy Klobuchar and Al Franken from Minnesota and Charles Schumer of New York, "and that's just touching the tip of the iceberg," says Paul. "In the Senate, there is an extraordinary amount of interest in pursuing" a domestic manufacturing agenda. "I am cautiously optimistic that in the Senate we can make some significant progress this year. Will the House listen? I don't know, but we were able to extract some modest improvements in the Buy American laws in the infrastructure bill that passed the Republican-led House in the last Congress because it would have been too painful for some of their members to vote against it."

Who is working against the pro-domestic manufacturing agenda? The organizations that represent multinational companies that have outsourced production, replies Paul. Identifying those outside groups "will shed some light on who on the inside [in Congress] is working against us," he notes. On the issues of "Buy American" and cracking down on Chinese currency manipulation and unfair trade practices, it is the U.S. Chamber of Commerce and the Club for Growth. "You think of the senators and those in the House of Representatives who take their guidance from the Club for Growth and the Chamber and you have your answer."

Even with those forces lined up against, the China currency bill was able to pass in the Senate during the last session with bipartisan support, despite the threat of a filibuster from Senate Minority Leader Mitch McConnell (R-Ky.). "There were enough Republicans including Lindsey Graham [R-S.C.], other southern senators and even [Sen.] Rob Portman [R-Ohio] who bucked him on this to support the bill," says Paul. "It was the only bill to overcome a Mitch McConnell filibuster. We are making some progress, but they are baby steps, not giant steps. I am hoping in the Senate this year, we can make giant steps and broader shame some of the Republicans in the House to go along with this. There are rank and file House Republicans who support this agenda -- not a lot of them, but enough to provide a majority."

Sen. Murphy says backing a strong domestic manufacturing agenda is a good political strategy for Democrats. As the former member of the House of Representatives who created the Buy American Caucus, Murphy says that most voters realize that the U.S. economy cannot fully recover unless there is a healthy manufacturing sector. "This necessitates a new agenda," he says. "I have always seen this issue as one of a few that allows Democrats to reach constituency groups that they might not traditionally reach. First and foremost, you are out there talking to small manufacturers and businesses which aren't used to having Democrats coming into their factories and talk to them about what they need. Second, you are talking to a demographic of families associated with manufacturing trades that also aren't traditionally Democratic constituencies."

Murphy said he held a seat in the House of Representatives from a conservative district -- one that had been Republican for the previous 24 years prior to his winning in 2006 -- "in part to my speaking to them on the issue of making things here in America."

The pro-domestic manufacturing issue was a big part of last year's election campaign, notes Paul. "One of the most popular images in American political advertising in 2012 was the American factory," he notes. "We have data to back that up." There were almost one million political ads last year addressing issues related to jobs, companies that ship jobs overseas and the auto rescue. "There were over $45 million in ads in the presidential contest alone just on the China trade issue," says Paul. "And in virtually every close race -- Indiana, Ohio, Wisconsin, Pennsylvania and in Sen. Murphy's race in Connecticut -- one of the primary focus points for the victors was support for an American manufacturing policy."

Even Obama pledged during the campaign to create one million manufacturing jobs over the next four years. "So now we have a metric to hold the Obama administration accountable," says Paul. "It's something that is easy to measure. So every month we will lay out how much or how little progress the President is making on his goal."

Murphy says he will start a Buy American caucus in the Senate "because the U.S. government, year after year after year, is outsourcing taxpayer funded procurement to foreign countries," he says.

Murphy would like to raise the requirement under the current law for agencies to buy 50 percent U.S. content to at least 60 percent and, better, 75 percent. He would get rid of loopholes that allow the U.S. government to buy foreign-made products if those products are being consumed outside the United States. And he would beef up the enforcement mechanism in the law by making it difficult for government agencies to approve waivers to the act.

As for free trade issue on Capitol Hill, Robert Borosage of the Campaign for America's Future says the financial sector collapse in 2008 and subsequent recession may have broken the stronghold that multinational corporations and Wall Street have had on policymakers. "Corporate-defined free trade that does more to guarantee investment abroad than it does to guarantee jobs at home has been the centerpiece of the bipartisan consensus in this country for many decades," says Borosage. The Democratic Party -- directed by Wall Street and Clinton White House titan Robert Rubin -- was fully on board with this strategy "even though it was widely opposed by broad majorities of Americans across both parties," he notes. "One of the moments we are in given the collapse of that economic model is whether that broad public sentiment against that policy can start to gain traction in the Congress despite these very powerful forces lined up against it. What is interesting about the array of allies and the progress on the [last session's] China currency bill that went further than many would have thought, is that we do have a moment here were popular opinion can finally start to be reflected in the halls of Congress in a way that it hasn't in the past."

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