A Critique of CRS’s “U.S. Manufacturing in International Perspective”

August 24, 2015
A recent Congressional Research Service report mistakenly suggests that U.S. manufacturing is healthy while dismissing the need for supportive manufacturing policies.

Over the last 15 years the U.S. manufacturing sector has declined significantly compared to those of competitor nations. In the face of this decline, congressional action is needed more than ever to reduce the effective corporate tax rate; to boost investment incentives, including for R&D; to better enforce trade rules globally; and to support manufacturing innovation and workforce development.

Recently, the Congressional Research Service (CRS) issued “U.S. Manufacturing in International Perspective,” in response to a congressional request to better ascertain the condition of the sector and the need for policies and programs to support American manufacturing. The CRS report denies 1) that American manufacturing is in trouble, and 2) that congressional action is capable of helping it. Thus, CRS endorses an agenda of inaction. 

However, as ITIF demonstrates in this new report, the CRS report consistently errs on the side of “all is well” when in fact actual U.S. manufacturing performance is declining significantly. Manufacturing employment has decreased at rates that cannot be explained by productivity gains, real value-added output has been stagnant, and the foreign direct investment and R&D statistics cited by the CRS are both inflated and poor indicators of manufacturing success.