The American Recovery and Reinvestment Act of 2009 (ARRA) was passed by President Obama and Congress in response to the recession of 2007-2009. The primary components of this bill included tax cuts and increased government spending, with an emphasis on infrastructure spending such as roads and bridges. Included in the bill was a “Buy American” provision which required all manufactured goods (a few exceptions did apply) purchased with ARRA funds to be made in the United States. The intention of this provision was to increase jobs in the United States by preventing foreign companies from reaping the rewards of the new spending projects.
1) Are attempts to protect U.S. firms from foreign competition, such as the Buy American provision, good ideas? Explain.
2) Explain why some American companies might be opposed to this provision.
3) Explain whether or not you believe the Buy American provision would create jobs in the United States.
4) What do you think will be the economic consequences of a Buy American provision?
5) Do you believe the government should get involved in this aspect of private business, even when the available funds are coming from the government? If so, why? If not, why not?
Sample Solution
