A quick primer: In the House version of the stimulus package, there was a "Buy American" provision requiring that public works projects use U.S.-made iron and steel. The "Buy American" provision in the Senate version of the bill goes much further, as the Wall Street Journal notes, requiring that "all manufactured goods" in such projects come from U.S. suppliers.
The provision is provoking outrage from U.S. trading partners, most notably in Europe. The European Union this week warned that if the stimulus bill passes with strong "Buy American" protections, it would file a complaint with the World Trade Organization charging the U.S. with violating agreements limiting discrimination in government spending.
Critics say that the provisions could prompt other countries to enact similar measures in response to the U.S. action, resulting in diminished sales abroad for U.S. companies like Caterpillar and Boeing.
But labor unions and other groups back strong "Buy American" protections as a way of ensuring that stimulus funds benefit U.S. workers and companies, not their foreign competitors. Unions strongly backed the president during the presidential campaign; as CBS News Chief Political Consultant Marc Ambinder points out, Obama campaign on "Buy American" provisions, and his campaign even printed up "Buy American, Vote Obama" stickers.
Which is why it may have come as a shock to some "Buy American" advocates when the president told ABC News yesterday that he did not support "Buy American" provisions because he did not want to "signal protectionism."
"I think that would be a mistake right now," he said. "That is a potential source of trade wars that we can't afford at a time when trade is sinking all across the globe."
The president also told Fox News, "We can't send a protectionist message."
Ambinder reports that Democratic and labor sources believe Mr. Obama is seeking to modify the provision in the Senate version of the stimulus package, not kill it.
White House spokesman Robert Gibbs told reporters this afternoon that the president supports a provision that "will strike a balance that ensures that we meet our commitments to global trade agreements."
The White House has not yet responded to a request from Hotsheet for further clarification on the president's position.
As the Journal notes, a study out today from the Peterson Institute for International Economics found that the provision would cost many more jobs than it creates.