The counter-attack against Buy American proposals clearly is underway.  There are lots of reasons to worry about this campaign to beat back measures to require high U.S. content standards in all U.S. government stimulus programs and other measures to support American business (like the auto rescue package).

After all, the counter-attack is coming from the exact same interests that have benefitted hugely from outsourcing and the global economic crisis it produced by hollowing out domestic manufacturing and the rest of the U.S. economy's wealth-creating sector.

Despite these disastrous results, these folks still have massive resources at their disposal. They're still major players in economic policymaking circles despite the Democratic party takeover of Washington.  And of course, their views still dominate mainstream media coverage of these issues.

But if common sense winds up having any influence on decisions by President Obama and Congress, their efforts won't stand a chance -- because they're completely incoherent.

Take one of the outsourcers' big arguments --that forcing participants in infrastructure programs to use American-made steel would unforgivably waste precious taxpayer dollars and increase inflationary pressures.

As I pointed out in my January 10 GLOBALIZATION FOLLIES item, the inflationary pressures created by infrastructure-related steel spending wouldn't even come close to moving the national economic needle.  Moreover, even the outsourcers acknowledge that the domestic steel industry is only operating at 43 percent of capacity.  So it's going to take an awfully long time for any inflation-inducing production bottlenecks to appear.  P.S. -- much of the rest of domestic manufacturing is in the same boat, or will be soon.

But here's the weirdest part of the outsourcers' critique.  As even the economic establishment increasingly acknowledges, deflation is the biggest economic threat we face now. In other words, the main price-related worry of the nation and the world is that they'll start falling faster and faster as more and more economic actors hunker down and hoard their remaining assets.

Indeed, Fed Chairman Ben Bernanke and everyone else in the know would be ecstatic to detect a whiff of price buoyancy anywhere.  That would go double if it resulted not because of production bottlenecks, but because domestic companies and their workers received stable sources of income.  In the process, the addiction of workers in particular to endless borrowing and debt accumulation would be eased.

If Washington's left brain and right brain are communicating (always a big "if"!), it won't take them too long to realize this.  

Finally, as I pointed out in a CNBC interview yesterday, let's dispense with all the baloney about how Buy American provisions would destroy competition and efficiency, and leave the field open to loser companies.  

The U.S. economy is still far and away the world's largest; current dollar gross domestic product will still approach $14 trillion if Friday's latest government status report shows a big fourth quarter 2008 drop as expected.  And this enormous economy still contains a huge number of highly competitive domestic companies.  Limiting government procurement to their products and to domestic supply chains should generate plenty of competition.  

By contrast, keeping these domestic businesses trapped in a no-win struggle against foreign governments and the entities they lavishly sponsor and subsidize has nothing to do with free trade or competition.  Worse, it would inevitably perpetuate and possibly worsen the trade imbalances that have brought the nation and world to the brink of disaster to begin with.  

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