SOTU preview: Expanding American production, hiring, and capital expenditures

Posted by mmcmullan on 01/24/2014

We’re just a few days away from President Obama’s 2014 State of the Union address.

And as promised: Each day, from now until the SOTU, the Alliance for American Manufacturing (AAM) will offer up a piece of what we consider to be the entire manufacturing puzzle. It is our hope that next Tuesday we'll hear President Obama offer ideas and plans on how we can fit these pieces into place to rebuild America's manufacturing sector. Here are our previous three previews.

Today: Expand American production, hiring, and capital expenditures.

The United States spent more than $250 billion on federal infrastructure projects every year.

While that sounds like a lot of duckets (and it is, it is a lot of duckets!), it’s not nearly enough to maintain a top-notch latticework of roads and bridges necessary for our economy to function smoothly. In fact, infrastructure spending has dropped precipitously in the last few years.

Here’s what AAM is looking for from President Obama in his State of the Union address: An all-out push for new infrastructure spending. But more than that, we’re looking for a guarantee that stringent Buy America requirements are attached to all federal procurement plans.

There’s a lot of pressure on our elected officials to make sure that money is spent wisely. There are more ways to do that, though, than making sure the price tag is as tiny as can be. Yes, cost is a factor when spending tax dollars, but the length of those dollars needs to be considered too, like: Where are they spent? Where will they be recirculated? Will they go toward supporting American jobs?

That’s what Buy America policies do; they put those considerations at front and center. With smart ones in place – take a look at the one instituted at the state level in Maryland last year – they make sure American companies get the first shot at infrastructure projects. Kind of a common-sense rule, no?

But infrastructure isn’t the only place government spends money – a lot of it goes toward our National Defense, which has become increasingly reliant on foreign suppliers for critical military materials as America’s industrial capacity has migrated offshore. AAM, in fact, released a report by a retired Army brigadier general last year that examined chokepoints in America’s defense supply chain (and, really, there are a ton). That’s why we should leverage defense procurement to American-made content of military equipment and supplies.

And lastly: We need to make sure any attempt at corporate tax reform preserves or, heck, expands tax expenditures that encourage domestic manufacturing. What would that mean? Lower tax rates for manufacturing in America, and cost-recovery mechanisms that allow expensing for big-ticket plant and equipment purchases.

Buy America, an American-made national defense, and a tax code that works for manufacturing. Will we hear of these issues from Mr. Obama on Tuesday evening?

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