The Biden administration has issued requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction materials, which is a significant step toward ensuring that federal dollars support American manufacturing.
According to administration officials, the directive announced Monday demands that the material purchased — whether for a bridge, a roadway, a water pipe, or broadband internet — be manufactured in the United States. The guidelines also provide a procedure for waiving such criteria if there aren’t enough local manufacturers or the material is too expensive, with the objective of giving fewer exemptions as U.S. manufacturing capacity grows.
“There will be more chances for decent employment in the manufacturing sector,” said Celeste Drake, head of the White House Office of Management and Budget’s Made in America initiative. “And, as we aim to increase American content, that means large corporations will generate opportunities for small and medium-sized businesses in the United States when supply chains are largely re-shored to fulfill content rules.”
President Joe Biden has made such advice a pillar of his record in the run-up to the 2022 midterm elections. The Democratic president claims he can use federal spending to boost manufacturing employment in the United States and minimize dependency on China and other countries with geopolitical interests that differ from America’s.
With inflation at a 40-year high, Biden is hoping that increased domestic manufacturing would eventually lower price pressures, in response to Republican claims that his $1.9 trillion coronavirus relief program caused higher costs to begin with.
“Every move I’ve done to restore our economy has been guided by one concept from the beginning: Made in America,” Biden said in Greensboro, North Carolina, on Thursday. “It needs a federal government that doesn’t simply talk about purchasing American, but really does something about it.”
According to Biden, the government’s yearly procurement budget of $700 billion is intended to prioritize domestic suppliers, but restrictions dating back to the 1930s have either been toned down or administered in ways that have hidden the use of foreign imports.
The administration could not say what proportion of building material for existing infrastructure projects is U.S. manufactured, even though the federal government is already spending $350 billion on construction this year. The new criteria would allow federal authorities to track how much money is spent on American employees and firms.
According to the 17-page guidance issued Monday, a requirement tucked into the bipartisan infrastructure package that became law last November was 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.”
If the purchase “would be inconsistent with the public interest,” if the materials needed are not produced “in sufficient and reasonably available quantities or of satisfactory quality,” or if the U.S. materials increase a project’s cost by more than 25%, these requirements can be waived, according to the guidance.
Manufacturing employment in the United States are around 170,000 jobs short of the 12.8 million factory jobs had in 2019, since the industry began to decrease before the epidemic. However, outsourcing and automation have resulted in a loss of 6.9 million manufacturing jobs in the United States since 1979.
Additional factories and assembly lines would likely be needed to create more industrial employment, as manufacturers are now running at 78.7% capacity, which is higher than the historical average, according to the Federal Reserve.