Democrats: Time to keep promises

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WASHINGTON – Democrats are facing a challenge this spring: making good on their promises to boost U.S. manufacturing and the American auto industry in particular.

Last fall, Democratic candidates nationally argued that one reason voters should strip Republicans of congressional control was to ensure that Washington would help the sluggish manufacturing sector. Now that Democrats control the House and Senate, they vow to attack problems as diverse as knocking down trade barriers overseas and controlling health care costs at home.

“We are committed to making manufacturing a priority,” said Democrat Debbie Stabenow, Michigan’s junior senator.

Many Rust Belt politicians, Republicans and Democrats alike, believe the Bush administration has been slow to help the manufacturing sector in both big and small ways, from not extending a training and assistance program aimed at small manufacturers to not helping the auto giants fight unfair trade barriers in South Korea or China.

“The very notion that (helping manufacturing) is a priority for the new Congress is welcome news for the state of Michigan and the companies that call Michigan home,” said Liz Boyd, a spokeswoman for Democratic Gov. Jennifer Granholm.

Yet Republicans chafe at the suggestion that they’ve ignored manufacturers. They note that the Bush administration and GOP lawmakers fought for tax breaks to offset research and development expenditures, protection for manufacturers from frivolous lawsuits and treaties that would open foreign markets to lucrative trade deals.

“We’ve definitely tried to help manufacturers and will continue to do so,” said Rep. Dave Camp, R-Mich.

Manufacturing represented about $1.49 trillion, or 12 percent, of the nation’s gross domestic product in 2005. It also accounted for two-thirds, or $782 billion, of the United States’ $1.2 trillion in exports that year, according to the National Association of Manufacturers (NAM).

At the end of 2006, manufacturing’s doldrums were diminishing nationally. The U.S. Federal Reserve reported last week that manufacturing production increased by 3.7 percent in 2006, outpacing the 3.1 percent growth in the gross domestic product for the first time since the late 1990s. Manufacturing grew by 0.7 percent in the final quarter of 2006.

“For manufacturing, which accounts for more than three-quarters of industrial output, the 0.7 percent surge in activity was the strongest gain in six months,” said David Huether, NAM’s chief economist. “It was driven by solid increases in computers and electronic products, machinery, aircraft and motor vehicles as well as a number of non-durable products such as apparel and petroleum and coal.”

To build on those improving numbers, Democrats propose:

• Establishing tougher trade enforcement mechanisms, such as creating a trade prosecutor in the Office of the U.S. Trade Representative to police trade, tariff and currency disputes.

– Blocking the Bush administration’s efforts to win fast-track trade authority, which would allow the president to negotiate trade agreements with little input from Congress.

– Considering new health insurance options, such as a federal catastrophic insurance plan covering the most expensive health care for individuals, thus reducing health care costs for manufacturers.

– Providing tax incentives along with direct federal investment to promote alternative fuels, such as biodiesel and ethanol, to lessen the reliance on oil for automobiles.

Not everyone is convinced the agenda will do much to strengthen the manufacturing sector or revive the domestic auto industry.

“Why are the auto companies here in Michigan struggling so much?” asked Dana Johnson, chief economist for Comerica in Detroit. “At the end of the day, they’re not producing cars that people want to buy. To suggest that it’s somehow government policy that is the savior is wrong.”

Manufacturers likely won’t like everything on the Democratic wish list, including raising vehicle fuel-efficiency standards, reversing some general tax breaks for businesses and ending subsidies for oil and gas companies.

“We’ve really made advances in producing fuel-efficient vehicles,” said Wade Newton, spokesman for the Alliance of Automobile Manufacturers, which represents foreign and domestic auto companies. “The Alliance believes that Congress should not legislate higher standards.”

Stabenow says that’s why it’s imperative that Congress work with manufacturers. The Senate is planning a manufacturing summit this spring to bring leaders from small and large companies to Washington to make the case for more federal help.

CM END KELLOGG

(Sarah Kellogg can be contacted at sarah.kellogg(at)newhouse.com)

2007-01-19-DEMS-MANUFACTURE

AP-NY-01-21-07 1702EST

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