US should be encouraging more foreign investment, not stifling it

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Far more than a single transaction is at stake in the U.S. Steel-Nippon Steel deal. Cash from foreign investment offers hope in solving America’s fiscal crisis.

The pending U.S. Steel-Nippon Steel deal and its trailing political intrigue is a microcosm of both the economic hope and the political cynicism at work in the United States as we race toward the midpoint of the 21st century., involves foreign direct investment from Nippon Steel, a public company owned by citizens of one of America’s strongest allies, Japan. The deal would retain the iconic company’s name, its existing headquarters, and its union contracts, as Nippon Steel.

This last point — getting more money into the federal coffers — deserves special consideration from America’s policymakers and regulators. Foreign investment is a big part of the hope and solution to the nation’s fiscal crisis, which is a genuine existential threat in the medium and long run. Due to the looming insolvency of Social Security and Medicare, any hope for a repeat of the 1998-2001 period is wishful thinking. The Congressional Budget Office projects worsening deficits for all years through 2054. The unrealistic benefits that politicians promised from our safety net programs — the primary drivers of the fiscal crisis — have never aligned with budgetary realities, and the bill is coming due.

This means we need to encourage both domestic innovation and cultivate investment now to ensure that the nation has the necessary resources to protect our safety-net programs and advance our standard of living. Receipts generated from foreign direct investment, such as the U.S. Steel-Nippon Steel deal, are precisely the investment that we need — investment from an ally that directly benefits American workers and our nation’s broader fiscal environment.

 

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