Jobs and Protectionism in the Stimulus Package

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That's not how it was received overseas, however. Robert Zoellick, president of the World Bank, told The New York Times that it was crucial to avoid the protectionist policies of the 1930s. "The Buy American provision is very dangerous," he said. At the Group of Seven meeting of world financial leaders in Rome last week, U.S. Treasury Secretary Timothy Geithner was pressed to assure other countries that the Obama Administration would remain committed to free trade.

Tightening the H-1B Visa Program

Indeed, editorials from Europe to Asia blasted the symbolism of the Buy American provision. The Times of London called it "ugly," while China's Xinhua news agency described it as "a poison."

Debates around the stimulus bill also focused on proposals relating to foreign workers. With U.S. unemployment rising sharply, to 7.6% in January, some groups and lawmakers were concerned that jobs created by the bill might be outsourced or that they wouldn't be filled with U.S. workers. That sentiment led senators Charles Grassley (R-Iowa) and Bernard Sanders (I-Vt.) to propose an amendment that would restrict firms receiving TARP money in their use of the controversial H-1B visa program.

The final version of the bill included a measure that makes these companies jump through extra hoops in order to employ H-1B visa workers, but doesn't ban them from doing so. Critics of the H-1B program hailed the inclusion of the amendment as a victory. "The demand to reform corporate recruiting policies that ignore highly skilled local talent now moves center stage," says Donna Conroy, director of Brightfuturejobs.com, a lobbying group for visa reform.

E-Verify Remains Voluntary

However, another measure aimed at preventing undocumented workers from being employed in stimulus-related work didn't make the final bill. That provision would have required employers receiving stimulus money to use the federal government's E-Verify program—which is currently voluntary—to ensure that job applicants are legally authorized to work in the U.S.

The U.S. Chamber of Commerce and immigrant advocacy groups lobbied against that rule, arguing that the E-Verify program incorrectly identifies some documented workers as undocumented, and that it would cost too much to enforce. "Expanding E-Verify before improving it would have been a costly and chaotic mistake," says Michele Waslin, senior policy analyst at the Immigration Policy Center.

Groups in favor of the provision expressed frustration that it wasn't included. "It is almost absurd to think that Congress is spending $800 billion to create 3 to 4 million jobs while not taking any precautions to make sure they are filled by U.S. workers," says Ira Mehlman, a spokesman for the Federation for American Immigration Reform. "It's a clear capitulation to pressure from the Chamber of Commerce and its constituents who want to hire labor as cheap as possible."

Herbst is a reporter for BusinessWeek in New York.