Earlier this year, National Taxpayers Union (NTU) and many other organizations praised a proposed federal budget prepared by the House Republican Study Committee (RSC).
In addition to promoting fiscal responsibility, the budget includes trade proposals that would restrain big-government trade policies. For example, the RSC plan includes Rep. Warren Davidson’s (R-OH) Global Trade Accountability Act. Under this Act, any new import taxes or restrictions imposed by the president could remain in place for no more than 90 days without congressional approval.
This RSC proposal is well timed given ongoing reports that President Biden may bypass Congress to impose a massive border climate tax through executive action. In addition, despite the steel and aluminum taxes never being approved by Congress, Biden continues to impose tariffs or quotas on most U.S. allies.
Gary Cohn, who served as Director of the National Economic Council for President Trump, observed that taxes placed on imported steel and aluminum undermine the benefits of the Tax Cuts and Jobs Act of 2017: “So all of the sudden, the advantages that we were trying to give companies to help stimulate the economy, to build facilities, to go out and hire people, to drive wages, we took away that advantage by taxing the input that they needed to build.”
Furthermore, the RSC budget would make President Biden’s American Jobs Plan slightly less of a bad deal for taxpayers. Specifically, the RSC Budget “...opposes President Biden’s action to limit commonsense waivers to domestic sourcing requirements applicable to federally financed projects.”
Domestic sourcing requirements increase the cost of federal projects and drain resources from America’s most competitive workers and businesses.
Following World War II, Presidents Truman and Eisenhower criticized domestic sourcing regulations.
According to Truman: “Encouragement of uneconomic domestic production and unjustified preferential treatment of domestic producers destroys trade and so undermines our national economic strength.”
According to Eisenhower: “...it is improper policy, unbusinesslike procedure and unfair to the taxpayer for the Government to pay a premium on its purchases.”
Another drawback of domestic sourcing requirements is that they encourage other countries to impose retaliatory restrictions on U.S. companies seeking to supply foreign governments with goods and services.
Although President Biden has only been in office a short time, his trade policies are shaping up to be the worst of any Democratic president in generations. The RSC’s pro-taxpayer trade proposals would prevent things from getting any worse.