The economic stimulus measures making their way through Congress hit a speed bump this week over the Buy American clauses embedded in the legislation. In their original form, these provisions would have mandated only American-produced iron and steel could be used in government funded infrastructure projects. The aim of these Buy American laws is to increase the number of jobs in the iron and steel industry, an understandable goal in the current environment. But after President Obama expressed concern such policies could trigger a trade war, the Senate conducted a voice vote to amend the provisions to be consistent with existing trade-agreements. In other words, they took the teeth out of it. So why are economists of all political persuasions coming out of the woodwork to voice their opposition to this legislation?
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