President Bush did the right thing when he dropped the tariffs on foreign steel imports last fall. If we’re going to be free traders, we’ve got to be so even when it hurts.
What the president did wrong, however, was what he didn’t do. He’s not out to kill the steel industry in the United States, but it does look as though it might die a painful death.
As I write this, neither Bush nor any politician, business or labor leader has proposed what seems like the common-sense solution to this issue: Use the tax code to encourage domestic users to buy domestic steel.
There may be reasons that this simple approach won’t work. I’m not an economist or a tax expert or a policy wonk, for that matter. But it seems to me that if we provide some incentive for the big users of steel — automakers, shipbuilders, home appliance manufacturers and the construction industry — to buy domestic steel, we deflect the cries of protectionism by the global steel dumpers and save jobs here.
Instead of using penalties to keep out foreign steel, why not find ways to encourage wider use of our own steel here?
A tax incentive for steel consumers might appear to some too much like corporate welfare. Funny that giving rich individuals a tax cut while wage earners and small business owners struggle to meet rising health care costs isn’t welfare for rich people, but using the tax code to help a struggling industry that provides good jobs for hard-working Americans is a giveaway to a special interest group.
In truth, steel and many other industrial age companies have made pension and health care promises to thousands of retirees. If they fail, those promises could be broken and pensioners could face financial jeopardy.
And guess who will end up picking up the pieces?
I’m not suggesting that tax incentives are the only remedy for ailing industries or even for the entire steel industry. Some companies are inefficient dinosaurs that deserve to go out of business, and the long-term survival of any industry shouldn’t be dependent solely on tax breaks.
But if we are to remain a manufacturing force in the world, we need to figure out why the great industries that created unprecedented wealth are failing, and what can be done by government, labor and business to revitalize them. They all have a big stake in the outcome.
