The federal government supports the U.S. maritime industry through the Maritime Administration (MARAD), which is part of the Department of Transportation (DOT). MARAD’s mission is to advance marine transportation — primarily ships and barges — and put forth a "viable U.S. merchant marine that is vital to commerce, emergency response, and national security." Among other things, MARAD maintains the Maritime Security Fleet and the Ready Reserve Force. Both programs make ships available to the military during national security emergencies.
MARAD's entire budget comes from the general fund. The Maritime Security Program accounts for more than half of the budget, sending direct payments to owners of the 60 ships and barges that participate in the program. For fiscal year 2009, $174 million of the $333 million budget went to the Maritime Security Fleet, with each participating ship receiving a flat payment of $2.9 million. The second largest chunk of the budget, $61 million, went toward operations of the U.S. Merchant Marine Academy (USMMA). In 2009, MARAD received $100 million in supplemental funds from the American Recovery and Reinvestment Act to be used for small shipyard assistance.
MARAD provides a large proportion of its budget as subsidies to the maritime industry. All told, $256 million — or 77 percent — of its fiscal year 2009 budget was dedicated to the growth of the industry. Aside from the Maritime Security Program and the USMMA, subsidies are given to state maritime academies and participants in the Maritime Guaranteed Loan program, aiding in the construction and rehabilitation of ships. Subsidies are also available through small shipyard assistance grants and two tax-deferral programs.
The maritime industry also receives implied subsidies from laws established to limit foreign competition and incentivize producers of American goods to use U.S.-flag ships. One example of this is the Jones Act, which mandates that all shipping from one American port to another be done by a U.S.-flag ship. Another example is the Military Cargo Preference Act, which requires that at least 50 percent of civilian agency goods shipped internationally be carried by U.S.-flag vessels. The Cargo Preference Act requires that all military cargo be carried on a U.S.-flag ship.
