Microeconomics: ARRA & Buy American - Assignment Example

The American Recovery and Reinvestment Act and the Buy American Provision The American Recovery and Reinvestment Act of 2009 (ARRA) was passed by President Obama and Congress in response to the recession of 2007-2009. However, fiscal spending under section 1605 of this act applies only to the American made goods, unless exemptions are made. Though the government attempts to preserve cost efficiency, disruptions will arise.This act ensures cost efficiency and employment are preserved. Unless American companies can provide cheap products, foreign goods are allowed under section 1605, subsection (b)(3).

Thus, this act ensures that cost efficiency is preserved, while American firms remain shielded from competition. In turn, American companies face an increase in demand and can hire more workers. However, some of that increase in demand for workers is offset by a decrease in demand in the private sector due to the recession. This provision also ensures that production and international agreements are preserved. Subsection (3) provides that heads of federal agencies or departments are entitled to waive this provision if deemed necessary.

In case necessary products are not made in the US, they can be obtained abroad. Canada also remains as a partner under the WTO agreement between two countries (Government of Canada).However, some companies might be opposed to this provision. Companies able to produce cheaply in the US will have an advantage over those that produce abroad, and then import. Government action will disrupt operations of private businesses. As a result, competition could eventually decrease in the US, harming consumers and taxpayers.

In short, though this provision is useful as it protects employment and production, consumers and operations of private businesses will be disrupted by government favoritism. Works CitedGovernment of Canada. Canada – U.S. Agreement on Government Procurement. Government of Canada, 2012. Web. 8 Oct. 2012. The American Recovery and Reinvestment Act of 2009. Pub.L. 111-5. 17 February 2009. Web. 8 Oct. 2012.