Manufacturing's decline threatens national security, House panel hears

US can't produce enough ammo to supply police, troops: expert

The hollowing-out of the US's industrial base means the country is risking its national security by being dependent on foreign contractors, experts told a congressional panel Wednesday.

The House National Security Oversight Subcommittee heard from a number of economists and labor leaders who argued that the long, slow erosion of American manufacturing has led to the US losing its edge in numerous industries that are vital to national security.

"We have allowed our industrial base to deteriorate for the last two to three decades. As a result, just in national defense terms, our supply lines for strategic parts and materials have been stretched around the world," said Jeff Faux of the Economic Policy Institute, as quoted at CNN.

Bob Baugh, the executive director of the AFL-CIO Industrial Union Council, told the panel the US has already lost its leading positions in such defense-related industries as semiconductors, advanced materials and aerospace.

"As you watch globalization move the manufacturing base offshore, in essence you are moving the defense base offshore," Baugh said. He also said the closure of US shipyards would "cripple" the country's ability to produce ships.

James Parks at the AFL-CIO blog reports:

Michael Wessel, a member of the US-China Economic and Security Review Commission, told the panel the situation is so bad that we no longer have the domestic capacity to produce enough ammunition to supply our troops and law enforcement. There are waiting lists to fill the police departments here at home, he said.

Baugh and Jeff Faux ... said the United States government must craft an industrial policy to rebuild our manufacturing. Its key elements should include taking away incentives for companies to move jobs overseas, reducing the huge U.S. trade deficit, pushing harder to force China to end its currency manipulation and using government procurement to encourage domestic production.

In recent months much of the debate about the US's uncompetitive manufacturing sector has focused on China and its trade policies. The AFL-CIO's Baugh, who appeared in front of the national security panel, is also active in the effort to pressure China into ending its currency peg to the US dollar.

Many economists and policy makers say China's peg to the dollar amounts to "currency manipulation." They argue the policy keeps labor costs in China artificially low and gives manufacturers there an unfair advantage.

This week, the House Ways and Means Committee will debate a proposed law that could see the US slap tariffs on China if it doesn't allow the yuan to appreciate against the dollar. The bill has been criticized by supporters of free trade as a dangerous step towards protectionism, but many Democratic lawmakers have rallied around a "get tough on China" policy ahead of mid-term elections.

House Majority Leader Nancy Pelosi added her voice Wednesday to those supporting the measure.

"For years, the Bush administration, the Obama administration and members of Congress have tried to persuade the Chinese government to allow its currency to respond to market forces. No significant progress has been made," Pelosi said in a statement.

"The Obama administration has lobbied against the legislation, though recent remarks by Treasury Secretary Tim Geithner suggested the administration's patience with China on the issue was wearing thin," notes The Hill.

"Similar legislation has stalled before in Congress, spurred by different administrations who are sensitive to the strong economic ties the U.S. and China face through trade. It is unclear whether legislation will make it to the House floor for a vote, but committee action alone would be a significant statement that would be likely to anger China."